How Many Times Have Financial Emergencies Been Declared in India

Introduction:

Financial emergencies in India can be defined as a threat to the Indian economy. Due to war or pandemic-like situations, a financial crisis may arrive and the economy of a country may fall. For this, the president of India may call for a Financial Emergency in the country under Article 360, according to the Indian constitution.

The 38th Amendment Act of 1975, states that if the country is under some financial instability or financial threat then the President of India can declare Financial Emergency in the country. The decision made by the President is taken as the final decision, however, the decision is made to the satisfaction of all the cabinet members and reviewed by the judiciary. But, the 44th Amendment Act of 1978 states that if the council members find the decision dissatisfactory then the decision can be taken under judicial review.

Proclamation of Financial Emergency in India:

The financial emergency had never been declared in India to date. But, conditions similar to the financial crisis had been faced by India. The Indian Economic Crisis of 1991, was one such incident where the country was under serious economic crisis. The Indian economy was under a serious financial crisis. The condition was such that the foreign exchange had depleted and the value of the rupee fell. The country had left with very less amount of funds to raise imports in the country. The situation for calling out a financial emergency arrived but had not been declared.

The next such condition arrived during the period of lockdown in 2020, the Covid-19 outbreak. The Center for Accountability and Systematic Change (CASC) filed a writ petition, requesting to declare a financial emergency in India by seeing the pandemic situation. However, the petition was rejected even though the most serious condition had not led to the declaration of a Financial Emergency in the country.

Important note

The straight answer to the title of the article is NO. India had never declared a financial emergency to date.

Duration of Financial Emergency

Once the declaration is approved by both Lok Sabha and Rajya Sabha the decision is forwarded to the president. The president takes the final decision on whether the Financial Emergency is to be imposed or not. The declaration of Financial Emergency must be approved within two months of the proposal. If the decision is held pending after two months also then, the ultimatum is passed to the president in a few days when the decision is to be made.

Consequences

The following are some consequences of a Financial Emergency:

1. Some budgets can be passed to both central and state governments to make the condition better.

2. The allowances and salaries of government employees can be cut to some extent.

3. Both central and state governments must be guided with proper instructions to be followed by them during the time of crisis to handle the situation wisely.

Significance

Every country needs financial emergency in some of the worst conditions of the time. If the country is facing some financial instability, then the declaration of a Financial Emergency may help the country to overcome the situation easily and lessen the chances of difficulties and depression to be faced by the citizens of the country.

Circumstances

1. A financial emergency can be declared during the worst economic conditions when there is no hope left to control the situation.

2. During war and pandemic situations if the condition had gone worse of the time.

3. If the value of the currency had gone down.

4. If there is a drastic fall in the gross domestic product (GDP) of the country.

5. When the economic conditions are not under the control of experts and economists.

6. If there is no sign left other than calling for a financial emergency in the country.

Conclusion

Violation of individual rights may take place in such situations that should be checked by the government of India. The weaker section of society should not be taken down in these situations. The opposition parties may raise issues by taking the condition as granted, this should be avoided. All the citizens of the country, the government and the local people must cooperate with the situation. So, that the crisis may be handled easily with no harm to anyone or anything.

Important note

The cooperation of all the Indians during COVID-19 was one of the most remarkable in history.