Special Provisions as to Financial Bills (Article 117)

At a Glance

• What it is Bills dealing with fiscal matters other than pure money bills
• Article Article 117(1) and 117(3)
• Types Money bills, Financial Bill (I) and Financial Bill (II)
• Rule All money bills are financial bills but not all financial bills are money bills
• Exam link UPSC Prelims, Polity: Parliament

Where Does It Fit?

This is the tenth topic of the category on Parliament. Financial bills deal with fiscal matters, that is, revenue or expenditure. The Constitution uses the term financial bill in a technical sense with three kinds.

Three Kinds of Financial Bills

Only those financial bills which contain exclusively matters mentioned in Article 110 are money bills and are certified by the Speaker.

Financial Bill (I)

A bill that contains not only any or all of the matters in Article 110 but also other matters of general legislation, for instance a bill containing a borrowing clause but not dealing exclusively with borrowing. In two respects it is similar to a money bill: it can be introduced only in the Lok Sabha and only on the recommendation of the President. In all other respects it is governed by the legislative procedure for ordinary bills. The Rajya Sabha can reject or amend it, except that an amendment other than one for reduction or abolition of a tax cannot be moved in either House without the President’s recommendation. If the Houses disagree, the President can summon a joint sitting. When presented to the President, he can assent, withhold assent or return it for reconsideration.

Financial Bill (II)

A bill containing provisions involving expenditure from the Consolidated Fund of India, but none of the matters in Article 110. It is treated as an ordinary bill in all respects, with one special feature: it cannot be passed by either House unless the President has recommended to that House the consideration of the bill. It can be introduced in either House and the President’s recommendation is not needed for introduction, only at the consideration stage. It can be rejected or amended by either House. A joint sitting can resolve disagreements, and the President can assent, withhold or return it.

Examples and Practical Meaning

A bill that has a borrowing clause but does not deal exclusively with borrowing is the example of Financial Bill (I). A Financial Bill (II), by contrast, contains provisions involving expenditure from the Consolidated Fund of India but none of the Article 110 matters. The key point is that the Rajya Sabha keeps its full powers over both types of financial bills, because they are not exclusively concerned with matters in Article 110. The Speaker’s certificate is the single formal feature that separates a money bill from a Financial Bill (I), and the Speaker’s decision in this regard is final.

For revision, remember the order of increasing normality: a money bill is the most restricted for the Rajya Sabha, Financial Bill (I) is restricted only in the place of introduction, and Financial Bill (II) is restricted only by the need for the President’s recommendation at the consideration stage. In every other respect the ordinary bill procedure applies to the two financial bills.

Comparison

The key to the classification is the content of the bill. If a bill goes beyond the matters in Article 110, it becomes a financial bill and the Rajya Sabha regains its normal powers. Article 117 also provides that a bill which imposes or varies a tax in which states are interested, or affects distribution of money to states, needs the President’s recommendation, as discussed in the earlier categories.

Why Is This Topic Important?

• Trap question Money bill versus financial bill
• Table Introduction and Rajya Sabha powers
• Judicial link Speaker’s certificate is the dividing line

What Came Next?

The next topic covers Parliamentary Committees.

Key People and Terms

• Financial bill Bill on revenue or expenditure
• Article 117 Special provisions on financial bills
• Consideration stage When Financial Bill (II) needs recommendation
• General legislation Matters beyond Article 110
• Reduction or abolition of a tax Amendments needing no recommendation

Exam Corner

Mains Angle

Questions on this topic usually ask about the Rajya Sabha’s powers. Use these points to add depth.

• Content decides Classification depends on content
• Rajya Sabha role Full for Financial Bill (II)
• Executive initiative President’s recommendation
• Certification Only money bills