Archive for the ‘Constitution’ Category

Aadhar: A Money Bill as a Legislative Coup on the Constitution.

12 April 2016
Aadhar was the brainchild of UPA-II, who coopted ex-Infosys Boss, Nandan Nilkeni, as the Technology Tsar to implement what it called a scheme for  “Targeted Direct Benefit Transfers” to intended  eligible beneficiaries so as to avoid endemic “leakages” [euphemism for Corrupt Government Machinery] in various subsidy schemes from Food [PDS], Kerosene, LPG, to Fertilisers. Aadhar is yet another UPA scheme that Modi led NDA government has made it’s own. On matters of Economic  and Finance policies BJP and Congress are indistinguishable, beholden as both are to do the bidding of Indian and Global Capital. BJP had opposed Aadhar when in the opposition, now it’s Congress turn to follow the act. BJP/ NDA government had been thwarted until the recent Budget session to have the Aadhar Bill passed as it lacked the requisite majority in Rajya Sabha [RS-Council of States] to secure it’s assent, though it had decisive majority in Lok Sabha [LS-Council of People]. No bill can turn into a law of the land unless it is passed by both houses of parliament. Well, almost. The only exception is MONEY BILL. Why is Money Bill an Exception?
Congress enjoyed comfortable majorities in both the houses of parliament for the first 4 decades [barring short lived Janata Party experiment] of the new republic’s life, and therefore could pass laws to legislate or to amend Constitution at will save except the “impediment” of Judicial Review. This state of affairs was neither held to be NATURAL or DESIRABLE by the Constituent Assembly as is evident from the Legislative Scheme it chose for the republic. The choice of Bi-Cameral Parliament served two objectives: (1) Since RS members are chosen by the State Legislatures, they were expected to articulate the Interests and Concerns of the States at the Union and to protect those in all the Central Bills. Thus they were more acutely expected to preserve the Federal Structure by maintaining the delicate balance between the powers of the Union/Centre and the States. (2) Members of the RS have a tenure of 6 years [as against 5 years for LS] and every 2 years one-third of the members are elected by rotation. Thus RS exists in perpetuity unlike LS, which is “dissolved” every 5 years or earlier [in case no stable government enjoying majority in the house is possible from among existing members] and all vacancies are filled afresh through Universal Adult Franchise. The staggered Time Frames of two houses serves a very important purpose. While the LS captures the Snapshot of the Mood of The National Electorate or it’s Perceptions of the Competing Political Formations at one go, RS aggregates the Moods of the State Electorates at three different points in times. The Expectation out of such a Scheme is that no political formation enjoys an Unchecked and Unfettered Power to legislate at Will -a situation that prevailed during the first 40 years of the republic. However, mindful of the fact that this should not create an Insurmountable Gridlock, which makes all or any legislative agenda impossible because of absence of political consensus; (1) the strength of RS is kept at less than 50% of the strength of LS and (2) A provision is made to call a Joint Session of both houses to consider Bills that have hit the wall of “Legislative  Deadlock”. Since this takes care of the possibility of highly divisive politics using RS to hold legislative process a hostage, it would have been an honourable way out for NDA government to follow. Possibility of such a move was floated several times during past year or so.
However, the stratagem that NDA eventually deployed was to introduce Aadhar Bill as a Money Bill, which merely had to overcome the hurdle of Certifying it to be a Money Bill by the Speaker of the LS, who dutifully “rubber-stamped” it. Why Money-Bill? Money Bill is covered by special provision, a separate article 110, of the Constitution. RS plays only advisory role in Critiquing the money bill and any amendments passed by it are not binding in nature and only recommendatory to LS, who may accept them, fully or partially, or reject them in toto. Once LS passes it again, with or without modification, Money Bill goes direct to the President for signing who too has to oblige without demurring. Incidentally, the authority  of the Speaker to decide whether a Bill is a Money-Bill is Final.
The finance minister Arun Jaitley justified Aadhar’s introduction as a Money Bill saying, “Focus is primarily on the usage of money belonging to Consolidated Fund of India belonging to either the Centre or states“. But he also reportedly said “the proposed law will help in targeting government subsidy at intended beneficaries which will result in a lot of savings” and added “targeted subsidy through Aadhar cards of LPG consumers had resulted in over Rs 15000 crore of savings at the Centre. Four states which had started PDS delivery by a similar exercise on a pilot basis, had saved more than Rs 2300 crore“. If the proposed law is for “targeting government subsidy at intended beneficiaries“, then it is altering only THE DELIVERY MECHANISM of subsidies without altering or modifying the quantum, which is patently the subject matter of FINANCE BILL [the most important money bill]; and therefore Aadhar Bill clearly does not fall within the ambit of Article 110 (1) sub clauses (a) to (f). Aadhar is not a money bill in the spirit of article 110. However, sub clause “(g) any matter incidental to any of the matters specified in sub clause (a) to (f)” is omnibus, whose words, “any matter incidental…“, are open to expansive interpretation [In fact, purely technically, each and every bill will have some potential Monetary Impact necessitating a claim on National Exchequer. And thus can be justified for inclusion under sub-clause (g) through sufficiently Elastic Reasoning]. Then there is the final authority on deciding whether a bill is a money bill that is vested with the speaker of LS. Jayaram Ramesh has challenged in the apex court the government’s decision to pass Aadhar Bill as a Money Bill. It would be interesting to see what the Apex court decides in the matter, but my hunch is his appeal won’t be sustained.  Before we see why, first one would like to dispose of the Grandiose Claim of “Rs 15000 crore of savings at the Centre“. The IISD report has this to say in this regard, “Therefore, the maximum net saving, according to the government’s own figures—without accurately accounting for the costs of implementation and entirely discounting Rs 5,234 crore ($781 million) provided in permanent advances (and associated interest costs)—was approximately (-) Rs. 97 crore ($14 million),“.

