Is there a need for Financial Emergency?

Earlier in March 2020, a 21-day lockdown imposed across the country has effectively led to the suspension of fundamental rights of citizens and the same can be done only through the imposition of emergency as per the Constitution and not an order under the Disaster Management Act (Act) as was done by the central government, a petition filed before the Supreme Court on Thursday argued.

• The petition filed by Centre for Systemic Accountability and Change claimed that the divergence in steps taken by various state governments have led to confusion and lawlessness in the country and a unified command between central and state governments is required to deal with the situation.
• “This is the biggest emergency in independent India and it must be addressed as per Constitutional provisions through unified command between Central and State Governments”, the petition stated.
• It, therefore, sought imposition of financial emergency under Article 360 of the Constitution, a step, the petitioner argued was essential to tackle the threat of coronavirus and to ensure the recovery of the Indian economy after the lockdown is lifted.
• The central government on March 24 invoked the provisions of the Disaster Management Act to impose a three-week lockdown in the country. The National Disaster Management Authority (NDMA) under the chairpersonship of Prime Minister Narendra Modi exercised its powers under Section 6(2)(i) of the Act and passed an order directing various departments and ministries of the central and state governments to take measures to prevent the spread of Covid 19.
• The petitioner submitted that even after the announcement of lockdown, different states and police authorities were continuing to take their own actions under Section 144 of the Code of Criminal Procedure, 1973, in the guise of orders issued by the central government. This, it was claimed, amounts to a “constitutional fraud”.
• “Divergence of steps, taken by different authorities, is causing confusion and lawlessness (and) in no way can be (a) solution to a problem as grave as COVID-19”, the petition said.

Understanding the Concept of Financial Emergency

• Well, a financial emergency occurs when a country is dealing with severe economic issues. The Finance Minister of India says that no crisis is going around right now (as per March 2020) in the country. Here is something that you need to know what is a financial crisis.
• If the President of a country feels like the economy of the country going down the drain and failing to cope up with the expected time duration, is falling under debt and there are other issues affecting it as well, then it becomes a national emergency. There are other causes as well which if not cured with time, may result in a national emergency. 
• There is an essential proclamation that draws under the whole of the emergency which takes place. If the proclamation works and President invokes the system, then the country can fall under the financial crisis.
• 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 advise of the Council of Ministers.
• Article 360 gives authority to the President of India to declare a financial emergency.
• But keep in mind that the 44th Constitutional Amendment Act of 1978 says that the President's 'satisfaction' is not beyond judicial review. It means the Supreme Court can review the declaration of Financial Emergency.

Parliamentary Approval and Duration of the Financial Emergency

• A proclamation of financial emergency must be approved by both the Houses of Parliament within two months from the date of its issue.
• Once approved by both the Houses of Parliament, 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 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.

How is the financial emergency in India imposed?

 There are various factors that are taken into account here:-

Based on the President’s rule

• If the President thinks that the country is falling into credit, and there is a lot of debt that cannot be repaid instantly or within a short duration, then the financial emergency is announced. The President of the country is the one who addresses the issue and orders the government to take the required actions.

There is an essential time limit

• The basic time limit is a source that works on the basis of the issue of the order. If the President makes sure that there is the order issued onto the name, then the Parliament will take a review. After the discussion, if the bill is still not passed then, it can be made into another count. If the order does not take place in around for more than thirty days later, the proclamation may cease to exist. 

How is the country affected as a whole on the basis of the case?

• During the period of proclamation, there is a set of the incident and a rule which is set. On the basis of that, the President and the government of the country act accordingly and comes forward with a discussed approach to handle the crisis. It is entirely for the state to understand the whole base. 
• If there are any directions or guidelines to be given by the President, then the work is planned and executed appropriately. And then there are a lot of other orders which are imposed right there.
•  During any type of financial emergency in any nation around the globe, a lot of cooperation, proper execution of plans, and prioritizing the subject is important. On the entire note, the state then declares the essential sources which are required to function under such a crisis. The entire constitution is hampered during a financial crisis.
•  During a financial emergency, there are many other cases that are taken in. It is the base of the President’s sole discretion and his rule, which is set. These are the basic things that take place when such a situation occurs.
• During the financial emergency, the executive authority of the Center expands and it can give financial orders to any state according to its own.
• 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.
• Salaries and allowances of all or any class of persons serving in the state can be reduced. 
• The President may issue directions for the reduction of salaries and allowances of;
  • All or any class of persons serving the Union and
  • The judges of the Supreme Court and the High Court

 Other Emergency Aspects

A state of emergency in India refers to a period of governance that can be proclaimed by President of India during certain crisis situations. Under the advice of the cabinet of ministers, the President can overrule many provisions of the Constitution, which guarantees Fundamental Rights to the citizens of India.

In addition to Financial Emergency, President can declare 2 more types of emergencies:

•         National emergency (Article 352)
•         State emergency (Article 356)

National Emergency:

It can be declared on the basis of external aggression/armed rebellion in the whole of India/part of its territory.

Instances-

•  It needs to be approved by both the Houses of Parliament within a month by special majority.
• Duration- It can be extended for up to 6 months further indefinitely by resolutions in 6-months increments.
• Effect- Many Fundamental Rights of Indian citizens can be suspended. The federal system of governance becomes unitary.

STATE EMERGENCY/ PRESIDENT’S RULE: 

• It can be declared in any state of India under article 356 on the recommendation of the Governor of the state. It must be approved by the Parliament within 2 months.
• Duration- It is imposed for an initial period of 6 months and can last for a maximum 3 years with repeated Parliamentary approval and beyond that period a Constitutional Amendment is required.
• Effects- The President takes over the Executive and Governor administers the state in the President’s name. The Parliament makes laws on 66 State subjects and all money bills are referred to the Parliament. The Legislative Assembly can be dissolved/ suspended. There is no effect on Fundamental Rights.
• Instances- It has been declared in every state of India except Chhattisgarh and Telangana.

Conclusion:- 

All the Members of Parliament including the President, the Vice President, and the State Governors have decided to accept a 30% pay cut for the next year.
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. Earlier, a serious financial crisis had arisen in India in 1991, but even then a Financial Emergency was not announced. Therefore, even at this time, the government should make a conscious decision in this regard, although the whole country stands together with the government to deal with any situation due to the COVID-19 pandemic.

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