SC upholds Tamil Nadu's scheme for crop loan waiver for small, marginal farmers

The Supreme Court on Tuesday upheld the Tamil Nadu government's 2016 order waiving off the loans issued to small and marginal farmers while emphasising that a scheme cannot be held to be constitutionally suspect merely because it was based on an electoral promise.

A bench of Justices D Y Chandrachud and A S Bopanna noted 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.

“Therefore, the 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 court said.

The top court set aside the Madras High Court's April 4, 2017, judgement, which held the grant of loan waivers only to small and marginal farmers was arbitrary. The HC directed the government to grant the benefit to all farmers irrespective of the extent of landholding.

The bench said that the law or the scheme of the government cannot be tested on the anvil of majoritarian morality but only on constitutional morality.

The bench also noted that the scheme was introduced in pursuance of an electoral promise made by the then party in power in Tamil Nadu. “It is settled law that a scheme cannot be held to be constitutionally suspect merely because it was based on an electoral promise," the bench said.

The court pointed towards the distinct degree of harm suffered by the small and marginal farmers with landholding of fewer than five acres and those who belonged to the economically weaker section of society as compared to other farmers.

"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," it said.

The bench also said the purpose of providing a waiver of agricultural loans for farmers is to uplift the distressed farmers, who have been facing the brunt of the erratic weather conditions, low produce, and fall in prices because of the market conditions.

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.

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