All stakeholders, including citizens, NGOs, etc. have an important role in the law making process. But for many stakeholders, the process is not obvious or easily explained. In PRS, we often receive a number of requests from NGOs about how it is that they can get Parliament to make changes in legislation and what would be productive ways in which citizens can make a difference in the law making process. To address this, PRS has developed a short Primer on "Engaging with Policy Makers: Ideas on Contributing to the Law Making Process", in which we have tried to explain the process of how a Bill becomes an Act and some of the opportunities for citizen groups to become part of the process. Sometimes, large parts of a Bill that is introduced in Parliament may not be agreeable to some groups. In such cases there is a tendency among NGOs to sometimes decide to redraft the Bill. To the extent that NGOs think of redrafting a Bill as a tactical negotiating position, they may have a point in trying to redraft legislation. To the extent that NGOs think of such redrafting as a way to keep the discourse alive on the most important issues in any legislation, such efforts are welcome and useful. But if there is a belief that the Bill introduced in Parliiament will be withdrawn to introduce another Bill on the same subject as drafted by NGOs, then history suggests that the probability of that happening is close to zero. This is not a comment on the quality of the Bill that may be drafted by the group of NGOs, but rather a result of a complex set of issues about lawmaking in India. Despite the odds, there are some recent examples in which NGOs were able to bring about significant changes to Bills in Parliament. The Right to Information Act stands out as one of the best examples in recent times. On the recently passed Right to Education Bill, NGOs were able to exert sufficient pressure to bring about changes in the Bill, and also get the government to bring in an amendment Bill to make further changes. In the Seeds Bill which was introduced in 2004, the Government appears to have agreed to bring about important changes thanks to the efforts of a number of farmer groups approaching the government directly, and through their local MPs and political parties. It would be useful if we can get more examples/ comments/ suggestions about how some NGOs were able to bring about these changes in Bills. This will help more people understand how their voices can be heard in the corridors of power.

The Insolvency and Bankruptcy Code, 2015 was introduced in Lok Sabha yesterday, as a Money Bill [Clarification: This is as per news reports.*  The text of the Bill does not indicate that it is a Money Bill].  In this context, we briefly outline the various types of Bills in Parliament, and highlight the key differences between Money Bills and Financial Bills. What are the different types of Bills? There are four types of Bills, namely (i) Constitution Amendment Bills; (ii) Money Bills; (iii) Financial Bills; and (iv) Ordinary Bills. What are the features of each of these Bills?

  • Constitution Amendment Bills[i]: These are Bills which seek to amend the Constitution.
  • Money Bills[ii]: A Bill is said to be a Money Bill if it only contains provisions related to taxation, borrowing of money by the government, expenditure from or receipt to the Consolidated Fund of India. Bills that only contain provisions that are incidental to these matters would also be regarded as Money Bills.[iii]
  • Financial Bills[iv]: A Bill that contains some provisions related to taxation and expenditure, and additionally contains provisions related to any other matter is called a Financial Bill. Therefore, if a Bill merely involves expenditure by the government, and addresses other issues, it will be a financial bill.
  • Ordinary Bills[v]: All other Bills are called ordinary bills.

How are these bills passed?

  • Constitution Amendment Bills1: A Constitution Amendment Bill must be passed by both Houses of Parliament. It would require a simple majority of the total membership of that House, and a two thirds majority of all members present and voting.  Further, if the Bill relates to matters like the election of the President and Governor, executive and legislative powers of the centre and states, the judiciary, etc., it must be ratified by at least half of the state legislatures.
  • Money Bills[vi]: A Money Bill may only be introduced in Lok Sabha, on the recommendation of the President. It must be passed in Lok Sabha by a simple majority of all members present and voting.  Following this, it may be sent to the Rajya Sabha for its recommendations, which Lok Sabha may reject if it chooses to.  If such recommendations are not given within 14 days, it will deemed to be passed by Parliament.
  • Financial Bills4: A Financial Bill may only be introduced in Lok Sabha, on the recommendation of the President. The Bill must be passed by both Houses of Parliament, after the President has recommended that it be taken up for consideration in each House.
  • Ordinary Bills5: An Ordinary Bill may be introduced in either House of Parliament. It must be passed by both Houses by a simple majority of all members present and voting.

How is a Money Bill different from a financial bill? While all Money Bills are Financial Bills, all Financial Bills are not Money Bills.  For example, the Finance Bill which only contains provisions related to tax proposals would be a Money Bill.  However, a Bill that contains some provisions related to taxation or expenditure, but also covers other matters would be considered as a Financial Bill.  The Compensatory Afforestation Fund Bill, 2015, which establishes funds under the Public Account of India and states, was introduced as a Financial Bill.[vii] Secondly, as highlighted above, the procedure for the passage of the two bills varies significantly.  The Rajya Sabha has no power to reject or amend a Money Bill.  However, a Financial Bill must be passed by both Houses of Parliament. Who decides if a Bill is a Money Bill? The Speaker certifies a Bill as a Money Bill, and the Speaker’s decision is final.[viii]  Also, the Constitution states that parliamentary proceedings as well as officers responsible for the conduct of business (such as the Speaker) may not be questioned by any Court.[ix]


  [i]. Article 368, Constitution of India. [ii]. Article 110, Constitution of India. [iii]. Article 110 (1), Constitution of India. [iv]. Article 117, Constitution of India. [v]. Article 107, Constitution of India. [vi]. Article 109, Constitution of India. [vii]. The Compensatory Afforestation Fund Bill, 2015, introduced in Lok Sabha on May 8, 2015, http://www.prsindia.org/billtrack/the-compensatory-afforestations-fund-bill-2015-3782/. [viii]. Article 110 (3), Constitution of India. [ix]. Article 122, Constitution of India. [*Note: See Economic Times, Financial Express, The Hindu Business LineNDTV ,etc.]