Every time India passes through an economic crisis, some opposition leaders promptly opine that we are gripped by a “Financial Emergency ”. But, to be candid, “Financial Emergency” is a technical term in our Constitution and it cannot be applicable to most such situations.

Our Constitution deals with three types of emergency. Under Article 352, the President can proclaim it due to war, foreign aggression or internal disturbance. If he is satisfied that the security of India or any part thereof is threatened by such event, he can proclaim National Emergency.

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Secondly, Article 356 provides that if the President is, on receipt of a report of the Governor or otherwise, satisfied that constitutional governance in the relevant province is at stake, he can proclaim Constitutional Emergency and impose President’s Rule over the state. Then, if, under Article 360, the President feels that a grave situation has arisen whereby the financial stability or credit of India or any part of it is badly threatened, he may proclaim a Financial Emergency. During Financial Emergency, there can be a drastic change in the financial arrangement —

1. The President may give direction to any state to observe certain
principles in public expenditure;

2. Salary of Union or state government servants may be temporarily
reduced;

3. Money bills of the state legislature may be reserved for the President’s assent and

4. The allocation of revenue between the centre and states may be substantially altered by the President.

Such a proclamation of the President will cease to operate at the expiration of two months unless, before the end of that period, it is passed by both the Houses of Parliament. However, if the Lok Sabha is dissolved before the time of the issue of such proclamation, it continues to operate till 30 days after the re-assembly of the new Lok Sabha, provided that the Rajya Sabha has approved it.

The Constitutional Emergency may continue for six months and Parliament can renew it by a period of six months up to a maximum period of three years. But, no maximum timelimit has been mentioned in the case of Financial Emergency.

So far, there were four occasions when National Emergency was proclaimed. During the Chinese aggression (1962), Indo-Pak Wars (1965 and 1971) and perceived internal chaos (1975) such Emergency was proclaimed. The second type of Emergency-power has been more abused than used, because it was proclaimed on more than one hundred occasions. But, as Dr S C Kashyap has observed, there has been no occasion for promulgation of the Financial Emergency. Thus Article 360 till now remains as a dead-letter of the Constitution. However, some critics have mercilessly cried down this provision.

According to them, it has unnecessarily increased presidential power. Significantly, the Constitution has not mentioned the specific situation in which he can rightly exercise such power. It has rather left the matter to the subjective satisfaction of the President.

Secondly, according to Dr BC Routh, such a provision unduly militates the spirit of democracy and vests the Centre, whose advice binds the President, with dictatorial power.

Thirdly, Dr HH Das thinks that the Constitution has not provided for any specific safeguard against the misuse of such central authority. As such, the autonomy of the units may be alarmingly destroyed. Moreover, Dr KV Rao has opined that ‘far from restoring confidence, it may lower the credit, create a panic and, thus, itself bring about a financial instability’.

Fifthly, the ‘satisfaction’ of the President in this matter is final and conclusive – it shall not be questioned in any court of law. As such, it is really an unimaginable affair.

Above all, DR BR Ambedkar, the Chief architect of the Constitution, opined that this provision followed the pattern of the National Recovery Act of the USA which sought to deal with the Great Depression of 1931. But, the logic is not at all solid, because Article 360 is applicable to a different situation. In fact, the MRA was merely a Parliamentary law which was withdrawn after the economic recovery, but Article 360 is an organic part of our Constitution and so it cannot be altered without an enabling amendment.

Of course, there is much truth in the words of the critics. But, truly, they have little relevance with the situations we have faced in the recent past. They are actually wide of the mark for various reasons. . Thus while we may, from time to time, face economic crises but, Constitutionally, they cannot be financial emergencies in terms of Art. 360.

(The writer is an author, Griffith Prizeman and former Reader, New Alipore College, Kolkata)