Article 360 of the Indian Constitution states that if the president is convinced that a situation has arisen that threatens the financial stability or credit of India or a portion of its territory, he may issue a proclamation to that effect.
The Effects :
If the parliament approves a financial emergency, the central government assumes complete control over the nation’s financial affairs. It has the authority to issue directives to state administrations regarding their financial conduct. If a state passes a financial law, it must be approved by the President of the country. The President would act on the Council of Ministers’ advice. In brief, the Central Government will determine which types of legislation a state can and cannot enact. It also grants the government the authority to reduce the salaries of all government employees nationwide. It means that even if the workers are employed by a state government, they will not be exempt. It grants the government the authority to reduce the salaries of the armed forces, Supreme Court, and High Court judges.
Duration:
The proclamation of financial emergency will be in effect for two months, and unless extended by the president, will expire at the end of the two-month period.
The Constitution of India is unique in that it contains a comprehensive plan for swift reorganization of the government during times of peace and national emergency. These provisions may seem notably out of place in a constitution that claims to be founded on democracy and fundamental rights. However, the provision must be examined in light of India’s history. India had her in its heyday whenever the central authority weakened. The constitution protects against forces of disintegration for good reason. There may be events that imperil the very existence of the state, and if there are no safeguards against such occurrences, the state and all that is desired to remain fundamental and unchanging will be washed away.
During a financial emergency, the federal government obtains complete authority over the states in all financial matters, according to critics.
This poses a threat to the financial sovereignty of the state.
According to H.N. Kunzru, the financial emergency provisions pose a grave risk to the financial independence of the states.Individuals’ Constitution of India-guaranteed Fundamental Rights may be infringed upon during a state of emergency for the purpose of exercising power. To deter political gains and give way to political interest, the validity of actions must be examined. In spite of the violation of emergency provisions’ powers, they continue to play an important role in India’s current circumstances, despite the fact that the issue remains controversial in the country.
Effects of the Financial Crisis on the Common Man:
Invoking a financial emergency can have far-reaching effects on the average citizen. The primary implication of this emergency would be the Central Government’s complete control over the nation’s financial decisions.
Therefore, the government can take actions such as devaluing the currency to increase foreign exchange reserves, increasing import duties, and other inflationary costs that will directly affect the cost of living for the common man.
In addition, the government can take actions such as slashing subsidies, raising taxes, reducing or modifying social welfare programs, etc. The government will also be able to restrict account holders’ withdrawals from their bank accounts, which will have a significant impact on the overall cost of living and standard of living. The overall economic disruption would result in an economic decline and job losses, which would ultimately increase unemployment, which is already one of India’s primary concerns.
Declaring a financial emergency has a negative impact on the country’s reputation and image. India is the fifth-largest economy in the world, and any such action would have the worst conceivable effect on the country, its credibility, and its trading partners. An emergency is a negative indicator because it restricts fundamental freedoms, such as the right to purchase, sell, and spend. Such actions are never beneficial to a nation’s reputation and development. Yet, dire circumstances call for desperate measures.