GST Compensation Cess extended till 2026 to meet shortfalls,
Debate over fiscal federalism intensified after COVID-related financial stress,
Push for more financial autonomy to States.
Measures to Strengthen Centre-State Financial Relations
Measure
Detail
Strengthening Finance Commission
Implement its recommendations without political delay.
Streamlining GST System
Quick dispute resolution by GST Council.
Empowering State Finance Commissions
Proper funding and respect to local bodies.
Reducing Conditional Grants
Allow States more freedom to use funds according to local needs.
Timely Devolution
No politically motivated delays.
Conclusion
Centre-State financial relations are the backbone of Indian cooperative federalism. Trust, transparency, and timely financial sharing will ensure:
Economic development,
Reduction in regional inequalities,
Stronger unity of the Indian federation.
“A strong India needs strong States — fiscal empowerment of States is empowerment of the Nation.“
Important Quick Facts for Prelims & Mains
Fact
Detail
Finance Commission Article
280
GST Council Article
279A
GST introduced by
101st Amendment Act, 2016
14th FC tax devolution rate
42%
15th FC tax devolution rate
41%
GST decision voting pattern
1/3rd Centre + 2/3rd States (75% approval needed)
Chapter 64: Emergency Provisions — National, State and Financial Emergency (Detailed Modern Analysis)
Introduction
Emergency Provisions are special constitutional mechanisms to deal with extraordinary situations that threaten the security, governance, or financial stability of India.
These provisions alter the normal federal structure and give exceptional powers to the Centre.
“The Constitution is not a suicide pact; it must survive and protect itself during emergencies.“
Types of Emergency in India
Type of Emergency
Basis
Constitutional Articles
1. National Emergency
Threat to security (war, external aggression, armed rebellion)
Articles 352–359
2. State Emergency (President’s Rule)
Failure of constitutional machinery in a State
Articles 356, 365
3. Financial Emergency
Threat to financial stability or credit of India
Article 360
1. National Emergency (Article 352)
Grounds for Declaration
War (open armed conflict),
External Aggression (attack by a foreign country),
Must be based on written advice of Union Cabinet (added by 44th Amendment, 1978),
Must be approved by both Houses of Parliament within one month,
Must be approved by special majority:
Majority of total membership and
2/3rd of members present and voting.
Duration and Revocation
Feature
Details
Duration
Initially 6 months, can be extended indefinitely with parliamentary approval every 6 months.
Revocation
Can be done anytime by President without parliamentary approval.
Revocation Mandatory
If Lok Sabha passes a disapproval resolution by a simple majority.
Effects of National Emergency
Area
Effect
Centre-State Relations
Centre becomes powerful — can give executive directions to States.
Legislative Power
Parliament can legislate on State List subjects.
Fundamental Rights
Certain Fundamental Rights (like Article 19) suspended automatically; others can be suspended by order.
Duration of Lok Sabha and State Assemblies
Can be extended beyond 5 years by 1 year at a time during Emergency (not beyond 6 months after end of Emergency).
Important National Emergencies Declared
Year
Reason
1962
Indo-China War
1971
Indo-Pakistan War
1975
Internal disturbance (controversial Emergency under Indira Gandhi).
2. State Emergency (President’s Rule) — Article 356
(Already covered in deep earlier in Chapter 50 — quick revision here)
Grounds for Imposition
Failure of constitutional machinery in a State,
Non-compliance with Union’s directives (Article 365).
Procedure and Duration
Feature
Details
Proclamation by President
Based on Governor’s report or otherwise satisfied.
Parliamentary Approval
Within 2 months; extendable every 6 months.
Maximum Period
3 years (with strict conditions and Parliament’s approval).
Effects
Dismissal of State Council of Ministers, suspension or dissolution of Assembly.
Important Safeguards (after SR Bommai Case, 1994)
Floor test must be conducted to prove majority,
Judicial review available,
Political misuse curtailed significantly.
3. Financial Emergency (Article 360)
Grounds for Declaration
Threat to the financial stability or credit of India or any part of its territory.
Procedure
Proclamation by President,
Must be approved by both Houses of Parliament within two months.
Effects of Financial Emergency
Area
Impact
Centre-State Financial Relations
Centre can direct States to observe financial propriety.
Salaries and Allowances
Reduction in salaries of government officials, including judges of Supreme Court and High Courts.
Reservation of Money Bills
President may ask States to reserve Money Bills for his consideration.
Key Fact
No Financial Emergency has ever been declared in India till date.
Judicial Review of Emergencies
Before 44th Amendment (1978): No judicial review of Emergency proclamation,
After 44th Amendment:
Judiciary can review the validity of Emergency.
Protects democratic rights even during Emergency.
Important Case:
Minerva Mills Case (1980): Confirmed that Parliament cannot destroy basic structure even during Emergency.
Safeguards against Misuse of Emergency Powers
Safeguard
Detail
Written advice of Cabinet mandatory for National Emergency (Article 352)
Parliamentary approval with special majority
Judicial review of Proclamation
Limited suspension of Fundamental Rights (only Article 19 suspended automatically during National Emergency based on war/external aggression, not armed rebellion).
Comparison of Three Types of Emergency
Feature
National Emergency
President’s Rule
Financial Emergency
Grounds
War, external aggression, armed rebellion
Breakdown of State machinery
Threat to financial stability
Who Declares
President
President
President
Parliamentary Approval
Within 1 month
Within 2 months
Within 2 months
Duration
6 months, renewable
6 months, up to 3 years
Continues till revoked
Impact on Centre-State Relations
Centre becomes all-powerful
State government dismissed
Centre controls finances
Recent Developments and Discussions
Demand to reform Emergency Provisions further to prevent authoritarian misuse (like 1975),
Debate over declaring emergencies during natural disasters (like COVID-19 pandemic),
Push to better define “armed rebellion” and “financial stability” for clarity.
Conclusion
Emergency Provisions were designed as safeguards, not weapons. Their judicious use is essential to preserve:
Democracy,
Federalism, and
Fundamental Rights.
“Emergency powers must be like a fire alarm — rarely used but always protected against misuse.“