Manmohan Singh, Sonia Gandhi and Rahul meet farmers at 10 Janpath on Friday. Picture by Prem Singh

Do sops work? The record shows they help. But they are no guarantee of electoral dividend. That still hinges not just on the numbers but on how economics and politics actually blend.

The budget for 2008-09 bets on the farmer. This is the lynchpin of the politics underlying the last full budget of the Manmohan Singh government. Whether it will work or not is the million-dollar question.

What is on offer is a bold, even audacious move. This idea holds. Finance minister P. Chidambaram has ignored the legacy of past regimes that went the same way but still fell by the wayside. But he perhaps had no choice but to go the whole way.

State governments in recent times have gone in for such loan waivers. Parkash Singh Badal did so in Punjab after winning the Assembly polls last year. M. Karunanidhi did likewise in Tamil Nadu in 2006. But these were post-poll write-offs.

The loan waivers and disbursals in the run-up to a poll are the ones that count. Here, the record is mixed. Janardhan Poojary, the then minister of state for finance, organised loan melas in the late 1980s. Public sector and cooperative banks were pressed into service and since the Congress governed most states of the Union, it was clear which party took the political credit.

These were not a failure all the way. If the Congress held its place in south India in 1989, when it lost ground in the north, the outreach to agriculturists was a big help. But they did not cut ice in the Hindi belt.

This is the nub of the problem this time round. The amount to be waived is over Rs 60,000 crore, but more important, this is to be accomplished by June 2008. That had better happen or rival parties take the vote.

All farmers with two hectares or less will get a full waiver on loans granted until end-March 2007. Around 40 million out of 110 million farm households will gain. Not a small number.

A different spin may be put on the larger issue at stake. The Congress led a coalition to power in the summer of 2004 on the promise of helping the common man and woman. It has presided over an unprecedented period of high-octane economic growth.

But agriculture has lagged behind the service and industrial sectors. Not only that, the credit picture has worsened even as the terms of trade have moved against many crops.

The growth rate in the 1980s, when Indira and then Rajiv led the Congress to two successive victories, was far less than today. It was at just over 3 per cent to the present run of 8.7 per cent.

Yet, this is precisely why the challenge is even greater. In a high growth period with buoyant government revenues and greater gap between town and country, the farmer card is all the more important for sound political reasons.

The loan waiver goes with a doubling of farm loans and a new lower rate of 7 per cent interest. Again, what will matter is how far the government delivers on the ground.

The farmer card is not the only one. The middle class is also being courted but this is a fickle group. It rarely stays with the party in power. Ask Dr Manmohan Singh, former finance minister.

The finance minister has pulled out all the stops. If it works, his party will praise him for keeps. Sops are no magic wand, come election time. It puts the Congress back in the game.