In this article, Shubham Kumar discusses the concept of the socialist state as enshrined in our Indian Constitution and does an analysis of whether India practically follows the socialist model or not.


Socialist: A socialist is someone who supports the political philosophy of socialism, which is governmental system that advocates community ownership and control of all lands and businesses rather than individual ownership. The word ‘Socialist’, added in the Preamble by 42nd Amendment Act, 1976 indicates the incorporation of the philosophy of “socialism” which aims to eliminate inequality in income, status and standard of living.

Capitalism: An economic system in which investment and ownership of the means of production, distribution and exchange of wealth is made and maintained chiefly by private individuals or corporations, especially as contrasted to cooperatively and state-owned means of wealth.

The adoption of New Economic Policy in 1991 is oriented towards free market and privatization. Before 2015 India grew at slower pace than China which has been liberalizing since 1978. But in year 2015 India outpaced China in terms of GDP growth rate.

When privatization was adopted by the government, doubts were raised that the word ‘Socialist’ in the Preamble, which gave power to the state owned industries, was being diluted. On the other hand, by adopting New Economic Policies in 1991 through privatization, free market was welcomed. The adoption of New Economic Policy raised concerns in the root of the Basic Structure i.e. it seemed to contravene the objective of the word ‘Socialist’ in the Preamble. Even the Supreme Court upheld the privatization of several enterprises without going into the question whether that conflicts with the word ‘Socialist’ in the Preamble.

Cases to support the above argument which changed the scenario of privatization post- liberalization in India are:


In this case, the petitioners in different writ petitions have questioned the power of the Central Government to grant licenses to different non-Government Companies to establish and maintain Telecommunications System in the country and the validity of the procedure adopted by the Central Government for the said grant. In February 1993, the Finance Minister in his Budget Speech announced Government’s intention to encourage private-sector involvement and participation in Telecom to supplement efforts of Department of Telecommunications especially in creation of internationally competitive industry. On May 13, 1994, National Telecom policy was announced which was placed in the Parliament saying that the aim of the policy was to supplement the effort of the Department of Telecommunications in providing telecommunications services. Later, guidelines for induction of private-sector into basic telephone services were announced and a Committee was set up to draft the tender documents for basic telephone services under the Chairmanship of G.S.S. Murthy. Ministry of Communications published the ‘Tender Documents for Provision of Telephone Service’. It specified and prescribed the terms and conditions for the basic services and also conceived foreign participation but as a joint venture prescribing a ceiling on total foreign equity which, so far the Indian Company was concerned, was not to exceed 49% of the total equity apart from other conditions.

  • BALCO Employees Union vs Union of India ( 2002) SCC 333

In this case, the decision of the Government to the aforesaid strategic sale was challenged by the BALCO employee union by filing Writ Petition No. 2249 of 1999 in the High Court of Delhi. This petition was disposed of by the High Court vide its order dated 3rd August, 1999.

On 3rd March, 2000, the Union Cabinet approved the Ministry of Mines’ proposal to reduce the share capital of BALCO from Rs. 488.8 crores to Rs. 244.4 crores. This resulted in cash flow of Rs. 244.4 crores to the Union Government in the Financial Year 1999- 2000.

“(h) It shall vote all the voting equity shares of the Company, directly or indirectly, held by it to ensure that all provisions of this Agreement, to the extent required, are incorporated in the Company’s articles of association.”

With the filing of the writ petitions in the High Court of Delhi and in the High Court of Chhattisgarh, an application for transfer of the petitions was filed by the Union of India in this Court. After the notices were issued, the company received various notices from the authorities in Chhattisgarh for alleged breach of various provisions of the M.P. Land Revenue Code and the Mining Concession Rules. Some of the notices were not only addressed to the company but also to individuals alleging violation of the provisions of the code and the rules as also encroachment having taken place on Government land by BALCO. This led to the filing of the Writ Petition No. 194 by BALCO in this Court, inter alia, challenging the validity of the said notices. During the pendency of the writ petition, the workers of the company went on strike on 3rd March, 2001. Some interim orders were passed in the transfer petition and subsequently on 9th May, 2001 the strike was called off.

