INTRODUCTION
India’s wealth and poverty disparities are widening at a startling rate. Oxfam India has released research revealing that the wealthiest 5% of Indians now account for almost 60% of the country’s total wealth. However, only 3% of India’s wealth is held by the poorest 50%, a percentage declining gradually between 2012 and 2021.[1] In addition, World Inequality Lab, a study firm, reports that the wealthiest 1% of Indians own more than any other group, with the income percentage increasing above that of nations like the US and Brazil.[2] This wealth concentration is at its most significant level in sixty years. ‘Based on the analysis, the wealthiest individuals in India possessed 40.1% of the nation’s total assets at the end of 2023—the highest level since 1961—and 22.6% of the total income, the most since 1922.’[3] Aside from this, there have also been contentious discussions over wealth redistribution during the election campaign between the opposition and the current government. Thus, ‘the creativity of our Constitution’s framers and the current circumstances are glaringly lacking.’[4] Article 39 assigns the Indian State the responsibility to guarantee “that the operation of the economic system does not result in the concentration of wealth and means of production to the common detriment”.[5] Amidst this chaos, a nine-judge bench of the Supreme Court has been set up to interpret the Directive Principles of State Policy (DPSP) concerning ownership and control of material resources.[6]
CONSTITUTIONAL INTENT, ECONOMIC DEMOCRACY, AND PRIVATE PROPERTY RIGHTS
Members of the Constituent Assembly unanimously agreed during the discussion of Article 39 that the Constitution should task the Indian State with the duty of preventing the concentration of income and wealth in a small number of hands.[7] But they had different ideas about how to proceed. For many, the only way to address wealth and income inequality in India was via a socialist perspective.[8] Economists like KT Shah urged the Draft Article to forbid the establishment of monopolies in any given industry expressly. Consistent with this, Shibban Lal Saxena requested that the State oversee a few critical sectors. The Constitution’s endorsement of divisive political and economic philosophies unnerved certain members, such as Naziruddin Ahmad. In an earlier discussion, B.R. Ambedkar had contended that the Directive Principles aimed to develop the concept of “economic democracy.” Thus, the wording of the Draft constitution was designed to be flexible enough to accommodate any future Indian government’s choice of economic model.
Consistently, many proponents of wealth redistribution cite Articles 39(b) and (c)[9] of the Indian Constitution. A community’s material resources must be owned and managed in a way that best serves the common good, according to Article 39(b). Comparably, the goal of Article 39(c) is to guarantee that the way the economic system operates does not result in the concentration of wealth and means of production in a way that harms the people. Nevertheless, since both provisions are included in the Constitution’s Directive Principles of State Policy, they are unenforceable.
There has been much legal discussion over-interpreting the two articles, especially about what “material resources of the community” means. This phrase should be independent of private resources, as demonstrated by a critical analysis of significant court cases. ‘On the other hand, in the 1977 case of the State of Karnataka v. Shri Ranganatha Reddy, Justice Krishna Iyer’s more expansive view was that the term “material resources of the community” includes all public and private resources.’[10] However, the other judges on the Bench disagreed with this interpretation and made it clear that they did not share Justice Iyer’s broad viewpoint.[11]
The enduring legal ambiguity emphasizes the need to uphold a moral interpretation according to which articles 39 (b) and 39 (c) should only direct state policy on resources owned by the community and should only impact the distribution of assets, not their acquisition. Consistent with the same B.R., Ambedkar never intended to expand state authority over private property without constitutional protections.[12] The same was again put forth in Property Owners Association v. State of Maharashtra. A seven-judge Supreme Court bench raised concerns about the expansive interpretation of private property included in the “material resources of the community.” As a result, the case was referred to a nine-judge bench for a final decision[13].
CONSTITUTIONAL EVOLUTION AND LEGAL PRECEDENTS
Property rights were consequently considered fundamental since they permitted persons to hold property. The Constitution’s Article 19(1)(f) recognizes the right to property as a fundamental right[14]. According to Article 31, the state must compensate anyone who acquires private property. That being said, in 1978, the 44th Amendment Act eliminated the right to property as a fundamental right. To stop the property class from bringing too many matters straight before the Supreme Court, Article 300A of the Constitution re-established it. The legal and constitutional right to possess property is unquestionably still important. It’s crucial to remember that the leading property rights only applied to land used for agriculture and other purposes upon independence.
