Extend farm loan waiver to all: HC

It also suggested that the Centre come forward to extend financial help to Tamil Nadu “during this difficult situation”.

Updated - November 29, 2021 01:22 pm IST

Published - April 04, 2017 08:19 pm IST - Chennai

A farmer takes a look at his drought-hit turmeric field in Thammampatti block in Salem district.

A farmer takes a look at his drought-hit turmeric field in Thammampatti block in Salem district.

Asserting that there is no rationale behind the classification of farmers into three groups for the purpose of granting farm loan waiver, and that there is no intelligible differentia taken note of by the State government, a Division Bench of the Madras High Court headed by Justice S. Nagamuthu has directed the government to extend the waiver to all the farmers irrespective of their extent of landholding.

In view of the High Court’s direction, the State government has to bear an additional burden of ₹1,980 crore over the already already committed ₹5,780 crore.

On the other hand, the order extends the loan waiver benefit to 3,01,926 farmers in addition to 16,94,145 farmers, who have already benefitted.


However, noting that the court was aware that the financial situation of the government is grim, the Bench has said, “In this difficult situation, The Central government cannot be a silent spectator. It should come forward to extend help to the State to share the burden. We are hopeful that the Government of India will share the burden considering the unprecedented situation prevailing in the State.”

'Classification of farmers irrational'

The issue pertains to a Public Interest Litigation (PIL) moved by P. Ayyakannu of National South Indian River Interlinking Agriculturist Association seeking to quash a government order dated June 28, 2016 granting farm loan waiver to a section of farmers (small and marginal) and direct the government to grant the waiver to all farmers who have borrowed from the Co-operative societies irrespective of the extent of land they hold.

Opposing the PIL, the State government contended that the court cannot interfere in the policy decisions of the government, more particularly in the loan waiver scheme, as it involves economic policy of the government.


However, justifying the court’s intervention in the issue, the Bench relying on Article 14 (right to equality before law) said, “Article 14 is primarily is a guarantee against arbitrariness in the State action. Though it permits classification, it completely prohibits class classification. It is well settled that power of judicial review can be extended to test whether the classification is founded on intelligible differentia and whether it has got nexus to the object sought to be achieved.”

The State government then objected the plea saying, “Maximum beneficiaries with a minimum fund is the underlying policy of the government. By waiving ₹ 5.78 thousand crore 16,94,145 farmers were benefited. But by waiving ₹ 1.98 thousand crore more only 3,01,926 farmers would be benefitted. So, with the larger public interest, the government has framed this policy after considering the vital parameters including budgetary allocation and revenue mobilisation. Thus the classification of the farmers into three groups is not arbitrary.”

But noting that the government evolved the policy to give farm loan waiver to small and marginal farmers only because it was a electoral promise made by the ruling party in the 2016 election, said, “Though it is now submitted by the government that the scheme was formulated taking into account the loss sustained by the small and marginal farmers, in more than one place, in the files relating to the waiver it is reiterated that in pursuance of the announcement made in the AIADMK election manifesto, the department proposed to waive the crop loan.”

Pointing out that there is no requirement for a farmer to disclose his entire land holdings falling within the jurisdiction of one Co-operative society or different societies while availing loan, the judges said, “Thus, it is quite obvious that the holding register maintained by a society shall not reflect the actual land holding of a particular farmer. So classification made on basis of such registers is demonstrably irrational.”

“When we asked the Advocate General whether this anomaly persists, on instructions he submitted that there is no mechanism to verify the actual land holding of a farmer for the purpose of classification,” the Bench added.

The court further noted that because of this anomaly, innumerable undeserving farmers would have got the benefits whereas, the deserving would not have. The Bench then directed the government to extend the waiver to farmer holding more than five acres and pass appropriate order within three months.

The authorities were also restrained from initiating action against the farmers for recovery of crop loan as on March 31, 2016.

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