Rahul Gandhi is on a roll these days. Fresh from his tour of the USA, Rahul Gandhi has deep-dived into campaigning for the BJP Congress, for the upcoming Gujarat elections. And it appears that he hasn’t done his homework well.

Yesterday, we had seen how Rahul Gandhi had lied during a speech in Gujarat’s Saurashtra region. He had claimed that the Sardar Patel statue, which is to be built near the Sardar Sarovar Dam, will actually be a ‘Made In China’ product. This claim was actually busted in 2015 itself, but Rahul Gandhi chose to ignore the facts and repeated the lie.

Today, media reports quoted Rahul Gandhi saying this:

PM Modi waived off loan worth Rs 1.3 lakh crores for 15 industrialists. When farmers demand loan waiver, PM does not not utter a word

The video can be seen here. It is hard to decide where to begin as far as this statement is concerned.

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1. Rahul Gandhi of the present says Rs1.3 lakh crores for 15 industrialists. Rahul Gandhi from the past, November 2016 to be precise, had said: Rs 1.1 lakh crores for 15 industrialists.

Obviously Rahul Gandhi has offered no explanation for this rise of Rs 20000 crores from his own statement (largely because the mainstream media doesn’t ask him or Congress about the lies he spreads), but we must be thankful that at least the number of industrialists is constant.

2. Or is it possible that may be Rahul Gandhi has a better source on this Rs 1.3 lakh crores? He does not mention a source but he claims that this amount relates to loans of industrialists. Fact is, this Rs 1.3 lakh crores relates to Farm Loan waivers and not business loans!

On 31st August 2017, RBI Governor Urijit Patel gave a speech, in which he estimated the total cost of farm loan waivers to be Rs 1.3 lac crores:

Beginning with Tamil Nadu in 2016, domino effects have spread in 2017 to several states and the total cost of loan waivers announced amounts to around ₹ 1,30,000 crores (0.8 per cent of GDP).

The irony of this is too much to bear. Rahul Gandhi, uses the farm loan waiver figure, claims that it is the business loan waiver figure, and says in the same breath that famers’ loans are not getting waived off!

3. Let us give the benefit of doubt to Rahul Gandhi and let us forget the figure for a bit. Irrespective of the actual crores, loan waivers to industrialists is quite a serious issue. Except that there has been no such loan waiver!

Firstly, Rahul Gandhi had uttered this same claim in the parliament, in February 2017, and the Finance Minister, on the floor of the house, had given a direct reply to Rahul Gandhi:

Though I am not used to using harsh words, I would say that what Rahul had been saying at various public meetings was completely away from truth

Jaitley further said that not a single Industrialist’s loan was waived after Modi government came to power. If only Rahul Gandhi had managed to pay attention he would have avoided this gaffe.

Secondly, Rahul Gandhi needs a basic lesson in finances of banks. As explained here, when a bank “writes off” a loan, it does not waive it. Write-offs are a purely technical, accounting entry. Write-offs give a true picture of the bank’s assets (loans given) and the income there on (interest). Accounts where prospects of recovery is bleak, are technically written off from the live ledgers and parked in AUCA (Advance Under Collection Account) in accordance with laid down instructions. Most write offs, irrespective of outstanding, should be treated as technical write offs and parked in AUCA and recovery process of these accounts will continue till resolution of these accounts.

Even when accounts are written off, various recovery procedures like recovery suits are filed before the DRT (Debts Recovery Tribunals) or Courts, and action initiated under SARFAESI Act continue. Accounts held in AUCA may be taken up for dropping only after exhausting all avenues of recovery, hence merely transferring an account to AUCA is not a “waiver of the loan”.

The RBI too had issued a clarification to this effect in February 2016 (during Raghuram Rajan’s term), when similar reports had surfaced. Is it too much to ask from Rahul Gandhi or his speech writers to be aware of this at least?

To summarize, Rahul Gandhi got the “loan waiver” figure wrong, the type of “loan waiver” wrong, and worse, his claim of a “loan waiver” is itself wrong. Two wrongs do not make a right, but three wrongs make a Rahul Gandhi claim.