Awareness

The Manner In Which The Government Amended The Finance Bill Was An Insult To Democracy

Sudhanva

March 27th, 2017

SHARES

“Just now we have received the list of amendments. 40 existing Acts are proposed to be amended by means of this Finance Bill. When the original Bill was presented on 1 February, only 8 to 10 Acts were proposed to be amended … You can’t put other laws in a Money Bill. This is totally unconstitutional.” – NK Premachandran, MP from Kollam, Kerala, in the Lok Sabha, March 21.


Introduction

The Finance Bill, 2017 is an unusual document.

Finance Bills are passed every year, and they usually do not cause major controversy and are passed smoothly, without many allegations of corruption or overreach.

This year’s Finance Bill, however, is unique for four reasons:

  1. It proposes massive changes in many areas;
  2. Its proposals are highly controversial and damaging;
  3. Its passage was riddled with questionable practices;
  4. It has received very little mainstream media coverage despite the above three points.

The Finance Bill, 2017 is one of the most controversial legislations to be passed in the halls of the Lok Sabha in years. Its scope is extensive, its implications are enormous, its overreach is alarming.

And yet, its knowledge among the masses is woefully constrained.

This article examines the questionable passage of the Finance Bill, 2017. The Logical Indian had published other articles on the contents of the Bill, arguing why they are damaging – from the powers it gives to tax authorities to its opening the door to unlimited political donations and enabling of electoral corruption.

Unlike the previous articles, this one questions the manner of the Bill’s passing, the unethical nature of it, and the destructive precedent that it sets.


Image Source: ndtvimg


The Budget Session

The Indian Parliament convenes thrice a year:

  1. Budget session: February to May;
  2. Monsoon session: July to September;
  3. Winter session: November to December.

The Budget Session is when the Union Budget is introduced. The government presents it on the first day of February so that it could be materialised before the commencement of new financial year in April. The Budget is presented by means of the Finance Bill and the Appropriation Bill. It is preceded by the Financial Survey.

Now, the Budget Session in India split into two main sub-sessions with a recess period in between. This four-week recess period is provided for lawmakers so that they have time to analyse the government’s budget proposals and recommend any changes or proposals of their own. It is also a period when the public and the media can be enlightened about the proposals so as to have an informed public debate about the same.


The Finance Bill

The Finance Bill is the Bill ordinarily introduced in each year to give effect to the financial proposals of the government for the following financial year and includes a Bill to give effect to supplementary financial proposals for any period.

The Finance Bill is governed by Rule 219, Chapter XIX of the Rules of Procedure and Conduct of Business in the Lok Sabha.

The Finance Bill is a Money Bill. Thus, its passage is a prerogative of the Lok Sabha; the Rajya Sabha’s view of the Bill is merely academic and non-obligatory in nature. Furthermore, due to its status as a Money Bill, the Finance Bill is essentially an entitlement of the ruling party/coalition, as the Rajya Sabha has little say in its passage.



The Finance Bill, 2017

The contents of the Finance Bill, 2017 have alarmed many people across the political spectrum. The 40 amendments, among other things, sought sweeping changes in taxation and campaign finance. Some of the major changes include lowering the legal limit on cash transactions from Rs 3 lakh to Rs 2 lakh and making Aadhaar mandatory for filing Income Tax Returns and for applying for a PAN Card.

The most contentious amendment, however, was the one on campaign finance. This amendment:

  1. removes the cap that barred companies from donating more than 7.5% of their average net profit to a political party;
  2. removes the requirement that made it mandatory for a company to disclose the name of the party to which the donation has been made.

Key dates related to the Finance Bill, 2017

  1. February 1: Introduction of the Bill in the Lok Sabha (less that 10 amendments proposed);
  2. February 9: Budget Session breaks for recess;
  3. March 9: Budget Session reconvenes;
  4. March 21: Finance Bill reintroduced and updated (it now has 40 amendments, including the one on campaign finance reform);
  5. March 21 – March 22: The House debates the contents of the Bill even as its provisions are unknown to many MPs and through many interruptions;
  6. March 22: Passage of the Bill by the Lok Sabha;
  7. March 27: Debate in the Rajya Sabha.

Key documents related to the Finance Bill, 2017

  1. Original draft;
  2. Final draft;
  3. The Finance Bill, 2017;
  4. Main amendments.

Main issues with the Finance Bill, 2017

  1. Most of the amendments were introduced in the last minute;
  2. The amendments’ purview and scope were unwarranted;
  3. The status of the Finance Bill being a Money Bill was exploited;
  4. The debate over the 40 amendments was limited and occurred over the course of 48 hours, with many interruptions in between;
  5. The amendments were not shared with many MPs.

In this issue, the questions raised in Parliament by NK Premachandran (the MP from Kollam, Kerala) are significant:

  1. Mr Premachandran said many amendments in the Bill did not fall under the purview of taxation, which is what a Money Bill is supposed to be about;
  2. He said the amendments were not circulated to the MPs, thus not giving them enough time to study the Bill. “Just now we have received the list of amendments. 40 existing Acts are proposed to be amended by means of this Finance Bill. When the original Bill was presented on 1st February, 2017, only 8 to 10 Acts were proposed to be amended,” he said;
  3. Premachandran says he is opposed to the Finance Bill under Rule 219(1) and Article 110 as the Finance Bill can only provide for a particular year.

Issue #1: Most of the amendments were introduced in the last minute

On February 1, when the Finance Bill was proposed, the Finance Minister proposed less than 10 amendments.

After this date, as is custom, the House broke for recess and reconvened on March 9.

On March 21, when the Finance Bill was reintroduced, the Finance Minister now proposed 40 amendments.

The Finance Bill was passed on March 22.

