Privy purse

Topic: Challenges to and Restoration of the Congress System · NCERT: Class 12, Ch 5 "Challenges to and Restoration of the Congress System"

Meaning

A privy purse was a yearly, tax-free sum of money that India promised to the former rulers of the princely states and their successors, in return for their states joining India. It was written into the covenants they signed and guaranteed by the Constitution, and it was abolished by the 26th Constitutional Amendment Act, 1971 [2].

It matters because it set two things against each other: a promise the nation made at integration, and the Constitution's promise of equality. The fight to end it also tested the Rajya Sabha, the Supreme Court and Parliament's power to amend the Constitution.

Explanation

What the privy purse was

• A yearly payment for joining India. It went to the ruler of each princely state that merged with India.
• It was hereditary. When a ruler died, it passed to his successor.
• Its size depended on the state. It was fixed by the extent, revenue and potential of each merging state.

• Bigger and richer states got larger sums.

• It came with other promises.

• The rulers could keep their private property.

• Their personal rights, privileges and dignities would be respected.

• It was written down in covenants. A covenant was a formal agreement each ruler signed when his state merged. The Constitution later guaranteed these promises too.

How the Constitution of 1950 protected it

• Art. 291: the privy purse sums were "charged on, and paid out of, the Consolidated Fund of India" and were "exempt from all taxes on income" [2].
• Consolidated Fund of India: the government's main account, where all its revenue goes.

• "Charged on" the fund: the money is paid without a vote in Parliament, so Parliament could not stop it in the yearly budget.

• Art. 362: Parliament and the state legislatures had to respect the rulers' personal rights, privileges and dignities promised in the covenants.

• Art. 366(22): defined a "Ruler" as the prince or chief whom the President recognised as Ruler of an Indian State.
• Only a recognised Ruler could receive the purse. This recognition was the legal key to the whole system.

Why it became controversial

• Little criticism at first. In 1947–50 the main goal was to bring the princely states in peacefully, so the cost seemed worth paying.
• It clashed with equality.
• It was an inherited privilege paid from public money.
• This went against equality before law (the same law for everyone, with no special status by birth).

• It also went against the social and economic justice promised in the Preamble and the Directive Principles.

• Nehru was uneasy about it many times, but his government did not abolish it.

• After the 1967 elections, Indira Gandhi backed abolition as part of her left-leaning programme, together with bank nationalisation.
• Morarji Desai opposed it. He called abolition morally wrong and a "breach of faith with the princes".

How it was abolished: the steps in order

1. Amendment bill (1970). The Constitution (Twenty-fourth Amendment) Bill, 1970 was moved to end the privy purses. - It passed the Lok Sabha. - It failed in the Rajya Sabha (September 1970) because it did not get the special majority. - Special majority (Art. 368(2)): each House must pass the bill by a majority of its total membership and by two-thirds of the members present and voting. - A joint sitting (both Houses voting together) is not allowed for amendment bills, so the Rajya Sabha's defeat ended the bill.

2. Presidential order (1970). Soon after, the President used Art. 366(22) to derecognise all the rulers at once. - No recognised Ruler meant nobody was entitled to the purse under Art. 291, so the payments stopped.

3. Supreme Court strikes it down (December 1970). In Madhav Rao Jivaji Rao Scindia v. Union of India, the Court held the order unconstitutional. - The executive cannot use its power to recognise rulers to wipe out, all at once, a right that the Constitution itself guarantees.

4. Fresh mandate (1971). Abolition became a key promise in the 1971 Lok Sabha election, along with "Garibi Hatao". Congress (R) won a big majority, which gave it the two-thirds strength it needed.

5. 26th Amendment Act, 1971. It came into force on 28 December 1971 [2] and ended the privy purses for good.

In the Constitution and practice

• Original provisions (1950): Art. 291 (purse charged on the Consolidated Fund and tax-free) [2], Art. 362 (rulers' rights and privileges) and Art. 366(22) (definition of "Ruler").
• Constitution (Twenty-sixth Amendment) Act, 1971, in force from 28 December 1971 [2]:
• Art. 291 omitted. The privy purse was no longer charged on the Consolidated Fund [2].
• Art. 362 omitted. The rulers' rights and privileges lost their constitutional protection.
• Art. 363A inserted. Anyone recognised as Ruler before the Act "shall cease to be recognised", and the "privy purse is abolished and all rights, liabilities and obligations in respect of privy purse are extinguished" [3].
• Art. 366(22) amended. "Ruler" now means only persons recognised before the 26th Amendment, so the word matters only for past events.

