What is the Financial Emergency: A brief explanation

Article 360 of the Constitution talks about the Financial Emergency

 What is a Financial Emergency?

  • Article 360 of the Constitution talks about Financial Emergency.
  • It states that if the President is satisfied that a situation has arisen whereby the financial stability or the credit of India or any part thereof is threatened, the  President may declare a state of financial emergency.
  • According to the 44thAmendment Act of 1978, such satisfaction of the President is within the scope of judicial review.

It has never been invoked in India.

Who gives approval for this?

  • The proclamation imposing Financial Emergency shall be laid down before the Rajya Sabha and the Lok Sabha must be approved within two months from its date of issue.
  • It only needs simple majority to be passed.
  • If approved by both the houses, then it can continue indefinitely till the time it is revoked. There is no maximum period defined for it. And unlike the National Emergency or President’s Rule, it does not require repeated approval for its continuation.

Read more: Explained- National Emergency: Know everything about

What happens during a Financial Emergency?

  • The executive authority of the Union shall extend to – the giving of directions to any State to observe such canons of financial propriety as may be specified in the directions, and to the giving of such other directions as the President may deem necessary and adequate for the purpose.
  • This may include-
  • All Money Bills or other Bills to be reserved for the consideration of the President after they are passed by the Legislature of the State.
  • Reduction of salaries and allowances of all or any class of persons serving in connection with the affairs of a State.
  • President can issue directions for the reduction of salaries and allowances of all or any class of persons serving in connection with the affairs of the Union including the Judges of the Supreme Court and the High Courts.

Revocation of Financial Emergency

It can be revoked anytime by a subsequent proclamation by the President. A proclamation of revocation does not require approval by the Parliament.

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