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The ordinance passed by the cabinet on Wednesday to make possession of old Rs 500 and Rs 1000 notes illegal post March 2017, is extremely significant since it gives legal validity to the demonetisation exercise.
It also ensures that in the budget session, the government will certainly hold a debate on demonetisation in Parliament as part of its legislative business. It makes the opposition demand for a debate with voting irrelevant, since voting will happen as a part of the legislative business.
But as it is an ordinance to provide continuity to its provisions it has to be passed by Parliament and assented to by the President within six weeks of the reassembly of Parliament. To make this possible, it is quite likely that it will be treated as a money bill. There is no expenditure here, but it is about management of cash. My sense is the ordinance would be converted into a money bill. In which the case the demand for a debate in Rajya Sabha with voting falls through. And having covered its flank with a demonetisation debate as legislative business, there is scarce chance the government will accept another debate on it.
As a money bill, the demonetisation ordinance will also be saved if there are demands of sending it to a standing committee. An ordinance as per Parliament rules becomes like an ordinary bill once it reaches the two house. But once it travels to the standing committee on finance, the orders made under the ordinance will not remain valid.
According to a PRS India blog, the power to make ordinances comes down from the Government of India Act, 1935. Author of the blog Shreya Singh writes “Interestingly, most democracies including Britain, the United States of America, Australia and Canada do not have provisions similar to that of Ordinances in the Indian Constitution. The reason for an absence of such a provision is because legislatures in these countries meet year long”.
Leaving aside Parliament issues, Wednesday’s ordinance is important as it rids the government of the need for issuing executive notifications, one after another quoting each other. It has been messy and difficult to reconcile with each other.
In its absence, the finance ministry has been forced to term the current demonetisation exercise as delegalisation, since November 8th. The ordinance now gives the government the legal right to take back the specified bank notes and hand out fresh ones, in their place. The issues surrounding implementation are of course a different box of concerns, that have little to do with the ordinance.
