Article 360 of CoI : Article 360: Provisions as to financial emergency.

Explanation using Example

Example 1:

Scenario: Economic Crisis in a State

Situation: Imagine the state of Maharashtra is facing a severe economic crisis due to a natural disaster that has devastated its agricultural sector, leading to a significant drop in revenue and an increase in debt. The financial stability of the state is under threat, and it is unable to meet its financial obligations.

Application of Article 360:

1. Proclamation of Financial Emergency: The President of India, upon being satisfied that the financial stability of Maharashtra is threatened, issues a Proclamation declaring a financial emergency in the state.
2. Parliamentary Approval: This Proclamation is laid before both Houses of Parliament. If both Houses approve the Proclamation within two months, it continues to operate; otherwise, it ceases to operate.
3. Directions to the State: During the financial emergency, the Union government issues directions to Maharashtra to observe financial propriety. This may include measures such as:
   • Reducing the salaries and allowances of state government employees.
   • Requiring all Money Bills passed by the Maharashtra Legislature to be reserved for the President's consideration.
4. Union Government Measures: The President may also direct the reduction of salaries and allowances of Union government employees, including judges of the Supreme Court and High Courts, to manage the financial crisis.

Example 2:

Scenario: National Financial Instability

Situation: Suppose India faces a nationwide financial crisis due to a global economic downturn, leading to a significant drop in exports, a devaluation of the currency, and a severe impact on the banking sector. The financial stability and credit of the entire country are at risk.

Application of Article 360:

1. Proclamation of Financial Emergency: The President, upon being satisfied that the financial stability of India is threatened, issues a Proclamation declaring a financial emergency across the entire country.
2. Parliamentary Approval: This Proclamation is laid before both Houses of Parliament. If both Houses approve the Proclamation within two months, it continues to operate; otherwise, it ceases to operate.
3. Directions to States and Union: During the financial emergency, the Union government issues directions to all states to observe financial propriety. This may include measures such as:
   • Reducing the salaries and allowances of state government employees across all states.
   • Requiring all Money Bills passed by the state legislatures to be reserved for the President's consideration.
4. Union Government Measures: The President may also direct the reduction of salaries and allowances of Union government employees, including judges of the Supreme Court and High Courts, to manage the financial crisis.

These examples illustrate how Article 360 can be applied to address financial emergencies at both the state and national levels, ensuring financial stability and propriety during times of economic crisis.