By accurately applying the consumption-based methodology (and using the CEA’s own estimates for the impact on consumption), our previous research note demonstrated that the maximum reduction in subsidy expenditure achievable through the implementation of DBTL in FY 2014/15 was approximately Rs. 143 crore (USD 21 million). It should be noted that this figure represents the maximum theoretical saving achievable on subsidy expenditure in FY 2014/15, through all mechanisms, before accounting for any costs of implementation. In the last financial year, the government allocated Rs. 200 crore (USD 30 million) for DBTL implementation costs, and the cost of commission on transfers made in FY 2014/15 amounted to at least Rs. 40 crore (USD 6 million)2 —both of which represent significant underestimates relative to the actual costs incurred. Therefore the maximum net saving according to the government’s own figures—without accurately accounting for the costs of implementation, and entirely discounting the Rs. 5,234 crore (USD 781 million) provided in permanent advances (and associated interest costs)—was approximately minus (-) Rs. 97 crore (USD 14 million).

The “Spurious Claim” of Savings made by the Finance Minister thus stands exposed.
The reason I think Supreme Court would dismiss the Appeal by Jayaram Ramesh is the very special status accorded to a Money Bill whereby it is put “Beyond Reach” of both the RS and President of India with the exclusive mandate for accepting it as it is or with amendments resting with LS, the house of people. If the money bill is defeated in LS, then it implies that the government has forfeited the confidence of the house of people leaving it only one option to exercise, for the Prime Minister to tender the resignation of his Council of Ministers to the President. Especially, if the government fails to pass the finance bill, then it means Government would cease to function in the upcoming financial year with no authority to collect taxes or spend money. Without Fiscal Space to operate, government will be simply asphyxiated to Constitutional Death. In such circumstances Vote on Account is taken for the survival of the Governance Function until elections are held and new government is sworn in. This is the reason why passage of Finance Bill [and Money Bills] is vital for the survival of the government, which must enjoy the Confidence of only the LS [and not the RS], and hence it is insulated from interference from RS or President [such as sending it back for reconsideration by LS or holding up his/her assent]. For the very same reasons, the Supreme Court too would have to desist from an expansive Judicial Review of the Speaker’s Decision about classifying a bill as a Money Bill. Otherwise it can open up Pandora’s Box.  Moreover, the decision to classify a Bill Money-Bil under Article 110 of the Constitution violates neither the “Basic Structure” of the Constitution nor does it abridge any fundamental rights or fall foul of other articles of the Constitution. The only Restitution for restoring the Spirit of the Constitution in this case is to reach a political consensus on not breaching boundaries of Constitutional propriety. This requires sagacity and the spirit of give and take by putting national interests in every crucial area above narrow partisan political interests. That would be the true test of Nationalism rather than the spurious test of shouting or not shouting this or that slogan stuffed down the throat of the people.
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PS: Classification Strategy And Law Making: An article in The Hoot argued that the Aadhar Bill should have never made it as Money Bill because it is “a surveillance project masquerading as a development intervention using biometrics“. That contention is hardly tenable devoid as it is of what constitutes a money bill. Moreover, the article pivots around the issue of “CLASSIFICATION of a NEW TECHNOLOGY” as the raison d’être for Aadhar Bill to qualify as a money bill. This is patently wrong. Neither the Government or Finance Minister have contented as such nor has Article 110 any reference to technology. In fact, in a single breath the author is arguing For and Against the passing of Aadhar as a Money Bill on one and the same criteria -“New Technology”.