In a setback to big farmers in Tamil Nadu, the Supreme Court on Monday stayed an order by the Madras High Court that directed the state government to waive loans of all farmers who incurred losses during the drought in thestate.

The Madurai bench of the Madras High Court had on 4 April extended the Tamil Nadu loan waiver scheme to all farmers even though the scheme intended to help only small and marginal farmers with 5 acres of land. The bench had also ordered cooperative societies and banks to waive the loans and not recover any dues. The government had moved the top court in May against the order.

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Citing adverse impact on state finances, the Tamil Nadu government had argued that the aim was to provide relief only to small and marginal farmers. The government had taken the decision after considering vital parameters ~ budgetary allocation, revenue mobilisation, the position of the farmers viz-a-viz their land holding and other considerations, said an official.

A bench of Justices Madan B Lokur and Deepak Gupta accepted the argument and said the loan waiver from cooperative banks and societies will apply only to small and marginal farmers. The court will take up the case for further hearing after four weeks.

In April, Tamil Nadu farmers had pressed their demands through a unique form of protest at Jantar Mantar in the national capital for over a month. They shaved their heads, halved their moustaches, held mice and snakes in their mouths, conducted mock funerals, flogged themselves and even carried skulls of other farmers who had committed suicide due to debt pressure.

With 60 per cent deficit in rainfall, Tamil Nadu witnessed its worst drought in 140 years. The farmers demanded a Rs 40,000-crore drought relief package, farm loan waiver and setting up of the Cauvery Management Board by the Centre and called off their protest after an assurance from Chief Minister E Palaniswami that their demands will be met.

But the farmers claim that the Tamil Nadu government has so far "failed to meet their demands". Last month, they had threatened to renew their stir till the Central government announces relief for farmers.