The Supreme Court has interpreted the relationship between the DPSP and fundamental rights in several instances. Most of these cases challenged state-made constitutional modifications that limited the then-fundamental right to property. The Supreme Court ruled in the Golak Nath case that the DPSP could not be implemented by restricting or diluting fundamental rights[15]. Finally, a thirteen-judge Supreme Court bench maintained the legality of Article 31C but subjected it to judicial review in the Kesavananda Bharati v. state of Kerala.[16] The Supreme Court decided in the 1980 Minerva Mills case that the Constitution strikes a harmonic balance between DPSP and fundamental rights.[17]
Any law that allows the state to take private property must have a public purpose and offer sufficient compensation. Therefore, the nationalization of private property should only be permitted as a justifiable constraint under Part III of the Constitution, emphasizing the eventual distribution of assets rather than being permitted unrestrictedly under Article 39, read in conjunction with Article 31(C). In addition to respecting individual property rights and being consistent with constitutional protections like Articles 14, 19, and 21, this strategy ensures that the state’s activities advance the common good and do not open the door for an overbearing, illiberal regime.[18]
WAY FORWARD
To address India’s wealth disparity, stakeholders must prioritize legislative clarity and judicial interpretation. Establishing a clear legal framework that balances wealth redistribution with property rights is essential. This framework should ensure that state interventions adhere to constitutional protections and serve the common good. Public awareness campaigns and advocacy efforts can also foster understanding and support for equitable wealth distribution measures. Collaborative efforts between government, civil society, and legal experts can pave the way for policy reforms that promote economic justice and social cohesion. Ultimately, a concerted and inclusive approach is needed to tackle India’s wealth inequality and uphold the principles of justice and democracy enshrined in its Constitution.
CONCLUSION
The discourse surrounding wealth distribution in India is deeply entrenched in legal ambiguity and constitutional interpretation. While Article 39(b) and (c) of the Indian Constitution underscore the state’s responsibility to prevent wealth concentration and ensure resources serve the common good, their enforceability remains challenging due to their status as Directive Principles of State Policy. Legal precedents have underscored the importance of upholding property rights while acknowledging the state’s role in wealth redistribution. However, a balance must be struck to avoid infringing individual rights and maintaining constitutional protections. Moving forward, a nuanced approach is imperative, one that respects property rights ensures justifiable state intervention for public welfare, and aligns with constitutional safeguards. Collaboration between legal experts, policymakers, and civil society is vital to navigate this complex terrain effectively and address India’s widening wealth gap.
Author(s) Name: Mohit Patnaik (XIM University, Bhubaneswar)
Reference(s):
[1] Tanya Kini, ‘Distribution of Wealth: The Unfulfilled Vision of the Constitution’s Framers’ (Constitution Of India, 24 January 2023) < https://www.constitutionofindia.net/blog/distribution-of-wealth-the-unfulfilled-vision-of-the-constitutions-framers/> accessed 26 May 2024
[2] ‘India’s richest 1% holds 40% of wealth; inequality rising since 2000s: Study’ Deccan Herald (New Delhi, 20 March 2024)
[3] Ibid
[4] Tanya Kini, ‘Distribution of Wealth: The Unfulfilled Vision of the Constitution’s Framers’ (Constitution Of India, 24 January 2023) < https://www.constitutionofindia.net/blog/distribution-of-wealth-the-unfulfilled-vision-of-the-constitutions-framers/> accessed 26 May 2024
[5] The Constitution of India, 1949, art 39
[6] ‘Constitution & the Redistribution of Wealth in India’ (pwonlyias, 4 May 2024) <https://pwonlyias.com/current-affairs/wealth-redistribution-in-india/> accessed 26 May 2024
[7] Tanya Kini, ‘Distribution of Wealth: The Unfulfilled Vision of the Constitution’s Framers’ (Constitution Of India, 24 January 2023) < https://www.constitutionofindia.net/blog/distribution-of-wealth-the-unfulfilled-vision-of-the-constitutions-framers/> accessed 26 May 2024
[8] Ibid
[9] The Constitution of India, 1949, arts 39(b),(c)
[10] 1978 AIR 215
[11] Ibid
[12] RANGARAJAN R., ‘Constitution and the redistribution of wealth (The Hindu, 30 April 2024) < https://www.thehindu.com/news/national/constitution-and-the-redistribution-of-wealth/article68126525.ece> accessed 26 May 2024
[13] Ibid
[14] The Constitution of India, 1949, arts 19(1)(f)
[15] 1967 AIR 1643
[16] Kesavananda Bharati v. State of Kerala [1973] 4 SCC 225.
[17] Minerva Mills Ltd. v. Union of India [1980] 3 SCC 625
[18] Bibek Debroy, and Aditya Sinha, ‘Opinion | Why Wealth Redistribution Is No Panacea For Inequality’ NDTV (2 May 2024)< https://www.ndtv.com/opinion/wealth-redistribution-is-no-panacea-for-inequality-5570597> accessed 26 May 2024
