Dr. Ambedkar while bringing out the unique distinction of the Constitution of India observed, “ it is both unitary as well as federal according to the requirement of time and circumstances. In normal times, it is framed to work as a federal system. But in times of war, it is also designed to make it work as though it was a unitary system.” The emergency is one of those concepts. The term ‘emergency’ may be deciphered as a difficult situation arising suddenly demanding immediate action by public authorities under powers specifically granted to them, by the Constitution, or otherwise to meet such exigencies. A situation of emergency in India attributes to a period of governance that can be proclaimed by the President of India during certain crises. Under the guidance of the cabinet of ministers, the President can overrule many provisions of the Constitution, which ensures Fundamental Rights to the citizens of India.
The emergency provisions are included in Part XVIII of the Constitution of India, from Article 352 to 360. These provisions enable the Central government to face any abnormal situation effectively. The rationality behind the inclusion is to safeguard the sovereignty, unity, integrity, and security of the country, the democratic political system, and the Constitution.
The Constitution designates three types of emergencies-
1. National Emergency(Article 352)
2. Constitutional Emergency (Article 356)
3. Financial Emergency (Article 360)
The author will endeavor to explain the concept of financial emergency in this article.
PROVISIONS OF FINANCIAL EMERGENCY IN INDIA
- What is Financial Emergency and who can declare it?
A financial emergency arises when a country is dealing with severe economic issues. The framers of the Constitution visualized a possibility of financial depression requiring the Central Government's intervention. The experience of the U.S. in the 1930's depression was recalled by some members. Suitable provisions were
made, to meet such situations in India as well. And therefore Article 360 was incorporated by the framers which contain provisions concerning the financial emergency. It empowers the President of India to declare a financial emergency.
Article 360 (1) provides that “ If the President is satisfied that a situation has arisen whereby the financial stability or credit of India or of any part of the territory thereof is threatened, he may by a Proclamation make a declaration to that effect.”
Clause (5) inserted by the 38th Amendment in 1975, declared the satisfaction of the President as “final and conclusive”. But this clause is omitted by the 44th Amendment, 1978. The 44th Constitutional Amendment Act of 1978 states that the President's 'satisfaction' is not beyond judicial review. It means that the Supreme Court can review the declaration of a Financial Emergency.
- Grounds of declaration:
The ground for the declaration of financial emergency is “a threat to the financial stability or credit of India or any part of the territory of India”
In other words, the president has the power 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. And thereby, He/she can declare the Financial Emergency on the aid and advice of the Council of Ministers.
- Parliamentary approval and duration:
Clause (2) of Article 360 provides that the proclamation issued by the President may be revoked or varied by a subsequent Proclamation made by him. The Proclamation concerning financial emergency is required to be laid before each House of Parliament. The Proclamation so made ceases to operate at the expiration of two months unless, before the expiration of these two months, it has been approved by resolutions passed by both the Houses of Parliament. On such approval, it shall continue to operate until revoked by the President by making a fresh proclamation under Article 360 (2) (a).
If a Proclamation of Financial emergency is issued at a time when the House of People (Lok Sabha) has been dissolved or the dissolution of the House of People takes place during the said period of two months, the Proclamation shall cease to operate at the expiration of 30 days from the date on which the House of People first sits after its reconstitution. However, the Council of States (Rajya Sabha) must have passed a resolution approving the Proclamation within the said period of two months.
If the House of People passes a resolution approving the Proclamation before the expiration of 30 days from the date on which the House of People first sits after its reconstitution and a resolution approving the Proclamation has already been passed by the Council of States within the initial period of two months, the Proclamation is said to be approved by both Houses of Parliament.
Thus, with the approval of both Houses of Parliament, a Proclamation of Financial Emergency shall continue in operation indefinitely for all times, until it is revoked by the President by making another Proclamation.
- Effects of Financial Emergency:
The object of issuing a Proclamation of Financial Emergency is to achieve financial stability. A Proclamation so issued has the following effects-
During the period, a Proclamation of Financial Emergency, is in operation, the executive authority of the Union extends-
To the giving of directions to the States to observe such canons of financial property as may be specified in the directions, and
To the giving of such other directions as the President may deem necessary and adequate for the purpose,
To the giving of directions requiring the reduction of salaries and allowances of all or any class of persons serving in connection with the affairs of the States.,
To the giving the directions requiring all Money Bills or other Bills to which Provisions of Article 207 apply (i.e., Financial Bill or Bills involving expenditure from the Consolidated Fund of the States) to be reserved for the consideration of the President after they are passed by the Legislatures of the States.
Thus, during the administration of a financial emergency, the Center gets full control over states in financial matters, which poses a threat to the state's financial sovereignty. Some critics assert that provisions of financial emergency generate a severe threat to the financial autonomy of the states that are abreast of the federal structure of the country. Earlier, a serious financial crisis had occurred in India in 1991, but even then, a Financial Emergency was not proclaimed.
1. Constitutional Law Of India, Narendra Kumar, Allahabad Law Agency, 10th Edition
2. Constitutional Law, A K Jain