Is financial emergency in Punjab the only solution? | punjab | Hindustan Times
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Is financial emergency in Punjab the only solution?

punjab Updated: Aug 26, 2013 09:29 IST
Bir Devinder Singh
Bir Devinder Singh
Hindustan Times
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The Punjab Congress, in its recent categorical resolve, has decided to meet President Pranab Mukherjee to put forth its demand for the imposition of financial emergency in Punjab, without perhaps realising its atrocious implications. Before making the demand, the protagonists of such a terrible measure should study the procedures by which the state of Punjab could be brought under financial emergency. They appear to be in a psychological paradox, in one breath opposing the new tax regime in Punjab, and on the other hand, demanding a step that would impose far more rigorous fiscal restrictions on the citizens.


Article 360 of the Constitution provides for the proclamation of financial emergency in view of the immeasurably worsening financial health of the union of India or parts of its territory. Under such conditions, the Indian government requires to table a detail statement of facts on the floor of both Houses of Parliament, and convince the President of its urgency. Article 360 provides that: "If the President is satisfied that a situation has arisen whereby the financial stability or the credit of India or of any part of the territory thereof is threatened, he may by a Proclamation make a declaration to that effect." This provision entails the union government unmistakably to make a detail statement of facts, stating the critically declining monetary conditions of the state, for justification for placing a particular state under financial emergency.

The government will have to convince both Houses, if Punjab has to be brought under the realms of such emergency, which given the situation, appears a Herculean task, particularly when the Opposition is stonewalling its flagship legislation on food security. The role of the Central government in terms of financial assistance or special stimulus package, if at all given to Punjab to offset its financial liability, may also come under the critical scrutiny of Parliament. Furthermore, the Central government's role, so far, in bailing Punjab out of the financial crunch would also come under the scanner.

The financial emergency will be construed a blow to the regional aspirations about the autonomy of states under India's federal structure. The factual position will also highlight the accumulated losses and debt during the successive Congress regimes in Punjab. The micro details will not remain dormant; rather will surface more vividly. The Congress cannot escape its responsibility for burdening the state with gigantic fiscal liabilities during militancy. The India government has never compensated Punjab adequately on account of these losses, notwithstanding the truth that Punjab was used as a battleground to fight cross-border terrorism and the proxy war with Pakistan.

Presumably, if both Houses happen to endorse the proclamation to bring Punjab under financial emergency, then there are also West Bengal and Kerela, under far greater debt and with economies worse than Punjab. A question would arise as to why Punjab was being singled out. If Parliament approves the proclamation under Article 360, the Centre will be responsible directly for administering the state's financial affairs. The implications would entail several inconsiderate financial measures. The Central government cannot dole out freebies to the people below the poverty line. All concessions such as free electricity and canal water to the agriculture sector will also be withdrawn. Farmers in various categories will lose the benefit of subsidy and benefits to industry will also be pruned.

Further, the President, by way of an executive order then, can withdraw all benefits of concessions and incentives to the industry and agriculture sector. The President can also reduce the salaries of all the state government employees or their groups under special category, including the high court judges, and no judicial remedy will be available against the executive order.

Is the Punjab Congress fully conscious of the devastating propositions and ramifications of the terms and conditions of financial emergency? If yes, do they wish really to coerce the state of Punjab through such preposterous conditions? In spite of the provision of financial emergency in the Constitution, it has never been promulgated, not even in the times of downright fiscal decline when the country had to mortgage its entire gold reserve to meet its fiscal liabilities. Financial emergency was never ventured. The solution probably lies in a conscientious change of the mindset of the political parties that bank on populist measures of freebies to earn votes at the cost of state's financial health.