{"id":8010,"date":"2024-05-21T11:33:57","date_gmt":"2024-05-21T11:33:57","guid":{"rendered":"https:\/\/www.nextias.com\/blog\/?p=8010"},"modified":"2024-05-21T13:01:08","modified_gmt":"2024-05-21T13:01:08","slug":"financial-emergency","status":"publish","type":"post","link":"https:\/\/www.nextias.com\/blog\/financial-emergency\/","title":{"rendered":"Financial Emergency (Article 360)"},"content":{"rendered":"\n<p><em>The <strong>Financial Emergency (Article 360)<\/strong> <strong>in India,<\/strong> as one of the three types of emergencies provided for by the Indian Constitution, remains a crucial tool in the hands of the Central Government to address any severe economic crisis or financial instability effectively. It is largely seen as an important safeguard to protect the country&#8217;s financial security, fiscal stability, and overall economic interests. This a<strong>rticle of NEXT IAS<\/strong> aims to study in detail the Financial Emergency, its meaning, constitutional provisions, grounds of imposition, judicial review, impacts, and other related aspects.<\/em><\/p><div id=\"ez-toc-container\" class=\"ez-toc-v2_0_56_1 counter-hierarchy ez-toc-counter ez-toc-transparent ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<span class=\"ez-toc-title-toggle\"><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/www.nextias.com\/blog\/financial-emergency\/#Meaning_of_Financial_Emergency\" title=\"Meaning of Financial Emergency\">Meaning of Financial Emergency<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/www.nextias.com\/blog\/financial-emergency\/#Constitutional_Provisions_Related_to_Financial_Emergency\" title=\"Constitutional Provisions Related to Financial Emergency\">Constitutional Provisions Related to Financial Emergency<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/www.nextias.com\/blog\/financial-emergency\/#Grounds_of_Declaration_of_Financial_Emergency\" title=\"Grounds of Declaration of Financial Emergency\">Grounds of Declaration of Financial Emergency<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/www.nextias.com\/blog\/financial-emergency\/#Judicial_Review_of_Financial_Emergency\" title=\"Judicial Review of Financial Emergency\">Judicial Review of Financial Emergency<\/a><ul class='ez-toc-list-level-3'><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/www.nextias.com\/blog\/financial-emergency\/#The_38th_Amendment_Act_of_1975\" title=\"The 38th Amendment Act of 1975\">The 38th Amendment Act of 1975<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/www.nextias.com\/blog\/financial-emergency\/#The_44th_Amendment_Act_of_1978\" title=\"The 44th Amendment Act of 1978\">The 44th Amendment Act of 1978<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/www.nextias.com\/blog\/financial-emergency\/#Parliamentary_Approval_of_Financial_Emergency\" title=\"Parliamentary Approval of Financial Emergency\">Parliamentary Approval of Financial Emergency<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/www.nextias.com\/blog\/financial-emergency\/#Duration_of_Financial_Emergency\" title=\"Duration of Financial Emergency\">Duration of Financial Emergency<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/www.nextias.com\/blog\/financial-emergency\/#Revocation_of_Financial_Emergency\" title=\"Revocation of Financial Emergency\">Revocation of Financial Emergency<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/www.nextias.com\/blog\/financial-emergency\/#Effects_of_Financial_Emergency\" title=\"Effects of Financial Emergency\">Effects of Financial Emergency<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/www.nextias.com\/blog\/financial-emergency\/#Conclusion\" title=\"Conclusion\">Conclusion<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/www.nextias.com\/blog\/financial-emergency\/#Frequently_Asked_Questions_FAQs\" title=\"Frequently Asked Questions (FAQs)\">Frequently Asked Questions (FAQs)<\/a><ul class='ez-toc-list-level-3'><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-13\" href=\"https:\/\/www.nextias.com\/blog\/financial-emergency\/#How_many_times_Financial_Emergency_Declared_in_India\" title=\"How many times Financial Emergency Declared in India?\">How many times Financial Emergency Declared in India?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-14\" href=\"https:\/\/www.nextias.com\/blog\/financial-emergency\/#Under_which_article_Financial_Emergency_can_be_proclaimed\" title=\"Under which article Financial Emergency can be proclaimed?\">Under which article Financial Emergency can be proclaimed?