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Subject: Emergency

  • Under what circumstances can the Financial Emergency be proclaimed by the President of India? What consequences follow when such a declaration remains in force?

    The framers of the Indian Constitution, drawing from the experience of political and economic instability during colonial times, provided for Financial Emergency under Article 360.

    Circumstances for Proclamation

    The President may proclaim a Financial Emergency if he is satisfied that the financial stability or credit of India, or any part thereof, is threatened.

    Such a proclamation must be approved by both Houses of Parliament within 2 months (30 days if Lok Sabha is dissolved).

    Once approved, it remains in force until revoked by the President; no maximum time limit is prescribed.

    Consequences of Financial Emergency

    Union Control over State Finances – The Union can direct States to follow financial discipline and reduce expenditure.

    Reservation of Money Bills – All State Money Bills must be reserved for the President’s approval.

    Reduction of Salaries – The President may direct reduction in salaries and allowances of persons serving the Union or State, including judges of the Supreme Court and High Courts.

    Executive Directions – Union may issue binding directions to States regarding financial propriety.

    Centralisation of Fiscal Powers – Parliament acquires a dominant role in fiscal management, subordinating State autonomy.

    Though never invoked in India, the provision of Financial Emergency underscores the precautionary design of the Constitution.

  • Account for the legal and political factors responsible for the reduced frequency of using Article 356 by the Union Governments since mid 1990s.

    Article 356 empowers the Union to impose President’s Rule in a State when the constitutional machinery fails. Between 1950-1990, it was invoked over 90 times. However, since the mid-1990s, its frequency has declined.

    Grounds of Imposition of President’s Rule

    Article 355 – Union’s duty to protect States and ensure constitutional governance.

    Article 356 – President’s Rule if State govt. cannot be carried on as per Constitution (based on Governor’s report or otherwise).

    Article 365 – If the State fails to comply with Union directions, the President may hold constitutional machinery has failed.

    Legal Factors

    The 38th Amendment (1975) made President’s Rule immune from judicial review, but the 44th Amendment (1978) reversed this, restoring judicial scrutiny.

    S.R. Bommai v. Union of India (1994) Guidelines

    Judicial Review – Proclamation under Article 356 subject to court scrutiny.

    Floor Test Rule – Majority to be tested on the floor of the House, not decided by Governor/President.

    Limits on Dissolution – Assembly cannot be dissolved before Parliament approves President’s Rule.

    Non-Arbitrariness – Political differences or administrative failures do not justify dismissal.

    Basic Structure Check – Federalism held as part of the Basic Structure; arbitrary use of Article 356 violates it.

    Subsequent Judicial Oversight – SC interventions in Uttarakhand (2016) and Arunachal Pradesh (2016) reinstated governments, reinforcing judicial limits on Centre’s power.

    Evolving Constitutional Conventions – Growing acceptance that President’s Rule is an exceptional remedy of last resort.

    Political Factors

    Rise of Coalition Politics (Post-1990s) – NDA, UPA and regional coalitions ensured that Centre relied on States for stability, reducing incentive for dismissals.

    Rise of Regional Parties – Strong regional satraps made dismissal politically costly, pushing Union towards consensus-based federalism.

    LPG Reforms (1991 onwards) shifted focus from political control to economic autonomy of states. Eg – 14th Finance Commission (2015) increased States’ share of divisible tax pool from 32% to 42%, strengthening fiscal federalism.

    Maturation of Federal Culture – Growth of cooperative federal institutions (Inter-State Council, GST Council, NITI Aayog) created forums for resolving Centre-State disputes outside coercive measures.

    Stable Majority Governments in States – As governance matured, strong state leadership and regional mandates reduced chances of political instability being exploited by the Union.

    Active Role of President – In 1997, President K.R. Narayanan returned the Cabinet’s recommendation for President’s Rule in Uttar Pradesh.

    Integrity of Governors – In 1990-91, Governor Surjit Singh Barnala refused Centre’s directive to recommend President’s Rule in Tamil Nadu.

    Though the frequency of Article 356 has reduced, instances like Maharashtra (2019) show it is still misused. Thus, the way forward is

    Punchhi Commission

    Localized use of Article 356 – applicable to a district or part of a district, not the whole State.

    Emergency duration should be limited to 3 months only.

    Sarkaria Commission

    Last resort – Invoke Article 356 only when all alternatives fail.

    Prior warning to the State and exploration of alternate solutions required.

    Proclamation must state material facts, ensuring Parliamentary control.

    Governor’s report should be a speaking document with wide publicity.

    Obtain State’s explanation before action.

    Federalism

  • Consider the following statements in respect of financial emergency under Article 360 of the Constitution of India

    Consider the following statements in respect of financial emergency under Article 360 of the Constitution of India:
    1. A Proclamation of financial emergency issued shall cease to operate at the expiration of two months, unless before the expiration of that period it has been approved by the resolution of both houses of Parliament.
    2. If a proclamation of financial emergency is in operation, it is competent for the President of India to issue directions for the reduction of salaries and allowances of all persons serving in connection with the affairs of the Union but excluding the Judges of the Supreme Court and the High Courts.
    Which of the statements given above is/are correct?

  • Which of the following are not necessarily the consequences of the proclamation of the President’s rule in a State

    Which of the following are not necessarily the consequences of the proclamation of the President’s rule in a State?
    1. Dissolution of the State Legislative Assembly
    2. Removal of the Council of Ministers in the State
    3. Dissolution of the local bodies
    Select the correct answer using the code given below:

  • If the President of India exercises his power as provided under Article 356 of the Constitution in respect of a particular State, then

    If the President of India exercises his power as provided under Article 356 of the Constitution in respect of a particular State, then