• Result: the privy purses and the rulers' official titles ended together [3].

• Landmark cases:

• Madhav Rao Jivaji Rao Scindia v. Union of India (1970), the Privy Purses case: struck down the presidential derecognition order. This was judicial review (the courts' power to cancel government actions or laws that break the Constitution) used against the executive.

• Raghunathrao Ganpatrao v. Union of India (1993): upheld the 26th Amendment.

  • The former rulers argued that it violated the basic structure. Parliament can amend any part of the Constitution, but it cannot destroy its core features, such as democracy, equality, federalism or judicial review (Kesavananda Bharati, 1973).
  • The Court held that ending an inherited privilege does not harm the basic structure. Instead, it strengthens equality and the republican nature of the Constitution.

• Lasting effect: it was one of three 1971 amendments that undid court rulings.

• 24th Amendment Act: answered Golaknath (1967).
• 25th Amendment Act: answered R.C. Cooper (1970).
• 26th Amendment Act: answered Madhav Rao Scindia (1970).

Don't confuse with

• 24th Amendment Bill, 1970 vs 24th Amendment Act, 1971. The 1970 bill tried to end privy purses and failed in the Rajya Sabha. The 1971 Act is a different law: it let Parliament amend Fundamental Rights and overturned Golaknath. Privy purses were ended by the 26th Amendment Act.
• Presidential order under Art. 366(22) vs ordinance under Art. 123. NCERT calls the 1970 derecognition an "ordinance", but it was a presidential order under Art. 366(22). An Art. 123 ordinance is a temporary law the President makes when Parliament is not in session.
• Charged expenditure vs voted expenditure. The privy purse was charged on the Consolidated Fund, so it was paid without a vote in Parliament. Most spending is voted, which means Parliament must approve it each year.
• Madhav Rao Scindia (1970) vs Raghunathrao Ganpatrao (1993). The first struck down the executive order that derecognised the rulers. The second upheld the constitutional amendment that abolished the purses.

Prelims Hooks

• Art. 291: privy purses were charged on the Consolidated Fund of India and tax-free. The 26th Amendment Act, 1971 omitted it with effect from 28 December 1971 [2].
• Art. 363A, inserted by the 26th Amendment, did two things: it ended the recognition of rulers and abolished privy purses [3].
• Art. 362, on the rulers' rights and privileges, was omitted by the same 26th Amendment Act, 1971.
• Trap: the 1970 abolition bill failed in the Rajya Sabha, not the Lok Sabha. Amendment bills need a special majority in each House, and there is no joint sitting for them.
• Madhav Rao Jivaji Rao Scindia v. Union of India (1970) = the Privy Purses case. It struck down the derecognition order made under Art. 366(22).
• Raghunathrao Ganpatrao v. Union of India (1993) upheld the 26th Amendment against a basic-structure challenge. Morarji Desai called abolition a "breach of faith with the princes".

Mains Points

• Promise against equality (GS-II/GS-I):
• The state promised the princes payments that would pass down their families. The Constitution promises equality and social and economic justice.
• The "breach of faith" view says the nation must keep its word. The equality view says no one should get privileges from public money because of birth.

• The issue was settled by an election mandate (1971) and by the Supreme Court (Raghunathrao, 1993), both in favour of equality.

• Bicameralism and the courts as checks (GS-II):

• In 1970 the Rajya Sabha used its special-majority veto to block a change that the Lok Sabha had passed. This shows it working as a chamber of second thought.
• The Supreme Court then stopped the executive's shortcut in Madhav Rao Scindia.

• Change came only after a fresh mandate in 1971. The 24th, 25th and 26th Amendments of 1971 are good background for the clash between Parliament and the courts that led to the basic structure doctrine (1973).

• Populism and party realignment (GS-I): after 1967, abolishing the privy purses helped Indira Gandhi present Congress (R) as pro-poor and the Syndicate as defenders of the old order. Bank nationalisation and "Garibi Hatao" did the same. Together they helped restore Congress dominance in 1971.

Related concepts

• Privy Purses case
• 26th Constitutional Amendment Act 1971

Read more

• Abolition of privy purses