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-15\" href=\"https:\/\/www.nextias.com\/blog\/financial-emergency\/#Who_declares_the_Financial_Emergency\" title=\"Who declares the Financial Emergency?\">Who declares the Financial Emergency?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-16\" href=\"https:\/\/www.nextias.com\/blog\/financial-emergency\/#When_a_Financial_Emergency_is_proclaimed\" title=\"When a Financial Emergency is proclaimed?\">When a Financial Emergency is proclaimed?<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n\n\n\n\n<h2 class=\"wp-block-heading has-text-color has-link-color wp-elements-0b6ecb8b0c07d25e56d7a1bcab9ae342\" style=\"color:#015aa7\"><span class=\"ez-toc-section\" id=\"Meaning_of_Financial_Emergency\"><\/span><strong>Meaning of Financial Emergency<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>In India, a Financial Emergency (Article 360) refers to a period when the <strong>financial stability or credit of the country or any part of its territory is threatened.<\/strong><\/li>\n\n\n\n<li>It is a time when the fiscal autonomy of the States may be temporarily curtailed, and the financial powers of the Central government are significantly enhanced to address the perceived economic crisis.<\/li>\n\n\n\n<li>A Financial Emergency empowers the Central government to take swift and decisive action to safeguard the country&#8217;s financial security, fiscal stability, and overall economic interests.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading has-text-color has-link-color wp-elements-588c28a6536b146169fcd0cf86ad2c82\" style=\"color:#015aa7\"><span class=\"ez-toc-section\" id=\"Constitutional_Provisions_Related_to_Financial_Emergency\"><\/span><strong>Constitutional Provisions Related to Financial Emergency<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><strong>Article 360 in Part XVIII of the Indian Constitution<\/strong> deals with the Financial Emergency. The article and its subject matter are as follows.<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"has-background\" style=\"background-color:#ebecf0\"><thead><tr><th><strong>Articles&nbsp;<\/strong><\/th><th><strong>Subject &#8211; Matter&nbsp;<\/strong><\/th><\/tr><\/thead><tbody><tr><td><strong>Article 360<\/strong><\/td><td>Provisions as to Financial Emergency<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<h2 class=\"wp-block-heading has-text-color has-link-color wp-elements-e111f64b8feb3d53f3e9008fc709078d\" style=\"color:#015aa7\"><span class=\"ez-toc-section\" id=\"Grounds_of_Declaration_of_Financial_Emergency\"><\/span><strong>Grounds of Declaration of Financial Emergency<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><strong>Article 360<\/strong> of the Indian Constitution empowers the President of India to proclaim a Financial Emergency if he\/she is satisfied that a situation has arisen due to which the <strong>financial stability or credit of India or any part of its territory is threatened.<\/strong><\/p>\n\n\n\n<h2 class=\"wp-block-heading has-text-color has-link-color wp-elements-22874b692cb06c113c0e1c710a0608d1\" style=\"color:#015aa7\"><span class=\"ez-toc-section\" id=\"Judicial_Review_of_Financial_Emergency\"><\/span><strong>Judicial Review of Financial Emergency<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<h3 class=\"wp-block-heading has-text-color has-link-color wp-elements-c3964862cc7e8f455ccaec19c53c7615\" style=\"color:#ff6a00\"><span class=\"ez-toc-section\" id=\"The_38th_Amendment_Act_of_1975\"><\/span><strong>The 38th Amendment Act of 1975<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The <strong>38th Constitutional Amendment Act, 1975<\/strong> made the <strong>satisfaction of the President<\/strong> in declaring a Financial Emergency under Article 360 <strong>final and conclusive<\/strong> which could not be challenged in any court on any ground<\/li>\n\n\n\n<li>Thus, it made the proclamation of the Financial Emergency <strong>immune from Judicial Review.<\/strong><\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading has-text-color has-link-color wp-elements-bf416b41266a3353eb955a94260e89ad\" style=\"color:#ff6a00\"><span class=\"ez-toc-section\" id=\"The_44th_Amendment_Act_of_1978\"><\/span><strong>The 44th Amendment Act of 1978<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The 44th Constitutional Amendment Act deleted the above provision of the 38th Constitutional Amendment Act, 1975.<\/li>\n\n\n\n<li>Thus, it provided that the <strong>satisfaction of the President<\/strong> for the proclamation of the Financial Emergency is <strong>not beyond judicial review.