A Financial Emergency in India, as provided by Article 360 of the Constitution, allows the President to proclaim a state of financial emergency when the financial stability or credit of India or any part thereof is threatened. This provision is intended to address situations where the economic well-being of the country is in jeopardy.
1. Grounds for Proclamation:
- The President can proclaim a Financial Emergency if they are satisfied that the financial stability or credit of India or any part thereof is threatened.
- Unlike the grounds for a National Emergency, a Financial Emergency is not explicitly tied to external aggression or armed rebellion. It is primarily concerned with economic and financial challenges.
2. Proclamation by the President:
- The President has the authority to issue a proclamation of Financial Emergency based on their own assessment or on the advice of the Cabinet.
3. Effect on Fundamental Rights:
- While a Financial Emergency is in operation, the President can suspend the enforcement of the right to move the Supreme Court for the enforcement of fundamental rights under Articles 32 (right to constitutional remedies) and 226 (power of High Courts to issue writs).
4. Effect on Financial Powers:
- The proclamation of a Financial Emergency allows the President to issue directions to the states to observe certain principles regarding the distribution of revenues between the center and the states.
- The President can also direct the reduction of salaries and allowances of all or any class of persons serving in connection with the affairs of the state.
5. Duration and Parliamentary Approval:
- The proclamation of a Financial Emergency must be approved by both houses of Parliament within two months.
- Initially, a Financial Emergency is valid for two months. It can be extended indefinitely with parliamentary approval every six months.
6. Judicial Review:
- The grounds for proclaiming a Financial Emergency are subject to judicial review. The President’s satisfaction about the financial stability or credit of India can be examined by the judiciary.
7. Revocation of Financial Emergency:
- The President has the authority to revoke the proclamation of Financial Emergency when they believe that the situation has improved.
8. One or More States:
- The proclamation of Financial Emergency can apply to the entire country or a specific state or states.
9. Use of Article 360:
- Article 360 has not been invoked in India since the adoption of the Constitution in 1950.
A Financial Emergency is considered a last resort, and its use is meant to be rare. It is distinct from National Emergency and State Emergency (President’s Rule) as it focuses specifically on financial and economic aspects rather than security concerns. The provision acknowledges the importance of financial stability and credit for the overall well-being of the nation.
