Financial Emergency

♤ The President proclaims Financial Emergency under article 360, if he is satisfied that the financial stability or credit of India, or any part thereof is threatened.

♤ This proclamation must be approved within two months from the date of its issue by the Parliament. If the Lok Sabha is dissolved within that period of two months, the proclamation has to be approved within thirty days of the first sitting of the newly constituted Lok Sabha. It can continue for an indefinite period till it is revoked by the President.

♤ During the period of Financial Emergency, the President can give directions to the States to observe the canons of financial propriety. He can issue directions to reduce the salaries and allowances of all or any class of persons serving under the State, or the Union including the judges of the Supreme Court and High Court.

♤ All money and financial bills passed by the State Legislature can be reserved for the

President’s consideration during the period of Financial Emergency.

A state of Financial Emergency has not been declared so far in the country.