The Supreme Court has observed that, in the Indian context, the term'socialism' should not be construed as limiting the economic policies of an elected government.

It clarified that neither the Constitution nor the Preamble prescribes a particular economic policy.

"Neither the Constitution nor the Preamble mandates a specific economic policy or structure, whether left or right. Rather, 'socialist' denotes the State's commitment to be a welfare State and its commitment to ensuring equality of opportunity," a CJI Sanjiv Khanna-led bench has said.

The bench, which included Justice Sanjay Kumar, emphasized that in the Indian context, socialism represents the commitment to economic and social justice, ensuring that no citizen faces disadvantage due to economic or social conditions. 

The court clarified that the'term'socialism' embodies the objective of economic and social upliftment but does not constrain private entrepreneurship or the fundamental right to business and trade under Article 19(1)(g). 

With this perspective, the Supreme Court dismissed petitions challenging the inclusion of the terms 'secular' and 'socialist,' along with the word 'integrity,' in the Preamble through the Constitution (Forty-second Amendment) Act, 1976.

"These amendments were made in 1976. Article 368 of the Constitution permits amendment of the Constitution. The power to amend unquestionably rests with the Parliament. This amending power extends to the Preamble....The fact that the Constitution was adopted, enacted, and given to themselves by the people of India on the 26th day of November, 1949, does not make any difference. The date of adoption will not curtail or restrict the power under Article 368 of the Constitution. The retrospectivity argument, if accepted, would equally apply to amendments made to any part of the Constitution, though the power of the Parliament to do so under Article 368, is incontrovertible and is not  challenged, the top court has said.

The insertions were challenged in the Supreme Court on several grounds. Petitioners argued that the retrospective application of the 1976 amendment created a falsity, as the Constitution was originally adopted on November 26, 1949. They contended that the word ‘secular’ had been deliberately excluded by the Constituent Assembly and that the term ‘socialist’ imposed undue restrictions on the economic policy choices of an elected government, which reflects the will of the people.

Additionally, the court was informed that the Forty-second Amendment was unconstitutional and invalid as it was enacted during the Emergency on November 2, 1976, after the normal tenure of the Lok Sabha had expired on March 18, 1976.