Policy decision – Power of judicial review – Exercise of – Government order granting waiver of loan to small and marginal farmers – Challenge to – High Court held the grant of loan waiver as arbitrary and directed the State to grant the same benefit to all farmers irrespective of the extent of land holding – On appeal, held: Loan waiver scheme is in pursuance of the Directive Principles of State Policy – Objective of promoting the welfare of the farmers as a class to secure economic and social justice is well recognized by Art. 38 – Scheme cannot be held to breach Art. 14 since it does not impose a burden but affords a benefit – Loan waiver scheme is introduced with an endeavor to bring substantive equality in society by using affirmative action to uplift the socially and economically weaker sections – Application of the Scheme to only the small and the marginal farmers is justified due to the climate crisis such as drought and flood causes large scale damages to small holdings as compared to the large holdings due to the absence of capital and technology; and the small and marginal farmers belong to the economically weaker section of society – Thus, the classification based on the extent of landholding is not arbitrary – Since the classification in the Scheme is based neither on the grounds in Art. 15 nor on the ‘innate and core trait’ of an individual, it cannot be struck down on the alleged grounds of under-inclusiveness and over- inclusiveness – Scheme propounded by the State passes muster against the constitutional challenge – Thus, the order passed by the High Court is set aside – Constitution of India – Art 14. Policy decision – Judicial review of – Ambit and extent of – Held: Court cannot interfere with the soundness and wisdom of apolicy – Policy is subject to judicial review on the limited grounds of compliance with the fundamental rights and other provisions of the Constitution – Courts would show a higher degree of deference to matters concerning economic policy, compared to other matters of civil and political rights – State and its agencies often endeavor to make economically feasible decisions – On facts, 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. Term policy – Meaning of – Held: Policy is the reasoning and object that guides the decision of the authority – Statutes, notifications, ordinances, or Government orders are means for the implementation of the policy of the State – To appreciate a legislation, reference to the policy behind the law is required – Judicially evolved two-pronged test to determine the validity of the law vis-à-vis Art. 14 refers to the objective of the law because the ‘policy’ behind the law is never completely insulated from judicial attention – Constitution of India – Art. 14 – Words and phrases. Constitution of India: test – Degree of proof under the test would impact the judgment of this Court on whether the law is under-inclusive or over- inclusive – Nexus test, unlike the proportionality test, is not tailored to narrow down the means or to find the best means to achieve the object – It is sufficient if the means have a ‘rational nexus’ to the object – Thus, the courts show a greater degree of deference to cases where the rational nexus test is applied – A greater degree of deference is shown to classification because the legislature can classify based on the degrees of harm to further the principle of substantive equality, and such classification does not require mathematical precision. A Introduction of Loan Waiver Scheme in pursuance of an electoral promise, if constitutionally suspect – Held: A scheme cannot be held to be constitutionally suspect merely because it was based on an electoral promise – Scheme can be held suspect only within the contours of the Constitution, irrespective of the intent with which the scheme was introduced. Art. 14 – Classification per se, if violative of Art. 14 – Held: Classification per se is not discriminatory and violative of Art.14 – Art. 14 only forbids class legislation and not reasonable classification – Classification is reasonable, when based on an intelligible differentia; and the differentia must have a rational relationship to the object sought to be achieved by the statute – There must be some yardstick to differentiate the class included and the others excluded from the group – Differentia used for the classification in the Loan Waiver scheme is the total extent of landholding by every individual – Thus, there is a yardstick used for constituting the class for the purpose of the scheme. Art. 14 – Under-inclusive and over-inclusive classification – Meaning and ambit of – Held: A statute is ‘under-inclusive’ if it fails to regulate all actors who are part of the problem – It is ‘over- inclusive’ if it regulates actors who are not a part of the problem that the statute seeks to address - Determination of under-inclusiveness and over- inclusiveness, and degree of deference to it is dependent on the relationship prong (‘rational nexus’ or ‘proportional’) of the