top of page

Financial Emergency in Indian Consitution

Financial Emergency
Financial Emergency


The concept of Financial Emergency is detailed in Article 360 of the Indian Constitution. This provision is a tool given to the President of India to deal with a situation where the financial stability or credit of India or any part thereof is threatened.

Unlike the more commonly discussed National Emergency (Article 352) and President's Rule (Article 356), a Financial Emergency has never been declared in the history of independent India, making it a significant yet underexplored aspect of constitutional law.


Grounds for Proclaiming Financial Emergency

Article 360 allows the President to declare a Financial Emergency if he is satisfied that the financial stability or credit of the nation is in jeopardy.

This can include scenarios such as a severe financial crisis that threatens the economic fabric of the nation or a situation where the government is unable to meet its financial obligations.

The declaration is subject to parliamentary approval and must be presented before both houses of Parliament within two months.

Provisions During Financial Emergency

Once a Financial Emergency is declared, the Union government acquires extensive powers to direct any state on financial matters.

This includes the ability to reduce salaries and allowances of all or any class of persons serving in the state, including judges of the Supreme Court and High Courts. Additionally, all money bills or other financial bills require the President's consideration before they are introduced in the state legislature.

Impact on the Centre-State Relations

The declaration of a Financial Emergency can significantly alter the balance of power between the Centre and the states.

The Centre gains the authority to issue directives regarding financial management and the maintenance of financial stability, which could include measures such as restructuring state debts or reducing expenditures.

This centralization of power, though temporary and crisis-driven, is a shift from the usual federal structure where states have significant autonomy.

Judicial Review and Safeguards

The imposition of a Financial Emergency is subject to judicial review. The courts retain the power to examine the basis of the proclamation and assess whether the circumstances justified the declaration of emergency.

This is a critical safeguard designed to prevent misuse of power. Additionally, the requirement that the proclamation must be approved by both houses of Parliament every six months adds a layer of legislative oversight that acts as a check on executive authority.


0 views0 comments

Recent Posts

See All


bottom of page