Draft Article 280-A was absent in the Draft Constitution of India 1948. It was introduced by the Drafting Committee Chairman in the Assembly on 16 October 1949.
Draft Article 280-A gave the President the power to declare a financial emergency and partly suspend India’s federal structure if he or she believed that India’s financial stability was being threatened. The Union Executive was empowered to issue directions to State Executive(s) to undertake certain financial measures. If these directions are not followed, the President could impose President’s rule in the State(s).
The Drafting Committee Chairman told the house that the Draft Article was inspired by the 1930 National Recovery Act. This Act gave the U.S. President extraordinary powers to deal with the financial crisis caused by the Great Depression. The U.S. Supreme Court struck it down as unconstitutional – leaving the U.S. President toothless in the face of financial doom. Draft Article 280-A, the Chairman argued, was aimed at avoiding such a situation by constitutionally guaranteeing the President sufficient powers to deal with a financial emergency.
Most Assembly members felt that the President’s powers under the Draft Article were too wide, unjustified and infantilized states. A number of amendments were moved which wanted to reduce the President’s powers. One Member singled out President’s power to reduce salaries, reserve State bills and impose President’s rule as being excessive. He argued that a mere ‘threat to financial stability and credit’ did not justify the President’s emergency powers. Another Member felt that the Draft Article appeared to not trust the states’ ability and initiative to deal with a financial emergency.
A small group of members came in support of the Draft Article and even asked for more powers for the President. A Member wanted the President to legislate on State List matters as if they were in the Concurrent List. Another Member moved an amendment to suspend India’s federal structure and provincial autonomy in toto for the duration of a financial emergency.
Towards the end of the debate, a Drafting Committee member defended the Draft Article. He assured the Assembly that the Union has no interest in interfering with State autonomy. He pointed out that the financial affairs of the States and the Union were intimately linked: a financial crisis even in a single State could affect the financial integrity of the entire country and vice-versa. Therefore, any financial crisis required a Union led response and temporary intrusions into the executive power of the States.
All the amendments were put to vote, but were rejected by the Assembly.
The original Draft Article moved by the Drafting Committee Chairman was adopted by the Assembly on the same day.
