Question

Consider the following statements about the Financial Emergency under Article 360.

(i) A Financial Emergency can include directions to reduce salaries of state government employees.

(ii) A resolution approving a Financial Emergency requires a special majority in Parliament.

(iii) No Financial Emergency has ever been declared in India.

• A. (i) and (iii) only
• B. (ii) and (iii) only
• C. (i) and (ii) only
• D. All of the above

Answer 1

Answer:

A. (i) and (iii) only

Financial Emergency (Article 360)

• The provision for a Financial Emergency is enshrined in Article 360 of the Indian Constitution. It is one of the three types of emergencies, along with National Emergency (Article 352) and State Emergency/President's Rule (Article 356).

• The President of India can declare a Financial Emergency if he is satisfied that a situation has arisen whereby the financial stability or credit of India, or of any part of its territory, is threatened.

• A proclamation of Financial Emergency has to be approved by both Houses of Parliament within two months from the date of its issue. This approval requires a simple majority (more than 50% of members present and voting), not a special majority.

• Once approved by both Houses, the Financial Emergency continues indefinitely until revoked by the President. There is no maximum period prescribed for its operation, and repeated parliamentary approval is not required for its continuation.

• The President can issue directions to states regarding financial propriety. These directions can include a provision requiring the reduction of salaries and allowances of all or any class of persons serving in connection with the affairs of a state.

• Furthermore, the President can direct 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.

• All Money Bills or other financial Bills passed by the state legislature can be reserved for the consideration of the President during a Financial Emergency.

• An important historical fact for competitive exams is that a Financial Emergency has never been declared in India till date, even during severe economic crises like the 1991 balance of payments crisis.

• The provisions related to Financial Emergency are inspired by the Government of India Act, 1935, which also contained similar emergency powers.