Law Insider India

Legal News, Current Trends and Legal Insight | Supreme Court of India and High Courts

SC: Wavier of Outstanding Crop Loans granted, Govt Scheme sustained

2 min read

Chaini Parwani –

Published on: November 24, 2021 at 18:20 IST

The Supreme Court upheld a scheme of the then ruling AIADMK Government in Tamil Nadu permitting a Waiver of Outstanding Crop Loans, Medium-Term (agriculture) Loans, and Long-Term (farm sector) Loans issued to Small and Marginal farmers.

A Bench comprising of Justices D.Y. Chandrachud and A.S. Bopanna stated “The small and marginal farmers belong to the economically weaker sections of the society. Therefore, the loan waiver scheme in effect targets the economically weaker sections of the rural population.”

Further the Bench highlighted that due to despicable harm suffered by the Small and Marginal Farmers as compared to other farmers, it is legitimate that the merits of the Scheme are only provided to a certain specified class.

The Tamil Nadu Government alleged that consumption expense of Marginal and Small Farmers exceeds their Estimated Income by a substantial margin, and the deficits are covered by borrowings.

Furthermore, It was highlighted by the Bench that 16,94,145 small and marginal farmers have availed Agricultural Loans and 3,01,926 farmers belonging to the ‘Other’ Category.

The Bench therefore accentuated that small and marginal farmers have a noteworthy Capital Deficit when compared to the rest of the farmers.

The Bench stated “It is a settled law that a scheme cannot be held to be Constitutionally suspect merely because it is based on an electoral promise.”

Furthermore, the Madras High Court Judgment granting wavier of Loans to small and marginal farmers to be arbitrary and same benefit to all the farmers was set aside by the Supreme Court.

The National South Indian River Interlinking Agriculturist Association had alleged the scheme as unconstitutional for violation of Article 14 of the Constitution, and pleaded a direction to provide loan waiver to all farmers, irrespective of the extent of landholding.