When Indira Gandhi Pulled the Strings of Nizam, Other Princely State Rulers over ‘Privy Purses’

Did you know that late Prime Minister Indira Gandhi abolished a form of compensation, called ‘privy purse’, which was being paid to the Nizam of Hyderabad and other princely state rulers? As Rahul Gandhi, her grandson, walks across the Nizam’s erstwhile state with hopes of restoring Congress to its former glory, we take a look at the case of the ‘privy purse’ on the day Indira Gandhi was assassinated 38 years ago.

Hyderabad state was annexed to the Indian Union in 1948 through a violent police action called ‘Operation Polo’. It was formally integrated into the country on January 30, 1950. The accession of princely states was the fruit of the labours borne by Sardar Patel and VP Menon.

Anuradha Reddy, co-convenor of Indian National Trust for Art and Cultural Heritage, told News18: “While integrating into India, the Nizams surrendered several acres of villages, museums, railway system etc. In consideration for their contribution and to safeguard their interests, it was agreed that they would be paid a compensation by the Indian state.” It was agreed that these payments would be tax free and the amount would be progressively reduced. Article 291 of the Indian Constitution guaranteed a privy purse to princely rulers and successors.

In the agreement made between the Governor General of India and Mir Osman Ali Khan Nizam (VII), it was stated that the Nizam of Hyderabad shall, with effect from the first day of April 1950, be entitled to receive annually for his privy purse the sum of Rs 50,00,000, free of all taxes. The amount was intended to cover expenses towards personal staff, maintenance of houses, marriages and other ceremonies. The Nizam was also entitled to all jewels, jewellery, ornaments, shares, securities and other private properties owned by him.

However, in 1971, Indira Gandhi abolished the privy purses saying they were incompatible with an egalitarian social order. Through the 26th Amendment Act, Articles 291 and 362 were omitted from the Indian Constitution, stripping former princely state rulers of privy purses and other privileges. In her statement for amending the Constitution, the former PM had stated: “The concept of rulership, with privy purses and special privileges unrelated to any current functions and social purposes, is incompatible with an egalitarian social order.

The government has, therefore, decided to terminate the privy purses and privileges of the rulers of former Indian states. It is necessary for this purpose, apart from amending the relevant provisions of the Constitution, to insert a new article therein so as to terminate expressly the recognition already granted to such rulers and to abolish privy purses.”

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