Financial Emergency

The term emergency means some difficult situation has arisen in the country or state then it is the responsibility of public authority or government to take major steps in order to create stability in the region. Dr Bheem Rav Ambedkar has drafted some provinces in the Indian constitution that can maintain the unity of the nation in times of emergency. The situation of emergency threatens the security of the nation. In this situation, the governing authorities are given some rights as per the constitution of India. 

Types of Emergencies

There are three types of emergencies mentioned in the Indian Constitution. In Article 352 National Emergency is mentioned and the second emergency is under article 356 which is Presidents Rule in the state. The last emergency is in financial emergency article 360 which is related to financial crises of the country. The 18th part of the Constitution of India contains these emergency provisions from article 352 to article 360 of Indian constitution.

• National Emergency: National emergency can be proclaimed by the President of India with the approval of cabinet ministers when a security threat has arisen to the nation such as an internal dispute, war or any external or internal aggression. India had witnessed three national emergencies so far.

• State Emergency: Article 352 gives authority to the Union government to impose state emergency to any state when the constitutional machinery of state breakdowns. Several times state emergencies were imposed on states. The President of India on a report from the Governor of a State or if he or she is satisfied that a situation has arisen in a state where the Government of the State is not sufficient to carry on under the provisions of the Constitution then-President may proclaim state emergency.

• Financial Emergency: Financial emergency article of the constitution is related to the financial situation of the country or any state. When President is satisfied that an economical crisis has risen he or she can declare a financial emergency.

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 Image: Emergency Provisions

What is Financial Emergency and When it Can be Declared?

Financial Emergency is a situation of the country when the country faces major economical crises. When the country becomes financially unstable the Constitution of India gave the right to the President to impose a financial Emergency in the nation. Financial emergency article 360 of the Indian constitution has declared the provinces of financial emergency. Prescient of India can proclaim the Financial Emergency on the advice of the Council of Ministers. After the 44th Constitutional Amendment Act which was announced in 1978 declares that the satisfaction of the President to impose an emergency is not beyond judicial review that gave rights to the Supreme Court to review the declaration of Financial Emergency. According to the 44th Constitutional Amendment Act, a periodical review is required every six months of the proclamation by both the houses of Parliament. The proclamation can be revoked by the President by making a subsequent proclamation. The proclamation of financial emergency increases the powers of the Central government on the States in financial matters.

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Image: Financial Emergency article 360

Effects of Financial Emergency

Once the emergency is declared it affects the country and the current governing authority in different ways. The major effects of a financial emergency on a country are given below.

1. A Financial Emergency article is related to the economical problems of the country so when a financial emergency is proclaimed then financial bills get affected. All money bills which come for the consideration of the president after passing by the state legislature can be kept reserved till the end of the emergency.

2. During the period of financial emergency, the authority of the central government increases and the central government is allowed to give orders to the state government and possess rights to make laws on the subject list of the government.

3. Salaries and allowances of all government employees and ministers serving in the central government or the state government can be reduced or suspended for some time. 

4. The President can issue orders for the reduction of salaries and allowances of all or any class of persons serving the Union and the judges of the Supreme Court and the High Court.

5. The tenure of the house of people and state assembly extended to a year.

6. Financial Emergency article 360 has detailed providence during that period. The President gets powered by modification of the provisions related to the distribution of revenues between the Union and the States.

7. Under article 19, it is declared that the Fundamental Rights will be suspended once the financial emergency is proclaimed and this suspension continues till the end of the emergency.

Approval and Duration of The Financial Emergency

The proclamation of financial emergency should be approved by both houses of the parliament with the approval of 2/3th majority members. The proclamation should be approved within two months of its issue date. After getting approval from both the houses of parliament (Lok Sabha and Raj Sabha) financial emergency continues till it is revoked. For the continuation of the financial emergency, there is no need for repeated parliamentary approval. Any maximum time limit is not prescribed for the operation of a financial emergency.  But after the introduction of the 44th Amendment of the constitution, a new provision has restrictions on the power of Parliament to extend a proclamation beyond one year. the Parliament can pass a resolution to approve continuance of the proclamation of financial beyond one year provided the following two conditions which must be satisfied. The first condition is that a National Emergency is already in operation or the second is the Election Commission proves that the election to the State Assembly cannot be held.

COVID-19: A Financial Threat to The Nation.

Economic and social activities have faced very bad financial crises in the entire world including India amid the COVID-19 pandemic. Because of this pandemic economical condition of the country is getting worse day by day. The President, the Vice-President, members of Parliament, and the Governors of states have donated their 30% of salary for the next year into the Consolidated Fund of India. At this time the government of India should make some conscious decisions in regard. The whole country stands together with the government to deal with any financial situation due to the COVID-19 pandemic. Many people donated funds to the COVID Care fund of India during the lockdown period. Although a financial emergency situation was risen because of the pandemic, the Indian government has managed this situation very well.

Did You Know?

• Our Indian constitution has taken many features from other countries constitutions. The provisions of emergency of the Constitution of India are taken from the Weimar Constitution of Germany.

• Mrs. Nrmala Sitharaman is the current Finance Minister of India from 31 May 2019 onwards.

• A financial emergency is never proclaimed in India so far therefore many people do not know what is a financial emergency? India has never faced any financial emergency crises.