Excessive levels of debt have consistently impeded the progress and development of India. This burden of debt particularly affects individuals involved in the agricultural sector, as evidenced by the alarming increase in farmer suicides directly linked to rural indebtedness. The origins of this issue can be traced back to the colonial era, with legislations enacted by provincial assemblies still persisting today. Since independence, conflicts have arisen between the central government and state governments regarding authority to legislate on debt relief.
A group of lawyers challenged the Maharashtra Debt Relief Act of 1976, aimed at assisting financially vulnerable segments burdened with debts owed to exploitative moneylenders. The challenge questioned the Act's legal validity and legislative authority, arguing its reasonableness and constitutionality.
The Supreme Court emphasized the significance of Article 301 in maintaining economic unity and stability. It underscored the interdependence between economic, political, and cultural progress, stressing the importance of legislative actions that promote social justice and order.
The Court upheld the validity of the Debt Act, asserting the State legislature's competence to legislate on matters of rural indebtedness. It clarified that the Act did not conflict with the Gold Control Act, as both addressed different aspects within their respective jurisdictions.
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