By Order dated 9th April, 2001, the writ petitions which were pending, in the High Court of Delhi and Chhattisgarh, were transferred to this Court being Transfer Case No. 8 of 2001 which pertains to the writ petition filed by BALCO Employees’ Union; transfer Case No. 9 of 2001 pertains to the writ petition filed by Dr. B.L. Wadhera in the Delhi High Court and Transfer Case No. 10 of 2001 is the writ petition filed by Mr. Samund Singh Kanwar in the High Court of Chhattisgarh.

  • Narmada Bachao Andolan vs Union of India (2000) SCC 664

Narmada is the fifth largest river in India and largest West flowing river of the Indian Peninsula. Its annual flow approximates to the combined flow of the rivers Sutlej, Beas and Ravi. Originating from the Maikala ranges at Amarkantak in Madhya Pradesh, it flows Westwards over a length of about 1312 km before draining into the Gulf of Cambay which is 50 kilometers west of Bharuch city. The first 1077 km stretch is in Madhya Pradesh and the next 35 km stretch of the river forms the boundary between the States of Madhya Pradesh and Maharashtra. Again, the next 39 km forms the boundary between Maharashtra and Gujarat and the last stretch of 161 km lies in Gujarat.

The basin area of this river is about 1 lakh sq km. The utilisation of this river basin, however, is hardly about 4%. Most of the water of this peninsula river goes into the sea. In spite of the huge potential, there was hardly any development of the Narmada water resources prior to the Independence.

In 1946, the then Government of Central Provinces and Berar and the then Government of Bombay requested the Central Waterways, Irrigation and Navigation Commission (CWINC) to take up investigations on the Narmada river system for basin-wise development of the river with flood control, irrigation, power and extension of navigation as the objectives in view. The study commenced in 1947 and most of the sites were inspected by engineers and geologists who recommended detailed investigation for seven projects. Thereafter in 1948, the Central Ministry of Works, Mines & Power appointed an Ad-hoc Committee headed by Shri A.N. Khosla, Chairman, CWINC to study the projects and to recommend the priorities. This Ad-hoc Committee recommended as an initial step detailed investigations for the following projects keeping in view the availability of men, materials and resources.

  • Center for Public Interest Litigation vs Union of India (2003) SCC 532

In these two writ petitions filed in public interest, the petitioners are calling in question the decision of the Government to sell majority of shares in Hindustan Petroleum Corporation Limited (HPCL) and Bharat Petroleum Corporation Limited (BPCL) to private parties without Parliamentary approval or sanction as being contrary to and violative of the provisions of the ESSO (Acquisition of Undertaking in India) Act, 1974, the Burma Shell (Acquisition of Undertaking in India) Act, 1976 and Caltex (Acquisition of Shares of Caltex Oil Refining India Limited and all the Undertakings in India for Caltex India Limited) Act, 1977.The petitioners contended that in the Preamble to these enactments it is provided that the oil distribution business be vested in the State so that the distribution subserves the common general good; that, further, the enactments mandate that the assets and the oil distribution business must vest in the State or in Government companies; that, they are not opposed to the policy of disinvestment but they are only challenging the manner in which the policy of disinvestment is being given effect to in respect of HPCL and BPCL; that, unless the enactments are repealed or amended appropriately, the Government should be restrained from proceeding with the disinvestment resulting in HPCL and BPCL ceasing to be Government companies. It is further submitted that disinvestment in HPCL and BPCL could result in the State losing control over their assets and oil distribution business and, therefore it is contrary to the object of enactments.

The argument till now raises a question in the mind of a reader that whether the diversion from the basic structure, which is taking place gradually under the garb of post-liberalization era is appropriate or not? It could be understood by an in-depth understanding of two important considerations :

Whether we support that economic policy must adhere to the ‘Doctrine of Basic Structure’ by relying on the fact that it should not be altered as decided in the landmark case of Keshavananda Bharti.

