NEWS

The Supreme Court on Tuesday upheld a scheme of the then ruling AIADMK government in Tamil Nadu granting a waiver of outstanding crop loans, medium-term (agriculture) loans, and long-term (farm sector) loans issued to small and marginal farmers.

ABOUT THE SCHEME

• Issued in May 2016
• Granting a waiver of outstanding crop loans, medium-term (agriculture) loans, and long-term (farm sector) loans issued to small and marginal farmers.
• ‘Small farmer’ – farmer who holds land of 2.5 acres to 5 acres
• ‘Marginal farmer’ – farmer who holds land up to 2.5 acres.

ISSUE

• The state government has raised a preliminary contention that the Court cannot review the scheme since it is a fiscal policy decision of the State.
• The Madras HC bench – judicially evolved two-pronged test to determine the validity of the law vis-a-vis Article 14 of the Constitution refers to the objective of the law because the ‘policy’ behind the law is never completely insulated from judicial attention.
• State government – Court cannot interfere with the soundness and wisdom of a policy. A policy is subject to judicial review on the limited grounds of compliance with the fundamental rights and other provisions of the Constitution

SC VIEW

• The implementation of every policy of the State involves expenditure. Merely because the policy involves the expenditure of funds, it cannot be termed as an economic policy. The core feature of the policy and the targeted area needs to be determined to identify the nature of the policy
• Impugned loan waiver scheme is, in essence, a social policy in pursuance of the Directive Principles of State Policy, introduced with an object to eliminate inequality in status, income, and facilities.