Emergency Provisions Under Financial Emergency (article 360)

When a circumstance has arisen that puts India's financial stability, credit, or any area of its territory at danger, the Indian President under Article 360, declares a financial emergency. The declaration of a financial emergency may be made for however long the situation calls for, but it may be revoked at a later date. There hasn't been a Financial Emergency proclaimed in India yet.

 

•    The president has the authority to declare a financial emergency under Article 360.

 

•    Reasons for Proclamation: If the President determines that a situation has developed that threatens India's financial stability or credit, in whole or in part, or any portion of its territory.

 

•    The executive and legislative authorities would be centralized in such a scenario.

 

•    It requires the same approval from the Parliament as the other two categories of crises.

 

•    The 38th Amendment Act of 1975 made it so that the declaration of a financial emergency could not be contested in court.

 

•    The 38th Amendment Act of 1975 introduced a clause that suggested that the president's satisfaction is exempt from judicial scrutiny. The 44th Amendment Act of 1978 repealed that clause.

 

•    The financial emergency is currently being reviewed by the courts. 

 

•    Within two months of the date of its issuance, a proclamation stating a financial emergency must be ratified by both Houses of Parliament.

 

•    However, if the declaration of a financial emergency is made at a time when the Lok Sabha has already been dissolved or during the two-month period prior to the dissolution without the proclamation receiving approval, the declaration will remain in effect until 30 days after the first meeting of the newly reconstituted Lok Sabha, provided the Rajya Sabha has approved it in the interim.

 

•    Financial Emergency may remain in effect for whatever long the circumstances require and may be cancelled by another proclamation.

 

•    The proclamation is valid as long as it is not rescinded after being given simple majority approval by the Parliament. This implies

 

•    There is no imposed time limit.

 

•    No more parliamentary permission is required.

 

•    Only a simple majority, or a majority of the members present and voting in that house, can adopt a resolution authorizing the declaring of a financial emergency.

 

•    Revocation: The President may, at any time, revoke the Financial Emergency by issuing a new proclamation.

 

The following effects could result from declaring a financial emergency:

•    Any of the States may receive financial guidance from the Union Government.

 

•    The President may request that all or a specific class of government employees have their salary and benefits reduced by the States.

 

•    After being approved by the State Legislature, the President may request that the States hold all money bills for consideration by the Parliament.

 

•    The President may also issue directives to lower the pay and benefits of central government personnel, including Supreme Court and High Court judges. 

 

The Emergency Provisions give the President broad authority to handle unusual and extreme circumstances. Any abuse of these authorities has the potential to undermine democracy. However, the actual operation of the Constitution for more than 50 years has shown that, with the exception of a few instances where an emergency was imposed due to political considerations, emergency powers were generally used in the country's best interests. Despite the fact that some States have abused emergency provisions, there is general agreement that emergency provisions are still necessary given the circumstances in India.