Abolition of privy purses

Detail

What the privy purse was

• Privy purse: a yearly grant of money that India promised to the former rulers of the princely states. It was paid in return for their states joining India.
• It was hereditary: it passed from a ruler to his successor.

• Its size depended on the extent, revenue and potential of each merging state. Bigger and richer states got larger sums.

• Before integration, the rulers were also promised that they could keep their private property. (For the integration story, see the nation-building chapter.)

• The promise was written into covenants (formal agreements signed by the rulers when their states merged). It was later also guaranteed in the Constitution.

How the Constitution of 1950 protected it

Provision	What it did
Art. 291	The privy purse sums promised in the covenants were "charged on, and paid out of, the Consolidated Fund of India" and were "exempt from all taxes on income" [2]
Art. 362	Parliament and state legislatures had to respect the personal rights, privileges and dignities of the rulers that the covenants promised
Art. 366(22)	Defined "Ruler": the prince or chief whom the President recognised as the Ruler of an Indian State

• Consolidated Fund of India: the government's main account. All its revenue goes into it. Money that is "charged on" this fund is paid without a vote in Parliament. This made the privy purse very secure.
• Recognition by the President under Art. 366(22) was the legal key. Only a recognised Ruler could receive the purse.

Why the privy purse became controversial

• There was little criticism at first. The main goal in 1947–50 was to integrate the princely states peacefully, so the price seemed worth paying.
• It went against equality. A hereditary privilege paid from public money clashed with:
• equality before law and the ideal of a society without inherited privilege;

• the social and economic justice promised in the Preamble and the Directive Principles.

• Nehru was uneasy about the privy purses many times, but his government did not abolish them.

• After the 1967 elections, Indira Gandhi backed abolition. It became 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", because the nation had made a promise in exchange for the merger of their states.

The legal sequence, 1970–1971

Step 1 — The amendment bill fails (September 1970)

• The government moved the Constitution (Twenty-fourth Amendment) Bill, 1970 to end the privy purses.
• It passed the Lok Sabha.
• It fell short in the Rajya Sabha (September 1970) because it did not get the special majority.
• Special majority (Art. 368(2)): for most amendments, each House must pass the bill by:
• a majority of its total membership, and
• two-thirds of the members present and voting.
• If either House fails on either test, the bill fails. A joint sitting is not allowed for amendment bills.

Step 2 — The presidential order

• Soon after the defeat in the Rajya Sabha, the President issued an order under Art. 366(22). The order derecognised all the rulers at one stroke.
• No recognised Ruler → no person entitled to the purse under Art. 291 → the payments stop.
• (NCERT: an "ordinance". In fact it was a presidential order, not an ordinance under Art. 123.)

Step 3 — The Supreme Court strikes it down (December 1970)

• Privy Purses case — Madhav Rao Jivaji Rao Scindia v. Union of India (December 1970). The rulers challenged the order.
• The Supreme Court held the order unconstitutional and set it aside.
• Core idea: the executive cannot use its power to recognise rulers to cancel, all at once, a right that the Constitution itself guarantees.
• Judicial review (the courts' power to strike down government actions or laws that break the Constitution) was used here against the executive.

Step 4 — An election issue (1971)

• Indira Gandhi made abolition a key promise in the 1971 Lok Sabha election, along with "Garibi Hatao".
• The idea had wide public support. Her Congress (R) won a big majority, which gave it the two-thirds strength needed in Parliament.

The 26th Constitutional Amendment Act, 1971

• Constitution (Twenty-sixth Amendment) Act, 1971. It came into force on 28 December 1971 [2].

Change	Effect
Art. 291 omitted	No more privy purse charged on the Consolidated Fund [2]
Art. 362 omitted	No more constitutional protection of the rulers' rights and privileges
Art. 363A inserted	(a) Any person recognised by the President as Ruler before the Act "shall cease to be recognised" as Ruler or successor; (b) 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 refers only to persons recognised before the 26th Amendment, so the term matters only for past events

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

Upheld by the Supreme Court

• Raghunathrao Ganpatrao v. Union of India (1993): the former rulers argued that the 26th Amendment violated the basic structure.

• 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 upheld the amendment. Ending a hereditary privilege does not damage the basic structure. It actually strengthens equality and the republican nature of the Constitution.

What this episode shows

• Amending the Constitution to undo a court verdict. When the Supreme Court blocked the government, Parliament changed the Constitution itself. The 24th and 25th Amendment Acts (1971) came in the same period:
• 24th Amendment Act, 1971: Parliament can amend any part of the Constitution, including Fundamental Rights. This answered Golaknath (1967).
• 25th Amendment Act, 1971: limited the courts' power to question the "amount" of compensation. This answered the bank nationalisation judgment (R.C. Cooper, 1970).

• The 26th Amendment answered Madhav Rao Scindia (1970).

• The Rajya Sabha as a check. The special majority let the upper House stop a change backed by the Lok Sabha in 1970. The change came only after a fresh popular mandate in 1971.

• Promise against principle. The "breach of faith" argument (keep promises made at integration) was weighed against constitutional equality (no inherited privilege paid from public money). Equality won through the democratic process.

Prelims Hooks

• Art. 291: privy purses were charged on the Consolidated Fund of India and tax-free. It was omitted by the 26th Amendment Act, 1971, with effect from 28 December 1971 [2].
• Art. 363A (inserted by the 26th Amendment) ends the recognition of rulers and abolishes privy purses [3].
• Art. 362, on the rulers' rights and privileges, was omitted by the same 26th Amendment Act, 1971.
• Art. 366(22) defines "Ruler". In 1970 the President derecognised all rulers under this article, not by an ordinance under Art. 123.
• Trap: the 24th Amendment Bill, 1970 (privy purses) failed in the Rajya Sabha. The 24th Amendment Act, 1971 is a different law: it overturned Golaknath.
• Madhav Rao Jivaji Rao Scindia v. Union of India (1970) = Privy Purses case. It struck down the presidential derecognition order.
• Raghunathrao Ganpatrao v. Union of India (1993) upheld the 26th Amendment against a basic-structure challenge.
• The amendment 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.
• Morarji Desai called abolition a "breach of faith with the princes".

Mains Points

• Parliament against the courts (GS-II): in 1970–71 Parliament amended the Constitution three times (24th, 25th, 26th) to overcome court rulings. Use this as a background case for the move toward the basic structure doctrine (1973) and the balance between parliamentary sovereignty and judicial review.
• Bicameralism works (GS-II): the Rajya Sabha's special-majority veto in 1970 forced the government to win a new mandate in 1971 before changing the Constitution. This is a good example of the upper House as a chamber of second thought.
• Equality against a promise (GS-II/GS-I): the state promised hereditary payments at integration, but the Constitution promises equality and social and economic justice. Weigh the "breach of faith" view against equality. Raghunathrao (1993) settled it in favour of equality.
• Populism and party realignment (GS-I): after 1967, abolition (with bank nationalisation and "Garibi Hatao") helped Indira Gandhi present Congress (R) as pro-poor and the Syndicate as status-quoist. This helped restore Congress dominance in 1971.