Chennai/New Delhi: The Madras high court on Tuesday directed the Tamil Nadu government to waive agricultural loans taken out by all farmers, irrespective of their land holding, and to ensure that no penal action or loan recovery is initiated against them.

The ruling comes amid a protest in Delhi by Tamil Nadu farmers who want a drought relief package of Rs40,000 crore from the Centre, the setting up of a Cauvery Management Board and waiver of farm loans from all the nationalized and co-operative banks.

A bench comprising justices S. Nagamuthu and M.V. Muralidharan said the state government’s classification of farmers into small, marginal and others is arbitrary and without thought.

According to a 28 July state government order, only marginal and small farmers are eligible for waiver of agricultural loans as declared by them when the loan was sanctioned. The bigger farmers are eligible only for partial debt relief.

The small farmers are those who declare between 2.5 and 5 acres and marginal farmers are those with land holding of less than 2.5 acres.

“The land holding register and the loan register maintained by the banks do not necessarily reflect the actual land ownership. A farmer might have shown land details only for which he is seeking a loan," the court said.

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An additional 300,000 farmers will benefit from the debt waiver scheme apart from the around 1.7 million existing beneficiaries for which the state will have to shell out an additional Rs1,980.33 crore. The existing scheme was pegged at Rs5,780 crore.

“The central government cannot be a bystander and should extend the support to Tamil Nadu," the court added, acknowledging the challenging financial situation in the state.

The government had defended the classification arguing that it achieves maximum result for available funds.

They noted that Tamil Nadu faced a severe drought in 2016-17 with many farmers committing suicides and it was the responsibility of both the state and Centre to take relief measures.

On Saturday, the Centre released Rs1,712.10 crore for Tamil Nadu from the National Disaster Response Fund (NDRF). In January, the Tamil Nadu government declared all 32 districts in the state drought-affected and urged the Centre to sanction a sum of Rs39,565 crore from the NDRF.

Hearing a petition filed by P. Ayyakannu of the National South Indian River Interlinking Agriculturist Association, who is also leading the protests in Delhi, the bench delivered the judgment on Tuesday and said a uniform scheme should be applied irrespective of the land holding as all the farmers have been severely affected due to drought.

In May last year, the late chief minister J. Jayalalithaa’s government waived the outstanding short-term crop loans, medium- term agriculture loans and long-term farm sector loans extended by co-operative institutions to small and marginal farmers, which cost the state exchequer Rs5,780 crore.