Implications of Emergencies on centre-state Financial Relations

The implications of emergencies on centre-state financial relations are as follows:

During National Emergency

During national emergency under article 352, the President can modify the distribution of revenues between the Centre and the states. This implies that transfer of finances {including tax sharing, grants etc.} can be modified or even cancelled. Such modification continues till the end of the financial year in which the emergency ceases to operate.

Financial Emergency

During Financial emergency under article 360, centre can give directions to the states: (i) to observe the specified canons of financial propriety; (ii) to reduce the salaries and allowances of all class of persons serving in the state (including the high court judges); and (iii) to reserve all money bills and other financial bills for the consideration of the President.