HC tells TN to waive loans for all farmers, not just small ones

The Madras High Court today asked the Tamil Nadu government to waive farm loans obtained by all farmers, instead of limiting the benefit only to those owning less than five acres of land.

The court also restrained officials from initiating any penal or recovery proceedings against farmers who had defaulted on repayment of crop loans.

The ruling will mean an additional financial burden of Rs1,980 crore to the Tamil Nadu government, and it will benefit 3.01 lakh farmers who fall in the 'other' category.

The 28 June 2016 order granting the loan waiver cost the government Rs5,780 crore and benefited 16.94 lakh marginal and small farmers who owned up to 2.5 acres and up to 5 acres of land respectively.

Calling the categorisation that left out other farmers as discriminatory and not an intelligible criterion, a division bench of Justice S Nagamuthu and M V Muralidharan, without striking down the government order, directed the government to expand its scope to cover all farmers irrespective of the land owned by them. The matter pertains to loans obtained from primary agricultural cooperative banks till 31 March 2016.

"We are aware that the financial situation of the state government is grim. The chief secretary in her letter to the advocate general also reiterated the same. The state government is already single-handedly shouldering the burden to the tune of Rs5,780 crore and it will be additional burden to bear Rs1,980.33 crore," the bench said, adding that the Centre too should step in to share the burden.

The bench also stopped penal recovery proceedings against farmers saying, "Consequently, we restrain the respondents from initiating action against the farmers for recovery of crop loans outstanding dues to cooperative societies / banks, as on March 31, 2016."

The bench further said, "In this difficult situation, the central government cannot be a silent spectator. It should come forward to extend the help to the state government to share the burden. We are hopeful that the government of India will share the burden with the state government and extend maximum financial help to the state government to tide over the situation."

The bench said it had the benefit of going through the entire file relating to the issuance of the government orders and added, "There is also no indication as to why such classification of farmers as marginal, small and other farmers was necessitated ... of course, it is the fiscal policy of the government into which this court cannot interfere with. But at the same time, as it has been found that the classification of farmers is irrational, illogical and unreasonable, this court has to necessarily interfere to do justice to farmers."

As for the government's contention in the counter-affidavit that because of the meagre income and resources, small and marginal farmers were really in need of assistance from the government by way of waiver of loans for their very survival and rehabilitation, the judges said, "It is very strange that the counter further stated that in the case of big farmers, they can survive and thrive with resources available with them.

"The file also does not contain any material to show that the small and marginal farmers alone were affected very much by the onslaught of drought and crop loss. Therefore, it is crystal clear that the government evolved a policy to give waiver of crop loans to small and marginal farmers because that was in the election manifesto of the particular political party," it said.

As for the contention that waiver of loans Rs5,780 crore had benefited small and marginal farmers numbering 16,94,145 and that giving crop loans to the tune of Rs1,980.36 crore to other farmers would benefit only 3,01,926 farmers, the bench said,

"In our considered view, this cannot be a relevant parameter at all to make classification among farmers. The contention that the maximum beneficiaries with minimum funds is the underlying policy of the government cannot be countenanced. When the policy of the government is to rescue the farmers from their woes, which were the result of natural calamities, and when all farmers have suffered equal loss, it is not intelligible to differentiate the farmers based on the number of beneficiaries."

The present order was given on a petition filed by P Ayyakannu of the National South Indian River Interlinking Agriculturist Association seeking debt waiver. Ayyakannu has been holding a farmers' dharna at Jantar Mantar in New Delhi for the past 21 days, drawing nationwide attention and visits by top political leaders across political spectrum.

The bench said, "We record our appreciation of the association president P Ayyakannu, who has fought for the voiceless farming community of the state and also the exemplary assistance rendered with erudition by advocate general R Muthukumaraswamy and counsel for the petitioner Muthukrishnan.''