SC upholds farm loan waiver by TN in 2016

By: |
November 24, 2021 3:05 AM

It said a scheme cannot be held to be constitutionally suspect merely because it was based on an electoral promise.

The Supreme Court on Tuesday upheld the Tamil Nadu government’s 2016 decision that waived of agricultural loans given to small and marginal farmer. It said a scheme cannot be held to be constitutionally suspect merely because it was based on an electoral promise.

“The small and marginal farmers belong to the economically weaker section of society. Therefore, the loan waiver scheme in effect targets the economically weaker section of the rural population,” the apex court said, adding that the purpose of waiver of agricultural loans was to uplift distressed farmers, who have been facing the brunt of erratic weather conditions, low produce, and fall in prices because of market conditions.

Setting aside the Madras High Court’s April 4, 2017 judgement that held that the grant of loan waivers only to small and marginal farmers was arbitrary, a Bench led by Justice DY Chandrachud said that the objective of promoting the welfare of the farmers as a class to secure economic and social justice is well recognised by Article 38 of the Constitution. It said that the scheme propounded by the Tamil Nadu government passed “ muster against the constitutional challenge. The High Court has erred in holding otherwise.” The HC had directed the government to grant the benefit to all farmers irrespective of the extent of landholding.

While noting that the scheme was introduced in pursuance of an electoral promise made by the then party in power in the state, the apex court said that the law or the scheme of the government cannot be tested on the anvil of majoritarian morality but only on constitutional morality.

“Due to the distinct degree of harm suffered by the small and marginal farmers as compared to other farmers, it is justifiable that the benefit of the scheme is only provided to a specified class as small and marginal farmers constitute a class in themselves. Therefore, the Percentage Distribution of Indebted Agricultural Households classification based on the extent of landholding is not arbitrary since owing to the inherent disadvantaged status of the small and marginal farmers, the impact of climate change or other external forces is unequal,” the judgement stated.

The court noted that 16,94,145 small and marginal farmers have availed of agricultural loans as compared to 3,01,926 farmers belonging to the ‘other category’. This testified that small and marginal farmers have a significant capital deficit when compared to the rest of the farmers.

The Tamil Nadu government issued GO in May 2016 granting a waiver of outstanding crop loans, medium term (agriculture) loans and long term (farm sector) loans issued to small and marginal farmers. The guidelines it provided that ‘small farmer’ means a farmer who holds land of 2.5 to 5 acres and ‘marginal farmer’ means a farmer who holds land upto 2.5 acre.

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