Consider the following statements regarding a Proclamation of Financial Emergency under Article 360 of the Constitution of India: 1. A proclamation of Financial Emergency shall cease to operate at the expiration of two months unless, before the end of that period, it has been approved by resolutions of both Houses of Parliament. 2. A Financial Emergency can remain in operation for a maximum period of three years. Which of the statements given above is/are correct?

Introduction / Context:
The Constitution of India provides for three types of emergencies: National Emergency (Article 352), President's Rule or State Emergency (Article 356) and Financial Emergency (Article 360). Financial Emergency has never been imposed so far, but its provisions are important for exams. This question asks you to evaluate two statements about the duration and parliamentary approval of a Financial Emergency, testing both your memory of article details and your understanding of emergency provisions.

Given Data / Assumptions:

Statement 1 speaks about the initial validity of a proclamation of Financial Emergency and the requirement of approval by both Houses of Parliament within two months.
Statement 2 claims that a Financial Emergency can remain in operation for a maximum period of three years.
You have to decide which statements are correct in the context of Article 360.

Concept / Approach:
Under Article 360, the President can proclaim a Financial Emergency if he is satisfied that the financial stability or credit of India or any part thereof is threatened. Such a proclamation must be laid before both Houses of Parliament and ceases to operate after two months unless approved by both Houses. Unlike National Emergency or President's Rule, there is no explicit maximum time limit on the continuation of a Financial Emergency once approved; it can continue until revoked. Therefore, the correct approach is to accept Statement 1 as accurate and reject Statement 2 as incorrect.

Step-by-Step Solution:
Step 1: Recall the basic rule: a proclamation of Financial Emergency must be approved by both Houses of Parliament within two months of its issuance; otherwise it lapses. Step 2: This matches Statement 1, which says that the proclamation ceases to operate at the expiration of two months unless approved by both Houses. So Statement 1 is correct. Step 3: Now consider Statement 2, which claims that a Financial Emergency can remain in operation for a maximum period of three years. Step 4: Unlike a National Emergency on certain grounds and President's Rule under Article 356, where there are specific time limits and renewal procedures, Article 360 does not prescribe any maximum duration once the proclamation has been duly approved. Step 5: Therefore, Statement 2 is incorrect because there is no such three-year cap mentioned for Financial Emergency. Step 6: Since only Statement 1 is correct, the right option is “1 only.”

Verification / Alternative check:
You can verify this by quickly contrasting emergency provisions: National Emergency initially lasts six months and can be extended indefinitely with repeated approvals; President's Rule generally has a one-year limit extendable under certain conditions up to three years; Financial Emergency has no explicit maximum time limit once approved, but must be periodically reviewed politically. Article 360 focuses more on immediate parliamentary approval within two months and the nature of executive control over finances, not on a long-term maximum, which confirms that Statement 2 is not part of the constitutional text.

Why Other Options Are Wrong:
2 only: This would require Statement 2 to be correct and Statement 1 to be wrong. However, Statement 1 accurately reflects the two-month approval requirement, whereas Statement 2 invents a three-year limit that does not exist. Both 1 and 2: This implies both statements are correct, which is not possible because Statement 2 contradicts the actual constitutional provisions. None of these: This would be the right choice only if both statements were wrong. But Statement 1 is clearly correct, so this option is incorrect.

Common Pitfalls:
A frequent error is to assume that all types of emergencies have similar time limits, leading students to incorrectly apply the three-year maximum (relevant in certain contexts for President's Rule) to Financial Emergency. Another pitfall is mixing up the two-month approval requirement with the separate rule that a National Emergency must be approved within one month. Keeping a clear mental chart of each emergency type, its article number, approval deadline and duration helps avoid such confusion.

Final Answer:
Only the first statement is correct. Therefore, the correct option is 1 only.