Actual Article
Article 360: Provisions as to financial emergency
(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 aforesaid 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 a provision requiring—
- (i) the reduction of salaries and allowances of all or any class of persons serving in connection with the affairs of a State;
- (ii) the reservation of all money bills or other financial bills 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 such Proclamation 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.
UPSC Notes for Article 360
Explanation:
- Declaration of Financial Emergency: Article 360 allows the President to declare a financial emergency if he is satisfied that the financial stability or credit of India or any part of its territory is threatened.
- Parliamentary Approval: The Proclamation must be laid before each House of Parliament and will cease to operate after two months unless approved by both Houses. If the Lok Sabha is dissolved, the Proclamation must be approved within thirty days of its reconstitution.
- Union’s Executive Authority: During the financial emergency, the Union’s executive authority extends to giving directions to States to observe financial propriety and other necessary directions.
- Salary and Allowance Reduction: The President can direct the reduction of salaries and allowances of individuals serving in connection with the affairs of a State or the Union, including judges of the Supreme Court and High Courts.
Key Points:
- Financial Stability: Ensures the financial stability and credit of the country by allowing central intervention during financial crises.
- Temporary Measures: Provides temporary measures to restore financial stability, subject to parliamentary approval.
- Wide-Ranging Powers: Grants the President significant powers to issue financial directions and reduce salaries, highlighting the severity of a financial emergency.
Important Cases and Commissions Related to Article 360
Cases:
- No landmark Supreme Court cases specifically interpreting Article 360, as a financial emergency has never been declared in India.
Commissions:
- Sarkaria Commission (1983): Discussed the use of emergency provisions, including financial emergency, and recommended safeguards to prevent misuse.
- Punchhi Commission (2010): Suggested measures to ensure transparency and accountability in the use of emergency powers, including financial emergency provisions.
Important Reports Related to Article 360:
- Sarkaria Commission Report: Emphasized the need for judicial and legislative oversight to prevent the misuse of emergency provisions, including Article 360.
- Punchhi Commission Report: Provided recommendations for safeguarding against the misuse of financial emergency powers and ensuring their judicious application.
Previous Year Prelims Questions Related to Article 360
- (UPSC Prelims 2016) What does Article 360 of the Indian Constitution provide for?
A. Proclamation of a financial emergency
B. Proclamation of a national emergency
C. Proclamation of President’s Rule in a State
D. Suspension of fundamental rights Correct Answer: A. Proclamation of a financial emergency - (UPSC Prelims 2018) Under Article 360, who can declare a financial emergency?
A. The Prime Minister
B. The President
C. The Chief Justice of India
D. The Governor Correct Answer: B. The President
Previous Year Mains Questions Related to Article 360
- Mains 2016: “Discuss the provisions of Article 360 regarding the declaration of a financial emergency. How do these provisions ensure the financial stability of India during crises?”
- Mains 2019: “Evaluate the role of parliamentary and judicial oversight in the context of Article 360. How effective are these safeguards in preventing the misuse of financial emergency powers?”
Additional Insights:
- Preventive Measure: Article 360 serves as a preventive measure to ensure the financial stability of the country, providing the Union with the necessary powers to address financial crises effectively.
- Checks and Balances: Parliamentary approval and the temporary nature of the measures ensure that the powers granted under a financial emergency are not misused and are subject to oversight.
- Unprecedented Provision: The fact that a financial emergency has never been declared highlights the robustness of India’s financial management systems but underscores the importance of understanding this provision as a safeguard.
Understanding Article 360 is crucial for UPSC aspirants as it provides insights into the constitutional provisions for declaring a financial emergency, highlighting the balance between ensuring financial stability and maintaining democratic oversight. This knowledge is essential for both preliminary and main examinations, offering a comprehensive understanding of the mechanisms ensuring the protection of India’s financial stability within the Indian Constitution.