Significance of Financial Emergency
If a country is facing financial instability or crisis then the declaration of the provisions of Financial Emergency can help that country to easily overcome such situation. According to Dr. B. R. Ambedkar, Article 360 of the Indian Constitution followed the National Recovery Act, 1933 of the US which empower the President to make similar provisions to lessen the difficulties of the American people due to the Great Depression of the 1930s.
Imposition of Financial emergency
According to Article 360 of the Indian Constitution, the President may declare a Proclamation of financial emergency if he considers that the financial stability of India or any part of its territory is in jeopardy.
Approval of Parliament and the time period of financial emergency
According to Article 360(2) of the Indian Constitution, the declaration of financial emergency must be ratified by both Houses of Parliament within two months of its issuance. A financial emergency, if approved by both Houses of Parliament, lasts indefinitely until it is repealed. Two things are implied by this:
- Its continuance does not need repeated Parliamentary approval.
- The function of a financial emergency is not subject to any time limits.
A Resolution approving the declaration of a financial emergency may only be carried by a simple majority in either House of Parliament (Lok Sabha or Rajya Sabha). The President can rescind a proclamation of a financial emergency at any moment without parliamentary agreement.
Outcomes of a financial emergency:
- After the Parliament approves the state of emergency, the Union assumes complete control of the country’s financial affairs. The Union Government may provide financial directives to any of the states, and the President may ask the states:
- to cut the pay and benefits of all or any class of government employees.
- to hold all money bills in reserve for consideration by Parliament once they have been enacted by the State Legislature.
- To reduce the salaries and allowances of central government officials, including those of Supreme Court and High Court judges.