Introduction
Article 360 of the Indian Constitution provides for the proclamation of a financial emergency in India. It grants the President of India the power to declare a state of financial emergency if he/she is satisfied that the financial stability or credit of the nation is threatened. This article allows for the central government to assume a greater degree of control over the financial affairs of the states.
EMERGENCY PROVISIONS (Part XVIII: Articles 352 – 360)
- These provisions have been borrowed from the Government of India Act 1935. It converts the federal structure into a unitary one without a formal amendment of the Constitution.
- It is needed to safeguard the sovereignty, unity, integrity and security of the country, the democratic political system and the Constitution.
- “Suspension of Fundamental Rights during Proclamation of Emergency” provision borrowed from the Weimar Constitution.
Important Articles
- Article 352: Emergency due to war, external aggression or armed rebellion (National Emergency).
- Article 356: Emergency due to the failure of the constitutional machinery in the states (President’s Rule).
- Article 360: Financial emergency due to threat to financial stability or credit of India.
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| Financial Emergency in India: Grounds, Approval, Duration, and Revocation |
| Grounds of Declaration |
- The President proclaims 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.
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| Parliamentary Approval |
- Simple majority: Approval of both houses within two months from the date of its issue.
- If the proclamation of financial emergency is issued at a time when the LS has been dissolved, or the dissolution of LS takes place during the period of two months without approving the proclamation, it survives until 30 days from the first sitting of the LS after its reconstitution, provided RS has passed it in the meantime.
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| Duration |
- Once approved, the emergency continues indefinitely until revoked.
- No periodic approval is needed.
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| Judicial Review |
- 38th Amendment: Satisfaction of president in declaring financial emergency made immune from judicial review.
- 44th Amendment: Provisions made under 38th Amendment deleted, so subject to Judicial Review
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| Revocation |
- Revoked by the president.
- No parliamentary approval required.
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| Imposition |
- No Financial Emergency has been declared so far.
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Impact of Financial Emergency: Executive Authority and Presidential Directives
- Article 360 more or less follows the pattern of what is called the National Recovery Act of the United States passed in 1933.
- In India, no Financial Emergency has been declared so far, though there was a financial crisis in 1991.
- Executive authority of the Centre extends to directing any state to observe such canons of financial propriety as are specified by it.
- President Can Direct:
- The reduction of salaries and allowances of all or any class of persons serving the state or union and the judges of the Supreme Court and High Court.
- Reservation of all money bills or other financial bills for the consideration of the President after they are passed by the state legislatures.
Comparative Analysis of National, State, and Financial Emergencies in India
| Article |
Approval |
Majority |
Revocation |
Period/Periodic Approval |
| 352 |
Within one month |
Special |
- By President (Lok Sabha only).
- No Parliamentary approval required.
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Unlimited/ Periodic approval Every 6 months with special majority |
| 356 |
Within two months |
Simple |
- By President.
- No Parliamentary approval required.
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Maximum 3 years /Periodic approval every 6 months with a simple majority. |
| 360 |
Within two months |
Simple |
- By President.
- No Parliamentary approval required.
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Unlimited (Repeated approval not required). |
