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Farm debt waivers which are meant to be a one-time settlement of loans have become common in India. This paper finds that the timing of waiver announcements by state governments between 2001-02 and 2018-19 is associated with the timing of elections after controlling for variables related to farming distress. This points towards a pattern of policy manipulation that suggests election-year targeting of the largest special interest group in India, namely farming households. The waivers, either announced prior to elections by incumbent governments or election pledges which are fulfilled after the election win, are unanticipated shocks to government revenue expenditure. We find that the waivers are associated with an increased revenue deficit, which is accommodated by a nearly 1/3rd cut in capital outlay to control the fiscal deficit, given the fiscal rule. