The Constitution of India
Article 354
Application of provisions relating to distribution of revenues while a Proclamation of Emergency is in operation
(1) The President may, while a Proclamation of Emergency is in operation, by order direct that all or any of the provisions of articles 268 to 279 shall for such period, not extending in any case beyond the expiration of the financial year in which such Proclamation ceases to operate, as may be specified in the order, have effect subject to such exceptions or modifications as he thinks fit.
(2) Every order made under clause (1) shall, as soon as may be after it is made, be laid before each House of Parliament.
Why this exists
Articles 268 to 279 set out the normal financial relationship between the Union and the States, including how taxes are collected, shared, and distributed. During a national emergency, government finances may come under severe strain, and the usual revenue-sharing arrangements might not be practical or sustainable. Article 354 was included by the Constitution's framers to give the Union government flexibility to temporarily adjust these financial arrangements during a crisis, ensuring the country can respond to emergencies without being locked into peacetime fiscal rules. The requirement to lay the order before Parliament ensures some check on this executive power.
Common misconceptions
- Myth: Article 354 lets the President permanently change how taxes are divided between the Union and States.
Fact: The change is strictly temporary—it cannot extend beyond the end of the financial year in which the Emergency proclamation ceases to operate. - Myth: The President can use this power anytime for financial convenience.
Fact: This power can only be exercised while a Proclamation of Emergency is actually in operation.