Summary
The Court upheld Tamil Nadu’s 2016 agricultural-loan waiver confined to small and marginal farmers and set aside the direction extending it to all farmers. Smaller farmers’ resource constraints and greater vulnerability supplied a rational basis for targeting relief. Policy remains reviewable for constitutional compliance, but courts do not choose its wisdom. Neither imperfect coverage nor fulfilment of an electoral promise alone made this supported welfare classification unconstitutional.
Issues
- Whether the loan-waiver policy was amenable to constitutional review.
- Whether classification by landholding reasonably targeted small and marginal farmers.
- Whether alleged under-inclusiveness, over-inclusiveness or the scheme’s electoral origin invalidated it.
Provisions considered
- Article 14, Constitution of IndiaThe landholding classification had a rational connection to the greater distress of small and marginal farmers and survived substantive equality review. (¶¶ 14, 15, 19, 20, 21, 22, 25, 32, 33)
- Article 38, Constitution of IndiaThe scheme furthered social and economic welfare by addressing distress among disadvantaged farmers. (¶¶ 12, 19, 25)
Held
- Policy decisions can be reviewed for constitutional and statutory compliance, although their wisdom and comparative merits are not for courts to choose. Expenditure alone does not turn every measure into economic policy; the loan waiver was essentially a social welfare measure. (¶¶ 9, 10, 11, 12)
- Maximising beneficiaries at minimum expense could not itself establish a distinct objective for classification, since that fiscal concern accompanies every disbursement scheme. The relevant objective was relief of farmer distress, assessed in light of the different degrees of harm established by cogent material. (¶¶ 17, 18, 19, 20, 21)
- Small and marginal farmers had less capital, technology and resilience to drought and floods and constituted an economically weaker class. Landholding therefore rationally identified a more vulnerable group for targeted relief and substantive equality. (¶¶ 22, 23, 24, 25)
- Classification does not require mathematical precision. The rational-nexus review applicable here allowed latitude in coverage; the classification was not based on an Article 15 ground or an innate core trait. The Court did not resolve the distinct higher-scrutiny question discussed in that context. (¶¶ 26, 27, 28, 29, 30, 31, 32)
- An electoral promise does not itself render a scheme constitutionally suspect. The scheme had to be tested against constitutional requirements and satisfied them, regardless of its electoral origin. The State’s later extension of coverage did not invalidate the earlier measure. (¶ 33)
Result
State appeal allowed. The Madras High Court judgment dated 4 April 2017 extending the scheme to all farmers was set aside.