At a first glance, the finance minister’s announcement of farm loan waiver was an invitation to all farmers never to repay bank loans. They only had to wait. No one could force them to repay; and sooner or later, a finance minister was bound to turn up who would write off their loans. At a second glance, it was a scheme to give a second loan to defaulting farmers. Once the loans were written off, they would no longer be defaulters; they would become eligible for new loans. Those loans too would not have to be repaid. So farmers would be able to get never-ending bounties from banks. At a third glance, it was an invitation to all never to repay loans. The only reason farmers enjoyed the bounty was that they had votes P. Chidambaram wanted. But if they deserved a loan waiver, everyone else did too. And finally, it was an invitation to non-farmers to start an association of bank borrowers. If the three crore of them combined, they could negotiate a loan waiver with Mr Chidambaram. Maybe he could arrange for them to keep getting new loans every year, without having to repay them, in return for their block vote to the Congress.

But maybe there was something else too. So thinks the prime minister, who told parliament, “It is an income transfer on an unparalleled scale. If bankruptcy is a permissible form of business outcome in industry, what is irrational about this waiver? It will allow a fresh flow of institutional credit to farmers. It will clean up bankers’ balance sheets; it will stimulate the economic activities all over India and I do not make any apology.” Interesting thought, that. Not content with one revolutionary invention, the prime minister invents a new accountancy. If ordinary businessmen fail to recover debts, the debts remain on their balance sheets until they make enough profits to write them off. But banks do not have to make profits; the prime minister will wave a wand and the bad debts on banks’ books will be ‘cleaned up’. That might violate double-entry book-keeping; but prime ministers do not have to know such boring details. If the bad debts wipe off banks’ capital, he will give them money out of the Central budget. If such expenditure looks bad on the budget, his finance minister will give banks government bonds, and tell them to treat the bonds as cash deferred.