Financial Emergency and its Effects on The Country

Suppose there is a situation where there is a threat to financial stability. In that case, events due to which ratings of credit of India deteriorate, or the territory is threatened. The current account deficit has grown significantly, leading to a decrease in GDP, so declaring a Financial Emergency can assist that government in quickly resolving the situation. According to Dr B. R. Ambedkar, Article 360 of the Indian Constitution was modelled after the United States’ National Recovery Act of 1933, which empowered the President to enact similar legislation to help the American people cope with the Great Depression of the 1930s. The term “financial instability” can be applied to a wide range of circumstances in a country.

Provisions as to financial emergency

Article 360 empowers the President to declare a financial emergency by Proclamation if he believes that the financial stability or credit or any part of its territory is threatened or in jeopardy. It must be presented to both Houses of Parliament, and unless authorised by a vote of two chambers, it must cease to operate after two months. If the Lok Sabha has been dissolved at that time or during the two-month term, the Rajya Sabha must approve the dissolution in the meantime. 

The declaration of a financial emergency is valid for 30 days from the newly elected Lok Sabha’s first session.

1. By a subsequent Proclamation, it may be withdrawn or modified;

2.  Be presented to each House of Parliament;

3. Shall cease to operate two months after it is issued unless resolutions have approved it of both Houses of Parliament before the expiration of that period: Provided, however, that if any such Proclamation is issued at a time when the House of the People has been dissolved, or the dissolution of the House of the People occurs during the two months.

Revoking Financial Financial Emergency

• Suppose the Council has passed a resolution approving the Proclamation. In that case, The Proclamation will expire thirty days after The House of the People reconstitutes unless the House of the People votes a resolution consenting to the Proclamation before the thirty days of its expiration.

• During the period in which any such Proclamation is in effect, the executive authority of the Union shall extend to the giving of directions to any State to observe such canons of financial propriety as may be specified in the directions, as well as the giving of such other directions as the President may deem necessary and adequate for the purpose.

• The President is provided with the authority to mark out plans of cutting salaries and allowances of any class serving in connection with the Union’s affairs, including the Judges of the Supreme Court and High court, when the Proclamation is in effect.

Effects of Financial Emergency 

1. During a financial emergency, the Center’s executive authority expands, allowing it to issue financial orders to any state by its policies. 

2. All money bills and other financial bills that come up for the President’s consideration after the state legislature has passed them can be reserved. 

3. Salaries and allowances for all or any class of state employees could be reduced. The Telangana administration has agreed to reduce staff salaries by 10% to 75%. All pensioners in the state would have their salaries cut by half.

4. The President has the authority to issue directives reducing the salaries and allowances of; 

• Any types of people who serve the Union; 

• Supreme Court and High Court justices

Criticism

• The federal character of the Constitution will destroy, and the Union will become all-powerful. Fundamental rights will become obsolete, and the democratic foundation will shatter.

• The state’s powers will be concentrated entirely in the hands of the union executive, both in the Union and in the Units and will revoke financial autonomy. The President will ascend to dictator status.

• ‘The financial emergency measures pose a major threat to the financial autonomy of the States,’ according to H N Kunzru. The mishandling and use of the Constitution’s Articles for political goals was also noted by Dr B.R. Ambedkar, the Chief Architect of the Indian Constitution. Citizens’ fundamental rights will be rendered meaningless due to emergency provisions; it has been noticed.

Conclusion 

The President is given broad powers to deal with threats to India’s financial stability or credit and other extraordinary events under the Emergency Provisions. Any abuse of these authorities has the potential to destabilise democracy. However, the Constitution’s actual operation for more than five decades has proved that emergency powers were almost always employed in the country’s best interests, except for a few instances which manufactured an emergency for political reasons. Despite the misuse of emergency provisions in some states, there is widespread agreement that emergency provisions have a role in India’s current circumstances.