# White Paper on Indian States (1950)/Part 11/Privy Purse of Rulers

Privy Purse of Rulers
238. The Covenants for the establishments of Unions of States and Agreements of Merger contain provisions guaranteeing to the Rulers of merged and integrated States payment of privy purse as fixed under the terms of these Instruments. These provisions have been guaranteed by the Government of India. In January 1950, the Government of India entered into Agreements with the Rulers of Hyderabad and Mysore under which the Rulers of these States also have been guaranteed payment of privy purse as determined under these Agreements (Appendices LVII & LVIII). Article 291 of the Constitution gives constitutional guarantee to these commitments. The Article contains a mandatory provision that the guaranteed sums shall be charged on, and paid out of, the Consolidated Fund of India subject to such recoveries as may be made from time to time from the Provinces and States in respect of these payments. Explaining the background of this provision to the Constituent Assembly, the Hon'ble Minister for States stated as follows:—
(a) privy purses have been fixed by the Centre;
(b) privy purses are political in nature; and
(c) similar payments are not made by the Provinces.
Article 291, thus, embodies constitutional sanction for the due fulfilment of the Government of India's guarantees and assurances in respect of privy purses and provides for the necessary adjustments in respect of privy purse payments necessitated by changed conditions.
239. Under the terms of the Covenants and Agreements of Merger the privy purses of the Rulers are to be free from all taxation. The exemption in respect of taxation applies only to the amounts of privy purses and does not extend to any other income of the Rulers or the income of the members of their families. The right of the Rulers to this exemption has been accepted because in their own teritories the Rulers were recognised as Sovereigns and were free from all kinds of taxation. This arrangement is also covered by Article 291 which provides that any sum paid to a Ruler as privy purse, which is charged on the Consolidated Fund of India, shall be exempt from all taxes on income.
* ↑ A statement showing the amounts of privy purse guaranteed to the Rulers is appended (Appendix LIX).
* ↑ As a result of subsequent agreements including those with the Rulers of Hyderabad and Mysore, the figure has been increased to about Rs. 58 millions.
APPENDIX LVII
AGREEMENT WITH H. E. H. THE NIZAM OF HYDERABAD REGARDING PRIVY PURSE, PRIVATE PROPERTY AND RIGHTS AND PRIVILEGES.
AGREEMENT made this twenty-fifth day of January, 1950, between His Excellency the Governor General of India (which expression shall include the Government of India and his and its successors in office) and His Exalted Highness the Nizam of Hyderabad (which expression shall include his heirs, executors, administrators and assigns).
WHEREAS it has been decided that the Constitution of India adopted by the Constituent Assembly of India shall be the Constitution for the State of Hyderabad as for the other parts of India and shall be enforced as such in accordance with the tenor of its provisions;
AND WHEREAS it is expedient that the rights, privileges and dignities, including the dynastic succession and the privy purse, of His Exalted Highness the Nizam of Hyderabad shall be determined by agreement between him and the Government of India;
IT IS HEREBY agreed as follows:—
Article I
(1) His Exalted Highness 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 (Rupees fifty lakhs), free of all taxes:
Provided that the sum specified above shall be payable only to the present Nizam of Hyderabad for his life-time, and not to his successors, for whom provision will be made subsequently by the Government of India.
(2) The said amount is intended to cover all the expenses of His Exalted Highness the Nizam of Hyderabad and his family including expenses on account of his personal staff, maintenance of his residences, marriages and other ceremonies etc., and will neither be increased nor reduced for any reason whatsoever.
(3) The said amount shell be payable to the Nizam of Hyderabad in four equal instalments at the beginning of each quarter in advance.
(4) The payment of the said amount as herein provided is guaranteed by the Government of India.
Article II
(1) His Exalted Highness the Nizam of Hyderabad shall be entitled to the full ownership, use and enjoyment of all the jewels, jewellery, ornaments, shares, securities and other private properties, moveable as well as immoveable (as distinct from State properties) belonging to him on the date of this Agreement.
(2) His Exalted Highness the Nizam of Hyderabad has furnished to the Government of India lists of all the moveable and immoveable properties held by him as such private properties.
