Economic and social activities have come to a halt in the entire world including India due to the COVID-19 pandemic. Due to this, the financial catastrophe is getting worse day by day that is why Members of Parliament including; the President, the Vice-President, and the Governors of states have donated 30% of their remuneration for the next one year into the Consolidated Fund of India.

In the minds of each and every citizen of the country, there lies a significant question if a Financial Emergency can be imposed. However, Finance Minister Nirmala Sitharaman has ruled out this possibility. But, according to the Quint, Former Reserve Bank of India Governor Raghuram Rajan sees the economic fallout of the coronavirus pandemic as the “greatest emergency” India has faced since independence. There has been no instance of imposing a financial emergency in the country since its inception.

What is a Financial Emergency?

The Constitution of India talks about three types of emergencies; National Emergency in Article 352, President’s Rule in State is mentioned under Article 356 and Financial Emergency in Article 360 of the Indian Constitution. Part XVIII of the Constitution of India contains emergency provisions from Articles 352 to 360. 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 advice of the Council of Ministers.

Article 360 gives authority to the President of India to declare a financial emergency. However, according to the 44th Constitutional Amendment Act of 1978, the President’s ‘satisfaction’ is not beyond judicial review. This implies that the Supreme Court can review the declaration of Financial Emergency.

A proclamation of financial emergency must be approved by both the Houses of Parliament i.e Lok Sabha and Rajya Sabha within two months from the date of its issue.

Once approved by the Lok Sabha and the Rajya Sabha, the Financial Emergency continues indefinitely till it is revoked. This implies two things:

  • Repeated Parliamentary approval is not required for its continuation.
  • There is no maximum time limit prescribed for the operation of a financial emergency.

A resolution approving the proclamation of financial emergency can be passed by either House of Parliament (Lok Sabha or Rajya Sabha) only by a simple majority.

A proclamation of Financial Emergency may be revoked by the President anytime without any Parliamentary approval.


During the financial emergency, the executive authority of the Center expands and it can give financial orders to any state according to its own. Also, all money bills or other financial bills, that come up for the President’s consideration after being passed by the state legislature, can be reserved. Moreover, Salaries and allowances of all or any class of persons serving in the state can be reduced. Further, The President may issue directions for the reduction of salaries and allowances of:

(i) All or any class of persons serving the Union and

(ii) The judges of the Supreme Court and the High Court

Thus, during the operation of a financial emergency, the Center gets full control over states in financial matters, which is a threat to the state’s financial sovereignty.

Some critics say that provisions of financial emergency pose a serious threat to the financial autonomy of the states that is against the federal structure of the country.

-By Abhishek Khare
Legal Associate at Law Offices of Kr. Vivek Tanwar, Advocate & Associates

Leave a Reply

Your email address will not be published. Required fields are marked *

This field is required.

This field is required.


The following disclaimer governs the use of this website (“Website”) and the services provided by the Law offices of Kr. Vivek Tanwar Advocate & Associates in accordance with the laws of India. By accessing or using this Website, you acknowledge and agree to the terms and conditions stated in this disclaimer.

The information provided on this Website is for general informational purposes only and should not be considered as legal advice or relied upon as such. The content of this Website is not intended to create, and receipt of it does not constitute, an attorney-client relationship between you and the Law Firm. Any reliance on the information provided on this Website is done at your own risk.

The Law Firm makes no representations or warranties of any kind, express or implied, regarding the accuracy, completeness, reliability, or suitability of the information contained on this Website.

The Law Firm disclaims all liability for any errors or omissions in the content of this Website or for any actions taken in reliance on the information provided herein. The information contained in this website, should not be construed as an act of solicitation of work or advertisement in any manner.