Question

Consider the following statements related to Parliamentary approval of Financial Emergency:

1. It must be approved within two months by both houses of Parliament.

2. Once approved, it continues indefinitely without need for repeated approval.

3. It requires special majority approval for continuation.

Which are correct?

• A. 1 and 2 only
• B. 2 and 3 only
• C. 1 only
• D. All of the above

Answer 1

Answer:

A. 1 and 2 only

Financial Emergency in India (Article 360)

• The provision for Financial Emergency is enshrined in Article 360 of the Indian Constitution, granting the President the power to declare it.

• It is invoked when the financial stability or credit of India, or any part of its territory, is threatened.

• Interestingly, India has never declared a Financial Emergency to date, making it a theoretical power.

Parliamentary Approval Process

• Initial Approval: A proclamation declaring a Financial Emergency must be approved by both Houses of Parliament within two months from the date of its issue.

• If the Lok Sabha is dissolved during this two-month period, and the Rajya Sabha has approved it, the proclamation remains in force until 30 days after the first sitting of the Lok Sabha after its reconstitution, provided the new Lok Sabha approves it within that period.

• Majority Required: The resolution for the approval of a Financial Emergency requires a simple majority (i.e., a majority of the members present and voting) in both Houses of Parliament. This is a crucial distinction from a National Emergency, which requires a special majority.

Duration and Continuation

• Once approved by both Houses of Parliament, a Financial Emergency continues indefinitely until it is revoked by the President.

• There is no maximum period prescribed for its operation, nor is there a need for repeated parliamentary approval for its continuation, unlike National Emergency (which needs approval every six months) or President's Rule (which needs approval every six months for a maximum of three years).

• The President can revoke the proclamation at any time by a subsequent proclamation, which does not require parliamentary approval.

Effects of Financial Emergency

• The Union Government can issue directions to states regarding financial propriety and reduction of salaries and allowances of all or any class of persons serving in connection with the affairs of the state.

• The President can issue directions for 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.