The Constitution of India
Article 207
Special provisions as to financial Bills
(1) A Bill or amendment making provision for any of the matters specified in sub-clauses (a) to (f) of clause (1) of article 199 shall not be introduced or moved except on the recommendation of the Governor, and a Bill making such provision shall not be introduced in a Legislative Council:
Provided that no recommendation shall be required under this clause for the moving of an amendment making provision for the reduction or abolition of any tax.
(2) A Bill or amendment shall not be deemed to make provision for any of the matters aforesaid by reason only that it provides for the imposition of fines or other pecuniary penalties, or for the demand or payment of fees for licences or fees for services rendered, or by reason that it provides for the imposition, abolition, remission, alteration or regulation of any tax by any local authority or body for local purposes.
(3) A Bill which, if enacted and brought into operation, would involve expenditure from the Consolidated Fund of a State shall not be passed by a House of the Legislature of the State unless the Governor has recommended to that House the consideration of the Bill.
Why this exists
State legislatures, like Parliament, need a check to ensure that decisions involving public money are not taken casually or without executive oversight, since the government (through the Governor, acting on ministerial advice) is accountable for the state's finances. This mirrors Article 117 at the Union level and reflects the Westminster principle that financial initiative rests with the executive, not with individual legislators. It also protects the elected Legislative Assembly's primacy over financial matters, keeping the (often nominated or indirectly elected) Legislative Council out of that process, similar to how Rajya Sabha is limited on money bills.
How courts read it
Indian courts have generally treated the Governor's or President's 'recommendation' for financial bills as largely a procedural and internal legislative safeguard, with limited scope for judicial review once a bill has been passed and assented to. Courts have been reluctant to strike down state laws merely for procedural irregularities in obtaining prior recommendation, treating this mainly as a matter of legislative propriety rather than a ground for invalidating an Act after enactment, similar to the approach taken with the analogous Article 117 at the Union level.
Common misconceptions
- Myth: Any bill mentioning fees or fines is a special financial bill needing the Governor's recommendation.
Fact: Clause (2) clarifies that fines, license fees, service fees, and local body taxation alone do not make a bill a special financial bill under this Article. - Myth: All bills involving any government expense need the Governor's prior recommendation before introduction.
Fact: Clause (3) only requires the Governor's recommendation before the bill is passed, not necessarily before it is introduced, and it applies specifically to expenditure from the Consolidated Fund. - Myth: The Governor can block any financial bill entirely.
Fact: The Governor's role here is procedural — recommending that the bill be introduced or considered — and does not amount to a veto power to reject the bill outright at this stage.