Waive co-operative loans of farmers: Madras HC to TN govt

The decision will bring in an additional burden of Rs 1,980 cr to the state

The Madras High Court has issued an order directing the Tamil Nadu government to waive loans of all the farmers, as against earlier decision to do the same for marginal and small farmers who owns land up to 5 acres. 

The decision, which would bring in an additional burden of Rs 1,980.33 crore to the state, which already has an ailing financial situation, is expected to help an additional 3.01 lakh farmers.

The court has also restricted the cooperative societies and officials from recovery proceedings against the farmers who had defaulted repayment. These farmers had conducted protests in Jantar Mantar, New Delhi, seeking for farm loan waiver and centre's drought assistance to help them from one of the worst droughts that has hit the state in more than 100 years.

On June 28, 2016, the government ordered waiver of outstanding crop loan, medium-term agriculture loan and long-term farm sector loan issued to the small and marginal farmers by the cooperative societies as on March 31, 2016. It classified farmers as small and marginal farmers, with definition that the small farmer means those farmers having total land holding of size ranging from 2.5 acres to 5 acres, and marginal farmer as those farmers with land holding of up to 2.5 acres.

The loan waiver scheme will benefit 16.94 lakh farmers, was estimated to cost around Rs 5,780 crore to the government.

While recognising that the financial situation of the state is grim and the government has single-handedly shouldered the burden to the tune of Rs 5,780 crore, the division bench comprising of Justice S Nagamuthu and M V Muralidharan, criticised the categorisation of the farmers as discriminatory, and asked the government to provide the same support to all the farmers regardless of the size of the land they own. 

The Central government cannot be a silent spectator in such difficult situation and should provide help to the State government, said the court.

"The Central Government is aware of the severe drought in the state of Tamil Nadu during 2016-17. The entire state has been declared as drought-hit. The farmers have started taking extreme steps to commit suicide. To save the farming community is not entirely upon the shoulders of the state government, but on the Central government also," said the order.

Therefore, it is for the state government to approach the Central government seeking allocation of funds for this purpose and the court expressed its hope that the government of India would consider this unprecedented situation prevailing in the state and extend its help to reduce the financial burden of the state government.

The court has asked the relevant departments to issue orders to extend the already announced loan waiver scheme to all farmers, within three months from the date of court order. The petition was filed by National South Indian River Interlinking Agriculturists Association.

The order comes at a time when the state's financial situation is weak and a Supreme Court order banning liquor sales within 500 meters of national and state highways is also expected to hit the revenues. It is expected to reduce the state's revenue from liquor sales by 25 per cent, which has been contributing around 30 per cent revenue till now.

The budget estimated fiscal deficit of 2.79 per cent of the gross state domestic product (GSDP) in 2017-18, which is further expected to increase to 3.17 per cent in 2018-19.

The State Finance Minister D Jayakumar recently said that low economic growth, demonetisation and the ban on sale of property in unapproved layouts have dented receipts from stamp duty and registration charges severely. Revenue deficit is expected at Rs 15,930.35 crore in 2017-18 as compared to Rs 15,459.27 crore in 2016-17. 

In 2018-19, this is expected to increase to Rs 25,334.85 crore and by 2019-20 this is expected to come down to Rs 21,922.30 crore.