Article 360

Article 360 states that the state authority will be transformed under the control of the President in case of identification of poor stability of the financial situation.

The provinces of India can be proclaimed by financial emergency in case of identification of any kind of financial instability in the part of India or in the entire territory by the president of India. Based on this basic information, the study has intended to explain other facts regarding Article 360. In addition, the study will further include an overview of financial stability along with aligning the facts that turn out to be the subject to judicial review. 

Provisions as to Financial Emergency

In such a country where any particular state or the entire country faces an economic slowdown, the activities regarding credit transfer at a halt are plagued. The arrival of such a situation inspires the President of India to take control of all kinds of financial transactions, of all the states or the particular states where the economical growth has been slowed at a minimal rate. The regulations and the process of such proclamation are registered in Article 360 of the Indian constitution. However, as per some critiques, the Indian constitution does not consist of any particular basis on which the financial emergency can be proclaimed. 

Financial Stability: Overview

The states and the union territory have the stability of the finances referred to as the financial stability. Based on this, the ground for declaration of financial emergency is stated in the below section:

  • If the credit of entire India or of any part of India is in danger 
  • In such situations where the executive and legislative power has been handed over to the central ministries
  • Invocation of financial instability of any states

Based on the previously mentioned situations, the president of India will be able to raise a bill regarding the proclamation of financial emergencies in both the houses of the Parliament.

Proclamation Make a Declaration to That Effect 

The proclamation needs to be supported by both the houses of the Indian parliament within two months prior to the activation of such a financial emergency. On the other hand, if the bill is raised in the Parliament when the Lok Sabha is going through the process of dissolution then only the proclamation will have the permission of servicing for 30 days more than the usual proclamation can survive. As per the demand of the situational approach, the financial emergency can be extended. The subsequent proclamation can be revoked to support the situation as well. 

Parliamentary Approval and Duration of Financial Emergency

The Parliament, from the date of the imposition in the Lok Sabha, requires the bill to gain the support of the central ministry along with the state governing bodies as well within two months. In case Lok Sabha dissolution takes place at that time, the Rajya Sabha will be responsible for approving the emergency. In such situations, the approval from the Rajya Sabha needs to be processed within 30 days of the imposed date of the particular situation of financial emergency for the particular parts of the state or the entire territory of India. 

Financial Emergency Subject to Judicial Review 

The 38th Amendment Act 1975 has stated that the proclamation of such a financial emergency cannot be a subject of questioning in a court of law. The judicial review has been allowed by the 44th amendment of the law in 1978. In addition, some consequences of the proclamation have been included as well. The Union Government might offer some solution to the state government regarding the financial issue to support resolving the financial problem. The president can even ask the state council for reserving all kinds of money bills. The President of India can direct the reduction of salaries of the government officials. 


The study has included information regarding how the central government of India, especially by the president, can proclaim the financial emergency. The study has stated that the power of the judiciary and legislature regarding maintaining the financial activities will be suspended for the state and union territories of India. It has been stated too in the regulation that if the financial emergency will be finalised and proclaimed by the central ministry under the order of the President, the president will take absolute control of the state finances.


Frequently asked questions

Get answers to the most common queries related to the UPSC Examination Preparation.

What is a financial emergency?

Ans : In some cases, the president of India can be satisfied with the information that a particular...Read full

How many times are financial emergencies applied in India?

Ans : It has been seen in the history of independent India that the financial emergency was not app...Read full

Are fundamental rights suspended during a financial emergency?

Ans : In any case, the fundamental rights of the people cannot be suspended as it goes against the ...Read full