Constitution and the redistribution of wealth

Constitutional provisions of wealth redistribution

• Preamble- It seeks to ensure social and economic justice, liberty and equality for all citizens.
• Part III- It outlines the fundamental rights that safeguard liberty and equality.
• Part IV- Directive Principles of State Policy (DPDP) outlines the governments towards achieving justice, it is not judicially enforceable.
• Economic justice- It is given under Part IV of DPSP.
• Article 39(b)- It states that  the ownership and control of the material resources of the community should be distributed in such a way as to best serve the common good.
• Article 39(c)- IT aims to prevent the concentration of wealth and means of production which could be detrimental to the community.

Article

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31A

It exempts certain laws from the scrutiny of fundamental rights, such as acquisition of property by the State

31B

It validates certain Acts and Regulations that are included in the Ninth Schedule of the Constitution

31C

Article 39(b) and Article 39(c) cannot be challenged on the grounds that it violates the rights granted under Articles 14 and 19

44th Amendment Act (1978)

It removed the right to property from fundamental rights to reduce litigation by property owners, thus making it a constitutional right under Article 300A.

Overview of India’s economic policies

• Socialist model- Post Independence, India adopted a socialist approach characterized by significant state intervention and control.
• Land acquisition laws- Laws were enacted by both the central and state governments to acquire land from zamindars (landlords) for public purposes, facilitating land reforms.
• Nationalization- Key sectors such as banking and insurance were nationalized, reflecting the state’s control over important economic resources.
• Taxation- There were extremely high rates of direct taxes, sometimes up to 97%, along with estate duty on inheritance and a tax on wealth, aimed at redistributing wealth.
• Regulate private enterprise- Measures like The Monopolies and Restrictive Trade Practices Act, 1969 (MRTP Act) were implemented to regulate and restrict the growth of private enterprise, preventing the concentration of economic power.
• Economic reforms- During 1990s India marked a shift from a closed economy to one focused on liberalization, globalization, and privatization.
• Industrial Policy of 1991- A new policy aimed to empower market forces, improve efficiency, and address industrial deficiencies.
• Legislative changes- The Monopolies and Restrictive Trade Practices Act (MRTP Act) was repealed and replaced by the Competition Act, 2002. Additionally, income tax rates were significantly reduced.
• Tax Reforms- Income tax rates were significantly reduced, estate duty and wealth tax was abolished in 1985 and 2016 respectively.
• Market driven economy- The reforms increased government resources, helping to alleviate extreme poverty.
• Inequality growth- As per World Inequality Lab, as of 2022-23, the top 10% of the population held 65% of the wealth and 57% of the income, while the bottom 50% only had 6.5% of the wealth and 15% of the income.