. If the President of India is satisfied that a situation has arisen due to which the financial stability or credit of India or any part of its territory is threatened. He/she can declare the Financial Emergency on the aid and advise of the Council of Ministers.Article 360 gives authority to the President of India to declare a financial emergency.
A proclamation declaring financial emergency must be approved by both the Houses of Parliament within two months from the date of its issue. However, if the proclamation of Financial Emergency is issued at a time when the Lok Sabha has been dissolved or the dissolution of the Lok Sabha takes place during the period of two months without approving the proclamation, then the proclamation survives until 30 days from the first sitting of the Lok Sabha after its reconstitution, provided the Rajya Sabha has in the meantime approved it. Once approved by both the houses of Parliament, the Financial Emergency continues indefinitely till it is revoked.
Consequences of financial emergency in India
- Federal laws will overrule state legislation, and the Union is empowered to govern areas (eg. Policing) that are normally devolved to the states.
- The Union is also empowered to take over and completely control the taxation and budgetary revenue processes. Under financial emergency, the Union is empowered to have the final say in the promulgation of financial acts approved by the state legislature.
- The Union may decide to suspend some or all of the fundamental rights guaranteed by Part III (Articles 12 through 35) of the constitution – which includes freedom of equality before law and freedom of speech and expression.
- Further, the right to challenge the suspension of the above mentioned rights (the right to constitutional remedies) may also be suspended. However, this provision will not cover the suspension of Articles 20 and 21 which govern rights to personal liberty, Right to silence, freedom from double jeopardy and freedom from unlawful arrest and detention. Any individual who deems that his rights under these categories have been suspended unlawfully, can challenge the suspensions under a court of law.