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Financial Emergency, Meaning, Declaration, Duration & Effect

Financial Emergency

Under Article 360, the Indian President declares a financial emergency. When a circumstance has arisen that puts India’s financial stability, credit, or any area of its territory at danger. 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 Financial Emergency is an important part of Indian Polity which an important subject in UPSC Syllabus. Students can also go for UPSC Mock Test to get more accuracy in their preparations.

Financial Emergency Meaning

According to Article 360 of the Indian Constitution, the President must declare a financial emergency if the country experiences a financial crisis. This imposition may be in place for however long the situation requires once it has been agreed by both houses of the Parliament. Based on its policies, the Union gains the right to provide the state’s financial directives.

The President has the authority to order the states to set a cap on government employees’ pay and benefits. After passing through the state legislature, money bills and other financial bills may be reserved and presented before the President. The President has the authority to lower the salaries and benefits of members of the Central Government, including judges on the Supreme Court and the High Court.

Also Read: Parliament Session

Financial Emergency Grounds of Declaration

The president has the authority to declare a Financial Emergency under Article 360. If the President determines that a situation has developed that threatens India’s financial stability or credit, or any portion of its territory. The executive and legislative authorities would be centralized in such a scenario. It also requires approval from the Parliament, much as the other two forms of emergencies.

The declaration of a financial emergency cannot be contested in court, according to the 38th Amendment Act of 1975.

The clause included by the 38th Amendment Act of 1975 that implied the president’s satisfaction was not exempt from judicial review was repealed by the 44th Amendment Act of 1978. The financial situation is currently being reviewed by a judge.

Also Read: President’s Rule

Financial Emergency Parliamentary Approval and Duration

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 while the Lok Sabha is dissolving or during the two-month period without the Lok Sabha approving the declaration, the declaration will remain in effect until 30 days after the first Lok Sabha meeting following its reconstitution, provided the Rajya Sabha has approved it in the interim.

The Financial Emergency may last however long the situation dictates and may be revoked by another proclamation. Once the proclamation has received simple majority approval from the Parliament, it is effective so long as it is not revoked. A resolution authorizing the declaration of a financial emergency can only be passed by a simple majority, or a majority of the members present and voting in that house. The Financial Emergency may at any moment be revoked by the President by executing a new proclamation.

Financial Emergency Effects

The Union Government may offer financial advice to any State. The President may ask the States to decrease the pay and benefits of all or a certain class of government workers.

The President may ask the States to postpone all money legislation until the Parliament has had a chance to review them after receiving approval from the State Legislature. The President may also order that judges on the Supreme Court and High Court and other employees of the Central Government receive reduced salaries and benefits.

Financial Emergency Criticism

The Constitution’s federal structure will be destroyed, and the Union will acquire absolute control. The cornerstone of democracy will be destroyed, and fundamental rights will be rendered obsolete. Financial autonomy will be removed and all state authority will be centralized in the hands of the union management, both in the Union and in the Units. The President will get dictatorship power.

The States’ financial independence is being threatened by the financial emergency measures, according to H N Kunzru. Dr. B.R. Ambedkar, the chief architect of the Indian Constitution, also made note of the improper management and use of the Constitution’s Articles for political objectives. Emergency measures will make citizens’ fundamental rights useless, it has been noted.

Financial Emergency UPSC

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. But 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 owing to political motives, emergency powers were largely employed in the country’s advantage.

There is widespread agreement that emergency provisions still have a role to play under the conditions in India, despite the misuse of emergency measures in several States. Students can read all the details related to UPSC by visiting the official website of StudyIQ UPSC Online Coaching.

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Financial Emergency FAQs

What is meant by financial emergency?

Article 360 provides that if the President is satisfied that the financial stability or credit of India or any of its part is in danger; he may declare a state of Financial Emergency.

When was financial emergency declared in India?

Financial emergency has never been proclaimed in India.

Who imposed financial emergency in India?

The President can declare three types of emergencies — national, state and financial emergency in a state.

What is an example of a financial emergency?

Financial emergencies may include car damage, unemployment, medical treatment, property damage, or family emergencies.

What causes financial emergency?

Article 360 of the Indian Constitution empowers the President to invoke financial emergency.

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