New Delhi: Prime Minister Narendra Modi is not likely to invoke financial emergency under Article 360 of the Constitution to battle the COVID-19 pandemic despite the weak finances of the Union government, said two experts on constitutional and economic issues.
The specialists said the government has several tools to arrange the money and more importantly it will not invoke the emergency provisions as it will dent the country’s image in the eyes of foreign investors.
“Countries such as Italy, Spain, UK and USA, which have suffered much more than India, have not declared financial emergency as such,” said PDT Achary, former secretary-general of the Lok Sabha.
The global pandemic caused by highly infectious SARS-CoV-2, also known as novel coronavirus, has killed more than 200 people in the country and more than 90,000 people across the world. The highly contagious virus has infected more than 1.5 million people in the world with an average death rate of 6% of the affected people.
In order to slow down the spread of the virus in the country, Prime Minister Narendra Modi last month announced a 21-day complete lockdown that has disrupted the economic activity. In order to deal with the the unprecedented challenge, the Union government last month announced a Rs 1.7 lakh crore ($23 billion) relief package for India’s 80 crore poor people.
The outbreak also forced the Union government to cut the salary of members of Parliament and suspend their local area development fund (MPLAD Fund) for two years to arrange the funds to tide over the difficult time.
Read more: What is Financial Emergency, will PM Modi invoke it to battle coronavirus
It triggered the speculation that the government might declare a financial emergency under Article 360 of the Constitution as the the provision gives sweeping powers to the Centre to reduce the salaries of its employees and other constitutional offices and take control of the budgets and expenditures of States.
“If you (the government) are thinking of declaring a financial emergency then you are advertising to the whole world that the government of India has no credit, it has no financial stability,” PDT Achary told ETV Bharat.
Noted economist Santosh Mehrotra also ruled out the possibility of invoking a financial emergency under Article 360 of the Constitution.
Santosh Mehrotra, who worked at the secretary level in the Planning Commission during the UPA government said that there was no possibility of declaring the financial emergency for a variety of reasons.
“What the government needs at this point in time? It needs more money in its pocket and it has several tools that it can deploy for that purpose,” Santosh Mehrotra told ETV Bharat.
He said Rs 1 lakh crore, that is available with the Public Finance Management System (PFMS), can be utilised to fight the battle against COVID-19 pandemic.
“It amounts to Rs 1 lakh crore (INR 1 trillion), that is half a per cent of the country’s GDP,” he told ETV Bharat.
“If the government’s objective is expenditure switching from one purpose to another then there is nothing preventing the government from mobilising the money which is already available in the PFMS,” he explained while talking about various options available to the government.
He said in addition to utilising the money available in the PFMS, the government has several other tools: it can issue treasury bonds, it can also allow States to borrow more money and large urban local bodies can also be permitted to issue bonds to raise funds to meet the expenditure.
Santosh Mehrotra and PDT Achary also point out the international repercussions that will follow in case the government declares a financial emergency.
They said any such move will dent the country’s image abroad as the government takes pride in the fact that the country has emerged as one of the fastest-growing major economies in the world and it has also become the fifth largest economy in the world by leaving behind countries like France and UK.
“If we declare financial emergency then it will have international repercussions. It will affect foreign investment and a whole lot of things,” PDT Achary told ETV Bharat.
(Article by Krishnanand Tripathi)
