Wealth redistribution: Why did the Solicitor General call the idea ‘rustic and juvenile’ in Supreme Court?

New Delhi, India

Wealth redistribution has been a highly debated issue between the government and the opposition in the Lok Sabha elections. The Supreme Court has also appointed a nine-judge bench to interpret the Directive Principles of State Policy (DPSP) in terms of material resource ownership and management.

What is the current debate?

Congress leader Rahul Gandhi during the Lok Sabha campaign said that there will be a financial survey to determine the distribution of wealth in the country for addressing the issue of inequality. The ruling BJP targeted Gandhi and alleged that Congress, if elected, would bring back the "socialistic model" of economics and hinder India's growth as an economy.

India's economic policy shifts: Now vs. then

In the first four decades following independence, the governments in India used "socialistic model" of economics. The economic policies resulted in the nationalisation of banks and insurance, exceptionally high direct tax rates (up to 97%), estate duty on inheritance, wealth tax, and so on. The objective behind these policies at the time was to reduce inequality and redistribute wealth among the poor who made up the bulk of the population. However, such policies impeded growth and led to the concealing of income/wealth. 

Since then, the country has transitioned from a closed economy to one of liberalisation,  globalisation and privatisation. The market-driven economy has resulted in more resources for the government, which has aided in lifting people out of poverty. 

What did the Supreme Court-appointed 9-judge bench say?

On Tuesday, a Constitution bench of the Supreme Court, which is examining the question of whether private property would constitute material resources of the community as mentioned in Article 39(b), stated that the provision should not be interpreted so broadly that no private rights are protected at all.

The bench comprised CJI D Y Chandrachud and Justices Hrishikesh Roy, B V Nagarathna, Sudhanshu Dhulia, J B Pardiwala, Manoj Misra, Rajesh Bindal, Satish Chandra Sharma  and Augustine George Masih.

“We will be sending a message across because what we write will send a message of what India is and what India aspires to be…We do not want to dilute the constitutional social significance of 39 (b) and (c). It’s there for us, given to us. At the same time, we should not be sending a message by interpreting 39(b) in such a wide sense that there is no protection of private rights in the society at all,” Chief Justice of India D Y Chandrachud, presiding over the bench, said.

“It would be rather extreme to interpret Article 39(b) to include privately-owned property as material resources of the community," the bench said.

“The dynamics of economic development have changed from socialist pattern to a free market economy since the 1990s and now private investments hold the key. If we want to have a productive economy, then private investment must be encouraged. In the 1950s, no one had envisaged that electricity would be distributed by private parties. In the present scenario, it would be extremely unfair to argue that community resources include all private properties,” it added.

Also read: India’s former judges write to CJI, urge him to counter political pressure, efforts to undermine judiciary

He also questioned, “How will we attract private investment if we say that there is no protection of private rights.”

What did Solicitor General Tushar Mehta say?

Solicitor General Tushar Mehta, who agreed with the CJI said, "It would be a rustic and juvenile method to propose computing the nation’s wealth by totalling the wealth of every citizen and then distributing it equally among a particular section. Such ideas reflect a lack of understanding of economic development, governance, social welfare, and the nation.”

The allusion to the nine judges stems from the 1978 ruling in 'The State of Karnataka And Anr Etc against Shri Ranganatha Reddy & Anr', which presented two opposing viewpoints. The lawsuit concerned the nationalisation of road transport services. Justice V R Krishna Iyer believed that the community's material resources would comprise both natural and man-made resources, as well as publicly and privately owned assets.

“The formulation by Justice Krishna Iyer is a little too extreme. What that says (is) since the community consists of individuals and therefore every individual is a part of the community, the material resources of the community would therefore also mean resources of the individual,” the CJI said.

(With inputs from agencies)