On Tuesday, the Supreme Court approved the Tamil Nadu Government’s loan waiver scheme of 2016 for small and marginal farmers. Announcing its decision, the SC cited that the purpose of waiver of agricultural loans is to uplift distressed farmers and bring about just social order. It highlighted that it is for those farmers who have been facing the brunt of the erratic weather conditions, low produce, and fall in the prices because of the market conditions.

The matter was being heard by a bench comprising Justices, Dhananjaya Y Chandrachud, and AS Bopanna. They mentioned that the loan waiver scheme is also in pursuance of the Directive Principles of State Policy. “The objective of promoting the welfare of the farmers as a class to secure economic and social justice is well recognized by Article 38,” said the court.

Article 38, it highlights that the state shall strive to promote the welfare of the people by securing and protecting as effectively as it may a social order in which justice, social, economic, and political, shall inform all the institutions of the national life.

The bench approved the Tamil Nadu government’s scheme noting that the 2016 loan waiver scheme for farmers owning land up to five acres was introduced with an endeavour to bring substantive equality in society by using affirmative action to uplift the socially and economically weaker sections. The scheme is beneficial only to a specified class. “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 bench noted.

Furthermore, the Madras Court decision taken in 2017 to extend the benefit of the scheme also to the big farmers was kept aside by the SC. To support its decision, the SC cited that small and marginal farmers are resource deficient, and do not have borewells to overcome the drought. It also mentioned statistics on the percentage distribution of the indebted agricultural households.


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