<\/strong><\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading has-text-color has-link-color wp-elements-ea033b24b22001fb9f539d0ef4d02ee7\" style=\"color:#015aa7\"><span class=\"ez-toc-section\" id=\"Parliamentary_Approval_of_Financial_Emergency\"><\/span><strong>Parliamentary Approval of Financial Emergency<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The proclamation of Financial Emergency in India must be approved by both Houses of Parliament <strong>within two months <\/strong>from the date of its issue.<\/li>\n\n\n\n<li>However, if a proclamation of Financial Emergency is issued at a time when <strong>Lok Sabha has been dissolved<\/strong> or the dissolution of Lok Sabha takes place during the period of two months without approving the proclamation then, in that case, the proclamation <strong>survives until 30 days<\/strong> from the first sitting of the newly constituted Lok Sabha, provided the Rajya Sabha has in the meantime approved it.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading has-text-color has-link-color wp-elements-61c68f5a23268daf582e7f24e1e6c3d7\" style=\"color:#015aa7\"><span class=\"ez-toc-section\" id=\"Duration_of_Financial_Emergency\"><\/span><strong>Duration of Financial Emergency<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Once approved by both Houses of Parliament, the Financial Emergency in India continues indefinitely till it is revoked.<\/li>\n\n\n\n<li>Thus, the following two points are to be noted w.r.t. Financial Emergency in India:\n<ul class=\"wp-block-list\">\n<li>There is <strong>no maximum period prescribed<\/strong> for the operation of a Financial Emergency.<\/li>\n\n\n\n<li><strong>Repeated parliamentary approval is not required<\/strong> for the continuation of a Financial Emergency.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"has-background\" style=\"background-color:#ebecf0\"><tbody><tr><td>A resolution approving a proclamation of Financial Emergency in India can be passed by either House of Parliament only by a <strong>Simple Majority<\/strong> (the majority of 50% of members present and voting in the House).<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<h2 class=\"wp-block-heading has-text-color has-link-color wp-elements-9009718246b141b0deb6ccd06d8450c0\" style=\"color:#015aa7\"><span class=\"ez-toc-section\" id=\"Revocation_of_Financial_Emergency\"><\/span><strong>Revocation of Financial Emergency<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>A proclamation of Financial Emergency can be <strong>revoked by the President at <\/strong>any time<strong> by a subsequent proclamation.<\/strong>\n<ul class=\"wp-block-list\">\n<li>Such a proclamation <strong>does not require the approval of the Parliament.<\/strong><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading has-text-color has-link-color wp-elements-e0a8b4c4fe85f6f9daa1db2ead8ff278\" style=\"color:#015aa7\"><span class=\"ez-toc-section\" id=\"Effects_of_Financial_Emergency\"><\/span><strong>Effects of Financial Emergency<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The consequences and effects of the Financial Emergency are as follows:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The Executive Authority of the Center extends to giving:\n<ul class=\"wp-block-list\">\n<li>Directions to any State to observe such canons of financial propriety as are specified by it.<\/li>\n\n\n\n<li>Such other directions to any State as the President may deem necessary.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li>Any such direction may include a provision requiring:\n<ul class=\"wp-block-list\">\n<li>Reduction of salaries and allowances of all or any class of persons serving in the State.<\/li>\n\n\n\n<li>Reservation of all Money bills or other Financial bills for the consideration of the President after they are passed by the State Legislature.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li>The President may issue directions for the reduction of salaries and allowances of:\n<ul class=\"wp-block-list\">\n<li>All or any class of persons serving the Union,<\/li>\n\n\n\n<li>Judges of the Supreme Court and the High Court.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n<p>Thus, during a Financial Emergency, the Center acquires full control over States in financial matters.<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"has-background\" style=\"background-color:#ebecf0\"><tbody><tr><td><strong>Note: No Financial Emergency has been declared so far even though there was a financial crisis in 1991.