Question

Q. In the context of Indian polity, consider the following statements about the “Financial emergency”.

Which of the above statements is/are correct?

• A.
  1 and 2 only
• B.
  2 only
• C.
  1 and 3 only
• D.
  3 only

Answer 1

The correct option is D

3 only
Explanation:

Statement 1 is incorrect:
Article 360 empowers the president to proclaim a Financial Emergency if he 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.
Such a proclamation must be approved by both the Houses of Parliament with simple majority within 2 months from the date of its issue.

However, if the proclamation of Financial Emergency is issued at a time when the Lok Sabha has been dissolved or the dissolution of the Lok Sabha takes place during the period of two months without approving the proclamation, then the proclamation survives until 30 days from the first sitting of the Lok Sabha after its reconstitution, provided the Rajya Sabha has in the meantime approved it.
Once approved by both the Houses of Parliament, the Financial Emergency continues indefinitely till it is revoked.
A proclamation of Financial Emergency may be revoked by the president at any time by a subsequent proclamation. Such a proclamation does not require parliamentary approval.

Statement 2 is incorrect:
The consequences of declaring the financial emergency will affect the centre-state relations in the sphere of finance. For example, all the money bills or financial bills may be reserved for the consideration of the President after they are passed by the legislature of the state.
But it does not mean that the legislative power in passing the money bills of the state is taken by the centre during the financial emergency.

Statement 3 is correct.
Even though India experienced a Balance of Payments crisis in 1991, no Financial Emergency has been declared so far.