Another consideration is whether we should support the alteration of the Basic Structure Theory in the name of development, which is nevertheless supported by Supreme Court where it upheld the privatization of several enterprises without going into the question if that conflicts with the word ‘Socialist’ that shows the diversion from the Basic Structure theory in the name of development.

Now if we support the first consideration, it will force our economy to follow the socialistic pattern and again create the situation where governmental system will advocate community ownership and control of all lands and business rather than individual ownership. In this technological era where development is happening rapidly all across the globe, it is not practically possible to go back where we totally depend on socialist pattern of development. So it could not be justified to be a part of society where we totally depend upon state-owned means of wealth. i.e. following ‘Philosophy of Socialism’. An example to justify the same is-

“Education is governed by the Constitution of India. In terms of enrollment, India is the third largest higher education system in the world after China and the USA. The quality of human resources of a country normally depends upon the quality of the education of the country. After Independence, it has been the vision of Indian government to adopt some economic reforms. So, in 1991 our government adopted “LPG” that connotes Liberalization, Privatization, Globalization and opportunities in higher education. Higher education drives, and is driven by, globalization, a phenomenon of increasing worldwide inter-connectedness that combines economic, cultural and social changes. Globalization and liberalization put tremendous effect on higher education and this paper explores the impact of globalization on higher education with regard to SWOT (strengths, weaknesses, opportunities and threats) analysis and liberalization with its positive and negative effects”. This example shows that if we were to stick to the Doctrine of Basic Structure theory then we cannot see the changes that we are witnessing today.

Now if we support the second consequence, where in the name of development, the government will continue its activity of privatizing each and every sector ,then the day is not far when the economic development of our country will be totally dependent on the private sector and it will directly or indirectly cause a great impact, i.e., on the one side, we have to face the situation where there is a state with power in the hand of individual ownership which further creates a situation where the consumer will be no less than a puppet in the hands of those who are having total command or control over each and every sector and on the other side, if the government supports complete privatization that is complete transformation from ‘Socialistic’ pattern to the ‘Capitalistic’ pattern of development, then it will cause ‘Damage, Destruction, Change or Alteration in the Basic Structure or Framework of the Constitution’. So it is crystal clear that, if government will follow such policy where the country has to face the complete transformation of socialism to the capitalism in the name of development then it will lead to the destruction of the Basic Structure of our Constitution.

The latest example nowadays is the concept of Reliance Jio to justify the above analysis:

RELIANCE JIO: A telecommunication leg of Reliance Industries Limited owned by Mukesh Ambani; it was incorporated in 2007. It is a Mumbai-based provider of 4G internet, mobile, telephone, broadband services and digital services in India, formerly known as Infotel Broadband Service Limited. It provides 4G services on a pan-India level using LTE technology which is attracting more and more consumers by promising to provide unlimited 4G network, free voice calls, free SMS and also has officially announced the ‘world’s cheapest tariff packs for internet and voice calls’. It may happen that by providing this dream offer, a day will come when all the other telecom companies like Aircel, Airtel, Idea etc. along with state owned telecom companies, who will not be able to provide such facilities, will collapse and this will lead to creation of a situation where there will be no competitor telecom company because people will only become the consumer of Reliance Jio.

Now if we try to figure out the negative impact of becoming the consumer of only one telecom company in the market is that, it will create its unbeatable monopoly in this sector and the question which will then arise would be that what if a day will come with the same ‘world’s cheapest tariff pack for internet and free voice calls provider’ will start charging unnecessarily higher amount opposite to that of what they are providing today? Then even though it would create extra monetary burden on the common man’s pocket, everyone will have to pay whatever they charge, willingly or unwillingly; we are bound to suffer inconvenience because till that time we will not have any alternatives left. In that scenario no one can help even the government to overcome the situation. And it is just one example to show the negative impact of concentration of power in one hand. So, if any practice which evolves in the name of development under post-liberalization era, which brings the founding stone of complete destruction of the basic structure of the constitution, is logically unreasonable.

