From farmer to billionaire, everyone needs support.

Although they appear different, there are similarities between farm loan waivers and corporate loan defaults, wrote Prof R Prasad. "A farm loan waiver is a sector-wide extinguishing of loans mandated by the government, usually before an election, with the exchequer compensating banks." On the other hand, "A key underpinning of bankruptcy procedures is the limited liability clause that protects assets of promoters unless explicitly pledged. Corporate bankruptcy, therefore, is a simultaneous process of cleansing bank balance sheets and a mechanism allowing optimal risk-taking by entrepreneurs." The problem with both is that they create non-performing assets (NPAs) in banks which keep increasing as new bad debts are discovered by the Reserve Bank (RBI). Another Rs 5.24 trillion could be added to bad debts at banks in the next financial year, according to the RBI. The electricity production and distribution companies may contribute Rs 1.8 trillion to bad loans. This is because politicians promise free electricity to win elections. 10% of Punjab government budget goes in providing free electricity to farmers. The Central government wants Punjab to stop such practices and transfer handouts to bank accounts of farmers instead. However, Gujarat, Prime Minister Modi's home state, wrote off Rs 6.25 billion in unpaid electricity bills of the rural population last month. When bad loans pile up banks become reluctant to lend. According to the RBI, personal loans, "which include home, vehicle and education loans", accounted for 96% of bank credit in 2017-18 financial year. The Centre for Monitoring Indians Economy reported that India lost 11 million jobs, mainly among women and uneducated laborers last year. If jobs are scarce it becomes harder to repay education loans which rose to 8.97% in March 2018. However, last month the RBI said that non-food bank credit jumped by 13%, or Rs 9.44 trillion, between October 2017 and October 2018. "Out of "every Rs 100 of new bank loans added, it was services which bagged Rs 50, while industry received just Rs 10. Out of Rs 10 advanced to industry, large firms cornered Rs 8.30, while medium and small enterprises had to make do with just Rs 1.70". To create more jobs before the coming elections Modi desperately wants to increase lending to businesses. So, he has asked public sector banks to lend to medium and small enterprises up to Rs 10 million in less than one hour. He appointed a civil servant as governor of the RBI to dilute provisions for clearing up bad loans, who immediately obliged by allowing banks to restructure bad loans up to Rs 250 million to small businesses. The Bankruptcy Code which was passed with such fanfare in 2016 is being bypassed to oblige a certain business family. "In short, the problem of the spendthrift farmer and that of the flagrant corporate firm are two sides of the same coin," wrote Prasad. Handouts equal crony capitalism. Very true.