What is a financial emergency, and when and by whom is it declared?
What is a Financial Emergency? A financial emergency is one of the three types of emergency declarations provided in the Indian Constitution, the others being national emergency and failure of constitutional machinery in states. Article 360 of our constitution empowers the President to invoke Financial Emergency. Article 360 has never been invoked till date. (Came close in 1991). The Emergency provisions are contained in Part XVIII of the Constitution, from Articles 352 to 360. These provisions enable the Central government to meet any abnormal situation effectively. Its aim is to safeguard the sovereignty, unity, integrity, and security of the country, the democratic political system, and the Constitution. During Emergency, it converts the federal structure into a unitary one without a formal amendment of the Constitution. The Constitution stipulates three types of emergencies: 1. Article 352 An emergency due to war, external aggression or armed rebellion. This is popularly known as National Emergency. 2. Article 356 An Emergency due to the failure of the constitutional machinery in the states. This is popularly known as Presidents Rule. It is also known by two other namesState Emergency or Constitutional Emergency. 3. Article 360 Financial Emergency due to a threat to the financial stability or credit of India. Grounds of Declaration Article 360 - empowers the president to proclaim a Financial Emergency if he 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. 44th Amendment Act implied that the satisfaction of the President is not beyond judicial review. Parliamentary Approval and Duration- A proclamation declaring financial emergency must be approved by both the Houses of Parliament within two months from the date of its issue. When the Lok Sabha is dissolved or takes place during the two-month duration without approving the proclamation, then the proclamation survives until 30 days from the first sitting of the Lok Sabha after its reconstitution, provided the Rajya Sabha has in the meantime approved. Once approved by both the Houses of Parliament, the Financial Emergency continues indefinitely till it is revoked. Thus- 1. There is no maximum period prescribed for its operation; and 2. Repeated parliamentary approval is not required for its continuation. A resolution approving the proclamation of financial emergency can be passed by either House of Parliament only by a simple majority A proclamation of Financial Emergency may be revoked by the president at any time by a subsequent proclamation. Such a proclamation does not require parliamentary approval. Effects of Financial Emergency- 1. The executive authority of the Centre extends (a)to directing any state to observe such canons of financial propriety as are specified by it, and (b)to directions as the President may deem necessary and adequate for the purpose. 2. Any such direction may include a provision requiring (a)the reduction of salaries and allowances of all or any class of persons serving in the state; (b)the reservation of all money bills or other financial bills for the consideration of the President after they are passed by the legislature of the state. 3. The President may issue directions for the reduction of salaries and allowances of (a) all or any class of persons serving the Union, and (b) the judges of the Supreme Court and the high court. Thus, during the operation of a financial emergency, the Centre acquires full control over the states in financial matters. Always upvote a good answer and try to follow a good author.