(3) If any dispute arises as to whether any item of property is the private property of His Exalted Highness the Nizam of Hyderabad or State property, it shall be referred to such independent person as the Government of India may nominated and the decision of that person shall be final and binding on all concerned.
Article III
His Exalted Highness the Nizam of Hyderabad and the members of his family shall be entitled to all the personal privileges, dignities and titles enjoyed by them whether within or outside the territories of the State immediately before the fifteenth day of August, 1947.
Article IV
The Government of India guarantees the succession according to law and custom to the gaddi of the State and to the personal rights, privileges, dignities and titles of His Exalted Highness the Nizam of Hyderabad.
In confirmation whereof, Mr. Vapal Pangunni Menon, Secretary to the Government of India in the Ministry of States, has appended his signature on behalf and with the authority of the Governor-General of India and His Exalted Highness Nawab Sir Mir Osman Ali Khan Bahadur, the Nizam of Hyderabad, has appended his signature on behalf of himself, his heirs, and successors.
(Sd.) MIR OSMAN ALI KHAN, Nizam VII.
(Sd.) V. P. MENON, Secretary, Ministry of States.
APPENDIX LVIII
AGREEMENT WITH HIS HIGHNESS THE MAHARAJA OF MYSORE REGARDING PRIVY PURSE, PRIVATE PROPERTY AND RIGHTS AND PRIVILEGES
AGREEMENT made this twenty third day of January, 1950, between His Excellency the Governor-General of India and His Highness the Maharaja of Mysore.
WHEREAS it has been decided that the Constitution of India, adopted by the Constituent Assembly of India shall be the Constitution for the State of Mysore as for the other parts of India and shall be enforced as such in accordance with the tenor of its provisions;
AND WHEREAS the Constituent Assembly of Mysore at its Sixth Session has recommended that the rights, privileges and dignities, including the dynastic succession and the privy purse, of His Highness the Maharaja of Mysore shall be determined by agreement between him and the Government of India;
IT IS HEREBY agreed as follows:—
Article I
(1) The Maharaja of Mysore shall, with effect from the first day of April, 1950, be entitled to receive annually for his privy purse the sum of Rs. 26,00,000 (Rupees twenty-six lakhs) free of all taxes:
Provided that the sum specified above shall be payable only to the present Maharaja of Mysore for his life-time, and not to his successors, for whom provision will be made subsequently by the Government of India.
(2) The said amount is intended to cover all the expenses of the Maharaja and his family including expenses on account of his personal staff, maintenance of his residences, marriages and other ceremonies, etc., and will neither be increased or reduced for any reason whatsoever.
(3) The said amount shall be payable to the Maharaja in four equal instalments at the beginning of each quarter in advance.
(4) The payment of the said amount as herein provided is guaranteed by the Government of India.
Article II
(1) The Maharaja shall be entitled to the full ownership, use and ​enjoyment of all private properties (as distinct from State properties) belonging to him on the date of this agreement.
(2) The Maharaja will furnish to the Government of India before the twenty third day of January, 1950, an inventory of all the immoveable property, securities and cash balances held by him as such private property.
(3) If any dispute arises as to whether any item of property is the private property of the Maharaja or State property, it shall be referred to such person as the Government of India may nominate and the decision of that person shall be final and binding on all concerned.
Article III
The Maharaja and the members of his family shall be entitled to all the personal privileges, dignities and titles enjoyed by them whether within or outside the territories of the State immediately before the fifteenth day of August 1947.
Article IV
The Government of India guarantees the succession according to law and custom to the gaddi of the State and to the personal rights, privileges, dignities and titles of the Maharaja.
In confirmation whereof, I, Vappal Panguni Menon Secretary to the Government of India in the Ministry of States has appended his signature on behalf and with the authority of the Governor-General of India and His Highness Sir Sri Jaya Chamaraja Wadiyar Bahadur, Maharaja of Mysore, has appended his signature on behalf of himself, his heirs and successors.
(Sd.) JAYA CHAMARAJA WADIYAR, Maharaja of Mysore.
(Sd.) V. P. MENON, Secretary to the Government of India in the Ministry of States.
APPENDIX LIX
Statement showing the annual Privy Purse amounts guaranteed to Rulers of Indian States