Article 360 of Indian Constitution: Provisions as to Financial Emergency
Article 360 of Indian Constitution | Financial Emergency Article
Intro: Article 360 of Indian Constitution is a safeguard against financial crises, empowering the President to declare a financial emergency when India’s economic stability is threatened. This provision, never invoked yet, underscores the government’s capability to enforce austerity and manage financial governance during dire economic conditions. It highlights the importance of maintaining fiscal discipline and the central role of the government in preserving economic stability, reflecting the constitutional framers’ foresight in addressing potential financial disturbance.
Original Text of Article 360 of Indian Constitution
(1) 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.
[(2) A Proclamation issued under clause (1)—
(a) may be revoked or varied by a subsequent Proclamation;
(b) shall be laid before each House of Parliament.
(c) shall cease to operate at the expiration of two months, unless before the expiration of that period it has been approved by resolutions of both Houses of Parliament:
Provided 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 takes place during the period of two months referred to in sub-clause (c), and if a resolution approving the Proclamation has been passed by the Council of States, but no resolution with respect to such Proclamation has been passed by the House of the People before the expiration of that period, the Proclamation shall cease to operate at the expiration of thirty days from the date on which the House of the People first sits after its reconstitution unless before the expiration of the said period of thirty days a resolution approving the Proclamation has been also passed by the House of the People.]
(3) During the period any such Proclamation as is mentioned in clause (1) is in operation, 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, and to the giving of such other directions as the President may deem necessary and adequate for the purpose.
(4) Notwithstanding anything in this Constitution—
(a) any such direction may include—
(i) a provision requiring the reduction of salaries and allowances of all or any class of persons serving in connection with the affairs of a State;
(ii) a provision requiring all Money Bills or other Bills to which the provisions of article 207 apply to be reserved for the consideration of the President after they are passed by the Legislature of the State;
(b) it shall be competent for the President during the period any Proclamation issued under this article is in operation to issue directions for the reduction of salaries and allowances of all or any class of persons serving in connection with the affairs of the Union including the Judges of the Supreme Court and the High Courts.
Article 360 of Indian Constitution Explanation:
Under Article 360, the Constitution has provided for the imposition of the Financial Emergency in case of financial instability in the whole or any part of India. Financial Emergency has not been proclaimed so far.
Ground of Imposition
- Article 360 of Indian Constitution empowers the President to proclaim the declaration of financial Emergency if s/he is satisfied that a situation has developed whereby the financial stability or credit of India or of any part of the territory thereof is threatened.
- The 38th Constitutional Amendment (1975) made the satisfaction of the President final and conclusive and not questionable in any court. However, the 44th Amendment repealed that Provision, which means it can be challenged in Court.
Parliamentary approval
The declaration of Proclamation of Emergency must be approved (by a simple majority) by the Parliament within two months if the Lok Sabha is dissolved or gets dissolved in the period of two months without approving the Proclamation. In that case, the Emergency remains operational until 30 days after the reconstitution of the Lok Sabha.
Duration
Once approved, the financial Emergency continues indefinitely until it is revoked. No Parliamentary approval is required for its continuation.
Revocation
The Proclamation can be revoked by the President anytime by a subsequent notification. It does not require Parliamentary approval.
Effects of the Financial Emergency
During the operation of the Financial Emergency, the Union acquires full control of the financial matters of the state.
The Provision under Article 360 of Indian Constitution empowers the Union executive to direct the states:
- To observe the principles of financial propriety as may be specified in the direction.
- On any other matters which the President may deem necessary for the purpose, such as:
- A provision necessitating the reduction of salaries and allowances of all or any class of state employees;
- A provision requiring all money bills and financial bills (containing provisions under Article 207) to be reserved for the consideration of the President.
The President is empowered to issue directions for the reduction of salaries and allowances of all or any class of Union government employees as well as the Judges of the Supreme Court and the High Courts.
Criticism of the Emergency Provisions in the Constitution
Several members of the Constituent Assembly criticized the inclusion of Emergency provisions in the Constitution on the grounds of:
- Endangering the federal character of the Constitution.
- Threat to fundamental rights of the citizen.
- Concentration of power in the hands of the union executive.
- KT Shah: He described the provisions as “a chapter of reaction and regression”. As per him, two thoughts influence these provisions: (a) to arm the Union with special powers against states and (b) to arm the state against the people.
- HV Kamath: Expressing his apprehension, he stated that “we are laying the foundation of a police state and a totalitarian state, a state which is completely opposed to the ideals we have upheld in the last few decades”.
- TT Krishnamachari: He feared that these provisions could lead to a “constitutional dictatorship”.
- Dr BR Ambedkar: He also thought that these provisions could be misused. He observed, “I do not altogether deny that there is a possibility of the Articles [related to Emergency] being abused or employed for political purposes.
- However, many members supported the provisions, such as Mahabir Tyagi, who called these provisions a “safety valve” and hence would help maintain the Constitution.
The Emergency provisions in a democratic state are meant for the preservation of vital values of democratic society, which can be endangered in exceptional circumstances. It is a “safety valve” to protect a nation’s unity, integrity and sovereignty. It must not be exercised to undermine democracy, centralize power or crush dissent.
The rule of law is a fundamental feature of democracy, in the absence of which lawlessness prevails, and the government’s lawlessness, when there is no authority to question government, is even more dangerous.
List of Amendments in Article 360 of Indian Constitution:
| Amendment | Description |
| 38th Constitutional Amendment, 1975 | The act made the satisfaction of the President final and conclusive and not questionable in any court |
| 44th constitution Amendment Act, 1978 | The Act repealed that Provision, which means it can be challenged in Court. |
