What is Financial Emergency Article 360?
The Financial Emergency Article 360 of the Constitution of India empowers the President to declare an economic emergency. The Parliament also has a say in the event of a financial emergency. A financial emergency in India has not been declared to date.
- Congress must approve this state of emergency within two months from the date of the imposition.
- Therefore, if this state of emergency would be declared on March 24, Prime Minister Narendra Modi would have to obtain parliamentary approval in both houses by May 24.
- If the Lok Sabha disbands for any reason, Rajya Sabha will need to approve the emergency.
- Lok Sabha approval must take place within 30 days of the election of new Lok Sabha members.
- If approved, the financial emergency would stay until the president announces that it should be lifted. Dismissal does not require parliamentary approval.
Reasons For Declaration Of Financial Emergency
There is no maximum period specified for the operation. The constitution does not require the approval of a new parliament. There are numerous reasons for declaring a financial emergency article by the President. Check here the list of the reasons that have been listed here-
- When the President is convinced that a situation has arisen that threatens the financial stability or creditworthiness of India or some parts of India's territory.
- Amendment 38 of 1975 states that the President's declaration of a financial emergency is final and cannot be challenged in any court for any reason.
- Article 44 Amendment Act of 1978 removes the provisions added by the Article 38 Amendment Act of 1975. This means that the president's satisfaction is not exempt from judicial review (that is, you can challenge it in court).
Significance Of Article 360
Introduced by PhD BR Ambedkar the act of financial emergency provisions has been made to the Constitutional Assembly influenced by the Great Depression of the 1930s, wherein according to the National Recovery Act 1933 of the United States, the President was empowered to make such provisions of Article 360 in the country. Situations such as recessions and other financial crises can be easily avoided with an emergency response plan.
The financial emergency clause was created such a provision to counter the economic threat that the country may face. India experienced a financial crisis in 1991 and fought hunger and war in 1965, but India did not even invoke the clause of Article 360.
Declaring a financial emergency gives the country a bad name. India is one of the biggest and most significant economies in the world. A state of financial emergency will affect its credibility and its trading partners.
Consequences of Financial Emergency
The result of such a declaration is the Allied Government issues a Directive to each state to comply with the rules of financial validity outlined in the Directive.
- The President can instruct the state to reduce salaries and allowances for all or specific groups of employees who work in the current situation.
- Banknotes or other fiscal bills are retained for review by the President after being passed by the Legislature.
- The President may issue orders to reduce salaries and allowances for those who work in connection with the work of the Union, including the Supreme Court and judges of the Supreme Court.
- The federal government gains full authority over the state in financial affairs during times of financial difficulty. This jeopardizes the state's financial sovereignty.
- A financial emergency is a threat to the well-being of the country and to the financial autonomy of all states of India.
Financial Emergency For UPSC Exam
The aspirants preparing for the UPSC exam must be well-versed with complete knowledge of the pivotal topics. The financial emergency topic frames an integral and eminent part of the UPSC syllabus. The candidates can practice the UPSC previous year papers to get enlightened about the types and patterns of questions asked in the exam. This topic is covered under the Indian Polity syllabus of the IAS exam.