Part XVIII - Emergency • Article

Article 360 Simplified: Provisions as to financial emergency

Article 360 is the 'Economic Crisis' rule. If India ever faces such a huge money problem that the country's financial stability is in danger, the President can declare a Financial Emergency. During this time, the Center can tell states how to spend money and can even reduce the salaries of government officers and judges to save the nation's economy. Note: India has never used this article so far.

Official Text

(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; MERGENCY P ROVISIONS ) (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. [(5) * * * * *] MISCELLANEOUS

Simple Meaning

Explain Like Ten

If the country faces a terrible money crisis, the President can declare a Financial Emergency. This lets the government cut salaries of civil servants and judges to save money. India has never had to use this rule.

Student Mode

Provisions for Financial Emergency. If the President is satisfied that India's financial stability or credit is threatened, he can declare a Financial Emergency. It must be approved by Parliament within 2 months. During its operation, the Union Executive can direct states to observe canons of financial propriety, reduce salaries of state/union public servants (including Supreme Court and High Court judges), and reserve state Money Bills for the President's consideration.

Example

Even during the big economic crisis of 1991, India did NOT use Article 360, showing that it is a very extreme rule that we hope never to use.

Key Takeaway

A special power to save the country if there is a total financial collapse.

FAQs

Has India ever declared a Financial Emergency under Article 360?

No. Even during the severe balance of payments crisis in 1991, India did not declare a Financial Emergency. The crisis was resolved through economic reforms and gold pledging without invoking Article 360.

Can the salary of Supreme Court and High Court judges be reduced during a Financial Emergency?

Yes. Under Article 360(4)(b), the President is explicitly empowered to issue directions for the reduction of salaries and allowances of all persons serving the Union, including Judges of the Supreme Court and the High Courts, notwithstanding normal constitutional protections.

Quiz

How many times has a Financial Emergency been declared in India under Article 360?

Answer: Never

A proclamation of Financial Emergency under Article 360 must be approved by Parliament within:

Answer: Two months