The Financial Emergency
A country already in an economic slowdown, all activities at halt plagued by fears of the Coronavirus pandemic, the free messaging services of WhatsApp, and the audience that would believe everything it gets on its phone. All this became perfect ingredients for fake news doing rounds on 24th March 2020. The message, also picked by some media houses, said that the Prime Minister Office would impose ‘Financial Emergency’ in the country. Though this information was busted a few hours later, us as citizens need to know what would happen in case the ‘Financial Emergency’ is imposed upon the nation. The provisions would help us understand the implications of what has never been invoked in the independent history of India.
Article 360 of the constitution mentions ‘Financial Emergency’. However, the constitution lays no clear basis for invoking a financial emergency. It only mentions that if any financial stability or credit situation is threatened, a financial emergency can be imposed. The power to impose this emergency vest with the President, if such action is advised by his council of ministers. The President would only be a stamp of approval while the government takes this decision. However, the decision can be challenged in court.
If the financial emergency is imposed, the parliament will also have its say. The parliament will have to approve this emergency within two months from the date of imposition. So had this emergency imposed on 24th March, Prime Minister Narendra Modi would have to seek Parliament’s approval by 24th May from both the houses. If for some reason the Lok Sabha is dissolved, Rajya Sabha will have to approve the emergency. Approval of Lok Sabha has to be taken within 30 days of the election of the new Lok Sabha members. Once approved, the financial emergency will continue until the President proclaims to remove it. The removal needs no parliamentary approval.
If a financial emergency is approved by the parliament, the Central government takes absolute control over the financial affairs of the country. It can issue a direction to state governments regarding their conduct on financial matters. If some money bill is passed by the state, it has to be approved by the President of the country. The President would act on the advice of the Council of Ministers. In short, the Central Government will approve what kind of bill a state is allowed to pass, and what it cannot. It also gives powers to the government to reduce the salaries of all the government employees throughout the country. It means that even if the employees work for some State Government, they too will not be spared. It gives the government the powers to reduce salaries of the armed forces, and the judges of the Supreme Court and High Courts.
However, unlike previous experiences of the country, there will be no effect on the fundamental rights of the citizens.
One major flaw in the law associated with the financial emergency is that it has no specification, unlike other laws. ‘Financial Instability’ is a loose word and the governments can twist this at will. India has a federal structure with a power shift towards the center. However, this law hinders in the autonomy of the elected governments of the state. Their powers to decide on the best interest of there are curtailed. Moreover, the Central Government manages the economy in India. Even the well-performing states will be bound to face the brunt of the mismanagement and failure of the Central Government.
The Final Word
The Financial Emergency clauses were inspired by the ‘National Recovery Act 1933’ of the United States of America. It created such provisions to tackle the menace of the Great Depression of 1930. However, in India, the law was never brought to use. Despite seeing a humiliating financial crisis in 1991, and battling hunger and war together in 1965, India never invoked the provisions even partially. The act of declaring a financial emergency brings a bad name to the country. India is the world’s fifth-largest economy. Any such action should be well thought; as it would affect us, the credibility we have, and our trading partners in the worst possible manner. Emergency, in general, is a bad sign because it curtails basic freedom, be it fundamental rights or the right to buy, sell, and spend. Such actions are never good for the reputation and betterment of a nation. Yet, desperate times, desperate measures.