The Constitution and the Redistribution of Wealth

The argument about wealth redistribution has attracted interest during the current election campaign.

What does the Constitution provide?

  • Preamble to the Constitution: It describes the Constitution’s aims, which include ensuring social and economic justice, liberty, and equality for all citizens. 
  • Part III and IV: Part III of the Constitution enumerates the essential rights that ensure liberty and equality, whereas Part IV contains the DPSP. These are the ideals that our country’s central and state governments must adhere to in order to achieve social and economic fairness. Unlike the fundamental rights outlined in Part III, the DPSP is not enforceable in court.
  • Articles 39(b) and 39(c): The DPSP focuses on principles that ensure economic fairness. Article 39(b) emphasises the distribution of ownership and control over material resources for the common benefit. Article 39(c) seeks to avoid the concentration of wealth that is damaging to the general good.

History of the Right to Property in the Indian Constitution:

  • Original Guarantee: Article 19(1)(f) of the Constitution established the right to property as a basic right. It said that individuals had the right to acquire, keep, and dispose of property.
  • Compensation Requirement: According to Article 31 of the Constitution, the state must offer compensation when acquiring private property for public purposes.
  • Land reform and public welfare: The government, faced with issues such as land reforms and the necessity for public infrastructure development, deemed the initial requirements too restrictive owing to a lack of resources. This resulted in modifications aimed at increasing flexibility in purchasing property for public use. 
  • Constitutional modifications: Notable modifications such as Articles 31A, 31B, and 31C were enacted to limit the right to property and make land acquisition easier for public welfare projects.
  • Judicial Interpretation of Constitutional Amendment: The Supreme Court evaluated the link between basic rights and Directive Principles of State Policy (DPSP) in a number of decisions. In the Golak Nath case (1967), the Court ruled that basic rights cannot be violated in order to implement DPSP. However, in the case of Kesavananda Bharati (1973), the Court maintained the legality of Article 31C, subject to judicial review. 
  • Harmonic Balance: In the Minerva Mills case (1980), the Supreme Court emphasised the need of maintaining a harmonic balance between basic rights and DPSP in the Constitution.
  • The 44th Amendment Act The 44th Amendment Act of 1978 eliminated the right to property as a basic right, transforming it into a constitutional right protected by Article 300A. The goal was to prevent unnecessary litigation and safeguard public welfare programmes.

Current discussion in India about economic policy and inequality as the country transitions from a socialist to a market-driven economy:

  • Impact of Economic Policies: The early decades after independence were characterised by socialistic policies that included land reforms, industry nationalisation, high taxation rates, and limitations on private activity. These programmes sought to alleviate inequality and redistribute wealth, but were criticised for limiting growth and creating inefficiencies. 
  • Changes in Taxation: Taxation laws have changed significantly throughout the years, including the elimination of inheritance duty in 1985 and wealth tax in 2016. Income tax rates were also significantly decreased, indicating a move towards a more business-friendly atmosphere.
  • Growing Inequality: Despite economic progress, there is an increasing worry over inequality. Reports, such as those from the World Inequality Lab, show the growing wealth and income disparity, with a large share of wealth concentrated among the top 10% of the population.
  • The ruling party and its supporters have criticised the opposition, claiming that their planned policies, such as the reinstatement of inheritance tax, will burden even the poorest members of society.
  • Legal Interpretation: The Supreme Court’s participation in the argument is underscored by its decision to form a nine-judge bench to determine whether Article 39(b) of the Constitution, which deals with the distribution of material resources for the general benefit, encompasses private resources.
  • Central Question of the Debate: The present discussion centres on the balance between economic policies that encourage development and efficiency and those that seek to reduce inequality and ensure social fairness. 

Way forward:

  • Inclusive Growth: When supporting innovation and growth, it is critical to ensure that the benefits are dispersed evenly across all sectors of society, particularly the marginalised. Policies should strive for inclusive growth, ensuring that the benefits reach those who need them most.
  • Debate and Adaptation: Economic policies should be developed following thorough debate and consideration, taking into account current economic models and worldwide best practices. To handle growing difficulties and possibilities, an ongoing process of adaptation and refining is required.
  • Marginalised populations should be empowered specifically through focused interventions such as education, skill development, access to resources, and chances for economic involvement. 

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