Leader of the Opposition Rahul Gandhi has stirred fresh political debate by warning of an ‘economic tsunami’ in India.

Speaking on economic challenges facing the country, Gandhi claimed that rising prices and weakening economic safeguards could lead to widespread unrest.

He also predicted that Prime Minister Narendra Modi may not remain in office within a year.

While Gandhi’s remarks were political in nature, they have once again drawn attention to an important constitutional question: what happens if India faces a severe financial crisis?

The Constitution provides a special mechanism known as a Financial Emergency under Article 360 to deal with extraordinary threats to the country’s financial stability and credit.

Notably, despite several economic challenges over the decades, including the balance of payments crisis of 1991, India has never declared a Financial Emergency since the Constitution came into force in 1950.

What is a Financial Emergency?

A Financial Emergency is one of the three emergency provisions contained in Part XVIII of the Constitution. It empowers the Union government to take extensive measures to protect the financial stability and creditworthiness of India or any part of its territory.

Under Article 360(1), the President can proclaim a Financial Emergency if satisfied that the financial stability or credit of India, or any part of the country, is under threat.

Unlike a National Emergency or President’s Rule, a Financial Emergency is specifically designed to address economic instability and fiscal........

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