Privy purse in India

The privy purse in India was a constitutionally guaranteed, tax-free payment made by the Union of India to the former rulers of princely states as part of the negotiated terms for accession (1947) and later integration and merger (1948–49). Conceived as a transitional device to compensate rulers for the surrender of sovereignty and the transfer of state revenues and assets to the new Republic, the arrangement endured from 1949 until its abolition by the Twenty-sixth Amendment to the Constitution of India (1971), following an intense political and legal contest over the place of inherited privilege in a democratic, egalitarian order.

Historical background and context

At independence, more than 560 princely states—ranging from expansive entities such as Hyderabad and Mysore to tiny estates—existed under British paramountcy. With the lapse of paramountcy under the Indian Independence Act 1947, rulers were theoretically free to accede to India or Pakistan, or to claim independence. Through the diplomacy of Vallabhbhai Patel and V. P. Menon, almost all executed the Instrument of Accession, ceding defence, external affairs and communications. Between 1948 and 1949, the Union negotiated Merger Agreements or Covenants of Integration through which rulers transferred full governmental powers and revenues in exchange for assurances, notably recognition of titles, certain personal privileges, and a privy purse.
The political logic was twofold: to achieve swift, peaceful consolidation of the territory of India, and to avert protracted disputes over property and authority that could jeopardise administrative continuity. The privy purse was therefore a price for stability, justified as a finite measure during the transition from monarchical to popular sovereignty.

Constitutional basis and mechanics

From 26 January 1950, privy purse payments were anchored in Article 291, which charged them on the Consolidated Fund of India and exempted them from taxation. The Constitution further recognised rulers and their successors through Article 366(22) and preserved certain personal privileges and dignities. While political privileges (e.g., gun salutes, precedence, ceremonial styles) were matters of executive practice, the monetary grant enjoyed the special constitutional protection of a charged expenditure, placing it beyond ordinary budgetary reduction.
In return, rulers relinquished all ruling powers, state revenues, and public properties (save specified private properties recorded in inventories). The arrangement underscored that the Republic recognised rulers only in a notional, ceremonial sense while extinguishing their political authority.

Scale, structure and determinants of payments

Privy purse amounts varied widely, reflecting the diversity of states. Determinants included former state revenues, status as a salute or non-salute state, antiquity of the dynasty, and political weight during negotiations. At the upper end, eleven states—including Hyderabad, Mysore, Travancore, Baroda (Vadodara), Jaipur, Patiala, Nawanagar, Bhavnagar, Rewa, Bhopal and Kolhapur—received grants of ₹1,000,000 or more per annum, with Hyderabad initially sanctioned above ₹4 million before subsequent downward revision. Roughly one hundred rulers drew ₹100,000 or more, while numerous small estates received much lower figures, some mere ₹5,000 annually.
The payment was to the person of the ruler and, by convention and covenantal stipulation, intended to meet familial, religious and ceremonial obligations. Over time, the Union adopted a policy of reduction on succession, compressing the fiscal outlay as generations changed. Separate from rulers, a range of jagirdars and political pensioners continued to receive long-standing stipends, though not under Article 291.

Political debate and early attempts at abolition

By the 1960s, critics questioned the social legitimacy of hereditary stipends in a republic committed to equality and socialist planning. Fiscal pressures accentuated scrutiny of charged expenditures. Government efforts to rationalise and reduce larger privy purses, especially during periods of tight external balances within the sterling area, fed a broader political narrative that such payments were anachronistic.
In 1970, the Government introduced a constitutional amendment to abolish privy purses and derecognise rulers. Though the Lok Sabha approved it, the Bill fell short by one vote in the Rajya Sabha, failing to secure the requisite two-thirds majority. The executive then issued a Presidential order under Article 366(22) withdrawing recognition of rulers, effectively halting payments and privileges. Several former rulers petitioned the Supreme Court, which set aside the executive action, holding that recognition could not be withdrawn in that manner while the constitutional guarantees persisted.

The Twenty-sixth Amendment: abolition and derecognition

Regrouping after the judicial defeat, the Government re-introduced the measure in 1971. The resulting Constitution (Twenty-sixth Amendment) Act, 1971 enacted three decisive changes:

• Article 291 repealed: the constitutional charge on the Consolidated Fund ceased; no further privy purse payments were permissible.
• Article 362 repealed: the non-justiciable assurance to respect privileges and dignities under covenants was removed, signalling the end of constitutional solicitude for former rulers’ personal entitlements.
• Article 363A inserted: all former recognition of rulers and successors ceased, and any privileges linked to such recognition were explicitly terminated. The provision fortified the bar on judicial review in matters arising from covenants and their political settlement.

The Government’s rationale framed abolition as a moral imperative of equality (Article 14) and a fiscal necessity, aligning the constitutional order with the socialistic directive principles and closing a chapter of transitional compromise.

Judicial interlude and doctrinal contours

The Supreme Court’s earlier intervention affirmed that executive action cannot override explicit constitutional guarantees; change of such magnitude required constitutional amendment. After the Twenty-sixth Amendment, challenges were largely foreclosed by the combination of repeal and Article 363A, which relocated these questions beyond ordinary judicial scrutiny. The episode reinforced two doctrinal points: the special status of charged expenditures and the limits of executive power absent constitutional change, while also illustrating Parliament’s competence to re-design constitutional settlements, subject to the later-articulated basic structure doctrine.

Social and political aftermath

The abolition dissolved the remaining legal vestiges of princely status. Many families retained private properties but lost ceremonial precedence, official styles, and income streams long used to support large households and patronage networks. Politically, responses diverged. Some erstwhile rulers entered electoral politics—Vijaya Raje Scindia and Madhavrao Scindia achieved notable success—whereas others, such as Mansur Ali Khan Pataudi, failed at the polls, signalling the democratisation of legitimacy. A few exceptional individual allowances, granted on distinct legal grounds, continued for life but lapsed with the beneficiaries’ deaths.
Economically, the removal of a charged, non-means-tested outlay marginally eased fiscal pressures and cohered with a wider programme of redistributive reforms. Culturally, royal houses recalibrated their public roles, converting palaces into hotels and museums, or curating heritage enterprises. Over time, markets—rather than mandates—determined their social footprint.

Titles, privileges and constitutional equality

India’s constitutional architecture had already abolished titles (Article 18) and espoused equality before the law (Article 14). After 1971, courts repeatedly affirmed that self-assumption or public use of abolished royal titles is incompatible with constitutional norms, and that special recognitions tied to pre-constitutional covenants no longer carry legal effect. The combined effect of Articles 18 and 363A entrenched a unitary civic status for citizens without inherited official distinction.

Significance in the project of integration

The privy purse system represents a nuanced two-phase state-building strategy. In phase one (1947–49), the Republic relied on contractual assurances—including monetary grants—to achieve peaceful, rapid integration, converting potential external sovereignty claims into internal allegiance. In phase two, once integration consolidated and democratic institutions matured, the Republic terminated transitional privileges to align practice with principle. The Twenty-sixth Amendment thus completed the arc from negotiated merger to egalitarian consolidation, demonstrating constitutional agility: promises made for nation-building were honoured for two decades and then lawfully withdrawn through amendment when their purpose had faded.
The story of the privy purse encapsulates India’s constitutional pragmatism: willing to bargain for unity at the outset, and equally willing—through Parliament acting within constitutional forms—to retire inherited distinctions in favour of civic equality, fiscal discipline, and democratic uniformity.