Now after doing critical analysis of both the situation, it paints a clear picture in the mind that in the practical scenario it is neither possible to completely stick on to the Basic Structure of the Constitution nor does the complete diversion from the Basic Structure holds good. Because on one hand, our economic policies cannot follow the old socialistic pattern of development in order to completely follow the Basic Structure theory and on the other hand government can’t take such steps in the name of development whose end will be the destruction or alteration in the Basic Structure of the Constitution.

So in light of the present situation of our country, it’s high time to accept the truth that there is need to make strategies where both should go hand in hand, that means the need of the time is that there must be some flexibility which should be maintained, while making any policy regarding trade and commerce in order to see the economic development.

Now I want to take everyone’s attention on the issue of ‘Right to Property’ just to show how the decision had been taken in the past in which the Government comes forward with the solution of neither to set aside the rights of the citizens nor to hinder or affect the development process of the State.

Article 19 and 31 of Part III of the Constitution Of India which deals with the fundamental rights, originally provided for the right to property, where Article 19 guaranteed to all citizens the right to acquire, hold and dispose of property and

Article 31 provided that “no person shall be deprived of his property save by authority of law”; it also provided that compensation would be paid to a person whose property has been taken for public purposes.

The provision relating to right to property were changed a number of times. The 44th Amendment of 1978 deleted the right to property from the list of Fundamental Rights and Article 300-A was added to the constitution which provides no person shall be deprived of his property save by authority of law.

Addition of citizens Right to Property in the Article 300-A and making it as the constitutional right can be considered as one of the best examples which can be correlated with the current topic, because it is one of the cases in which the lawmakers neither kept right to property as the fundamental right nor declared it as unconstitutional because if the right to property is kept as a fundamental right of the citizen, then it will never be possible for the State to take away the land from citizens even if that piece of land is required for the welfare as well as development of the society and which could benefit the society as a whole. Then this right to property as a fundamental right will be no less than an obstacle in the path of development. So, there was the need of time to take it out from the part 3 of the Constitution. In short, lawmakers could not stick to the old law where Right to Property was a Fundamental Right. On the other hand, the same lawmakers cannot declare it unconstitutional because then the citizens are not left with any means to protect their land, and even this situation was not acceptable. So the lawmakers instead of leaving right to property as a fundamental right or instead of making it unconstitutional, chose to make it a constitutional right of the citizen, according to which, if needed, the government can take the right over property from its legal owner by paying adequate compensation or if the owner of the property is deprived of his property unreasonably or unlawfully then they can knock the door of the court for justice because it is their constitutional right to enjoy their right to property provided under article 300 A by the Constitution Of India. This leads to a conclusion that sometimes there are situations where neither the lawmaker can stick to the law nor make it unconstitutional.

So it is one of the best examples where the situation resembles to the current topic where I am trying to prove that it is the flexibility which is the need of the hour and which should be maintained while making any policies regarding trade and commerce in order to see economic development because in today’s advanced and technological era neither can we go back, as we cannot imagine in the practical scenario to be a part of situation where our Indian economy has to be totally dependent upon the socialistic pattern of development just because we have to stick anyhow to the doctrine of Basic Structure theory, nor can the government take such steps which destroy, change, or alter the Basic Structure or framework of the Constitution in the name of development under the roof of post- liberalization era.


In order to overcome the dilemma of choices so as to understand the requirements of changing times, there is a need to move towards a comprehensive doctrine which encompasses the complexity of policy making and respects the mandate of the Basic Structure, thereby upholding the supremacy of the Constitution. And, it is possible only when the guardians of law and the custodians of the Constitution strive to strike a fine balance between the legitimacy of Development as well as Basic Structure theory. This is the pressing demand of the era.

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