This leads us to some self-evident conclusions:

  1. The Bill’s scope was expanded from less than 10 amendments to 40 amendments;
  2. This was done without the knowledge of most MPs, the media, and the public;
  3. After its reintroduction, the House had less than 48 hours to debate the contents of the Bill;
  4. The amendments’ last-minute introduction is highly unethical: the recess period during the Budget Session is provided so that MPs can analyse the Bill proposed by the government at the beginning of the Budget Session – that is, the Bill proposed by Finance Minister Arun Jaitley on February 1.

Issue #2: The amendments’ purview and scope were unwarranted

Newslaundry columnist Meghnad S noted how the government exploited parliamentary loopholes to push the passage of the amendments. Rule 80 of the Rules of Procedure and Conduct of Business in the Lok Sabha states:

  1. The following conditions shall govern the admissibility of amendments to clauses or schedules of a Bill:
    • An amendment shall be within the scope of the Bill and relevant to the subject matter of the clause to which it relates.

The government, however, exploited Rule 388 of the same document. Rule 388 states: “Any member may, with the consent of the Speaker, move that any rule may be suspended in its application to a particular motion before the House and if the motion is carried the rule in question shall be suspended for the time being.”



Besides its introduction, the amendments (as listed above) are extensive in scope and massive in influence. Money Bills are traditionally about financial matters like taxation; but the Finance Bill, 2017 will lead to sweeping changes in several ministries. Thus the Bill’s scope is massive – something unusual in a Finance Bill.


Issue #3: The status of the Finance Bill being a Money Bill was exploited

As the MP from Kollam, Mr Premachandran, had said, many amendments in the Bill did not fall under the purview of taxation, which is what a Money Bill is supposed to be about.

The Finance Minister, in response to Mr Premachandran, cited the definition of a Money Bill according to Article 110 of the Indian Constitution. Mr Jaitley argued that the meaning of the word “only” – that is, its context in the Article – is debatable.


Image Source: indiakanoon


Citing Article 110 in the Lok Sabha, the Finance Minister said this: “So, the critical word, according to Mr Premachandran, is the word ‘only’ … that it is only the taxation proposals and nothing else, which … can find a place as far as the Money Bill is concerned. Now, with regard to this word ‘only’, right from the inception of this House, as to what is the width that this word ‘only’ permits has been a subject matter of debate.”

In response to NK Premachandran, Speaker Sumitra Mahajan ruled in favour of the government saying that parliamentary rules do not rule out the possibility of inclusion on non-taxation proposals in a Money Bill. She reportedly said, “I have accepted this. The Finance Bill may contain non-taxation proposals also. Now another thing is no doubt every effort should be made to separate taxation measures from other matters.”

The government has used money bills to pass non-taxation measures even before (like with the Aadhaar Bill). This is due to two reasons:

  1. The government has a comfortable majority in the Lok Sabha; however, its strength in the Rajya Sabha is weak;
  2. Money Bills – as explained before – are a prerogative of the Lok Sabha; the Rajya Sabha has little say over its passage.

Issue #4: There was limited debate over the 40 amendments

If one understands the aforementioned three isuues, this becomes obvious.

  1. The four-week recess period is meant for MPs to analyse the Finance Bill proposed at the beginning of the Budget Session. Most of the amendments this time were introduced less than 48 hours before the passage of the Bill.
  2. 48 hours are thoroughly insufficient to properly debate the contents of 40 different amendments – most of which were introduced abruptly.
  3. The debate needs to be more extensive as the amendments propose sweeping, crucial changes in many Ministries; however, the debate was brief and uninformed.
  4. Even in the short debate that occurred, there were many interruptions – including discourse on other legislations and a prolonged speech by UP CM Aditya Nath.

Issue #5: The amendments were not shared with many MPs

To add to Issue #4, it was later revealed that many MPs did not even have access to the final draft or the text of the amendments. Without information of the debate, how can one expect informed debate – even when the debate is unacceptably brief?

To quote Newslaundry columnist Meghnad S: “There were 150 clauses in the original bill and the finance minister put in 33 new sections at the last moment and didn’t even let anyone know what they were. Even we were left scrambling trying to figure out what the heck is going on. [The] original Finance Bill, which Members of Parliament were given and were prepared for, was changed at the last minute. And on top of that, the changes were made to laws that don’t even relate to the Finance Ministry.”


The Logical Indian take

In his Budget Speech on February 1, 2017, Mr Jaitley highlighted the need to cleanse the system of funding of political parties, which he said was corrupted with black money.

Mr Jaitley was fully correct in saying that – electoral reform is an urgent concern that needs to be addressed by the government – any government.

However, his statement also begs the question as to why the Finance Bill he proposed would open the floodgates to unlimited corporate donations, electoral corruption, and anonymous financing which would essentially put Indian democracy up for sale (explained here). Besides the removal of caps on campaign donations and the unwarranted authority it gives to tax authorities, the Finance Bill encourages the usage of electoral bonds and expands the scope of Aadhaar.


Image Source: samacharplus


Furthermore, as explained in this article, the manner of passage of the Finance Bill, 2017 was a mockery of democracy. The amendments were introduced in the last minute, they involved unnatural overreach, there was very little debate over the amendments in Parliament, and many MPs were not even given a copy of the Bill in the first place.

These issues are serious. And the government must justify them. The government must also, for the sake of democratic values and common sense, rethink many of the components of the Bill. This is especially true when it comes to the changes it proposes to electoral funding – these changes have the ability to irreparably damage our democracy and encourage special interests to trump public interests.

The Finance Bill is currently in the Rajya Sabha. However, due to the Bill being a Money Bill, the Upper House has little say over its passage. Therefore, as things stand, the Finance Bill, 2017 will invariably – and damagingly – become the law of the land.

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