<\/strong><\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<h2 class=\"wp-block-heading has-text-color has-link-color wp-elements-d0adc4bd9eb2e9b9b187dc32f0e06642\" style=\"color:#015aa7\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span><strong>Conclusion<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The provision for declaring a Financial Emergency is a double-edged sword. They grant the Central government the necessary authority to address economic crises, but also carry the risk of abuse and undermining the financial autonomy of the states. As India navigates evolving economic challenges, it is crucial that the provision regarding financial emergency is exercised judiciously, with robust oversight and adherence to the rule of law, to preserve the country&#8217;s fiscal stability and federal structure.<\/p>\n\n\n\n<h2 class=\"wp-block-heading has-text-color has-link-color wp-elements-618812723183593a2c916a1fd5800128\" style=\"color:#015aa7\"><span class=\"ez-toc-section\" id=\"Frequently_Asked_Questions_FAQs\"><\/span><strong>Frequently Asked Questions (FAQs)<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n<div id=\"rank-math-faq\" class=\"rank-math-block\">\n<div class=\"rank-math-list \">\n<div id=\"faq-question-1716278160722\" class=\"rank-math-list-item\">\n<h3 class=\"rank-math-question \"><span class=\"ez-toc-section\" id=\"How_many_times_Financial_Emergency_Declared_in_India\"><\/span><strong>How many times Financial Emergency Declared in India?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<div class=\"rank-math-answer \">\n\n<p>No Financial Emergency has ever been declared in India.<\/p>\n\n<\/div>\n<\/div>\n<div id=\"faq-question-1716278170171\" class=\"rank-math-list-item\">\n<h3 class=\"rank-math-question \"><span class=\"ez-toc-section\" id=\"Under_which_article_Financial_Emergency_can_be_proclaimed\"><\/span><strong>Under which article Financial Emergency can be proclaimed?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<div class=\"rank-math-answer \">\n\n<p>Under Article 360, the Financial Emergency can be declared in India.<\/p>\n\n<\/div>\n<\/div>\n<div id=\"faq-question-1716278180531\" class=\"rank-math-list-item\">\n<h3 class=\"rank-math-question \"><span class=\"ez-toc-section\" id=\"Who_declares_the_Financial_Emergency\"><\/span><strong>Who declares the Financial Emergency?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<div class=\"rank-math-answer \">\n\n<p>The President of India can declare the Financial Emergency in India.<\/p>\n\n<\/div>\n<\/div>\n<div id=\"faq-question-1716278196651\" class=\"rank-math-list-item\">\n<h3 class=\"rank-math-question \"><span class=\"ez-toc-section\" id=\"When_a_Financial_Emergency_is_proclaimed\"><\/span><strong>When a Financial Emergency is proclaimed?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<div class=\"rank-math-answer \">\n\n<p>Financial Emergency can be proclaimed if the President is satisfied that a situation has arisen due to which the financial stability or credit of India or any part of its territory is threatened.<\/p>\n\n<\/div>\n<\/div>\n<\/div>\n<\/div>","protected":false},"excerpt":{"rendered":"<p>The Financial Emergency (Article 360) in India, as one of the three types of emergencies provided for by the Indian Constitution, remains a crucial tool in the hands of the Central Government to address any severe economic crisis or financial instability effectively..<\/p>\n","protected":false},"author":9,"featured_media":8027,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[64],"tags":[71],"class_list":["post-8010","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-polity","tag-gs-2"],"_links":{"self":[{"href":"https:\/\/www.nextias.com\/blog\/wp-json\/wp\/v2\/posts\/8010","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.nextias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.nextias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/blog\/wp-json\/wp\/v2\/users\/9"}],"replies":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/blog\/wp-json\/wp\/v2\/comments?post=8010"}],"version-history":[{"count":7,"href":"https:\/\/www.nextias.com\/blog\/wp-json\/wp\/v2\/posts\/8010\/revisions"}],"predecessor-version":[{"id":8025,"href":"https:\/\/www.nextias.com\/blog\/wp-json\/wp\/v2\/posts\/8010\/revisions\/8025"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/blog\/wp-json\/wp\/v2\/media\/8027"}],"wp:attachment":[{"href":"https:\/\/www.nextias.com\/blog\/wp-json\/wp\/v2\/media?parent=8010"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.nextias.com\/blog\/wp-json\/wp\/v2\/categories?post=8010"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.nextias.com\/blog\/wp-json\/wp\/v2\/tags?post=8010"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}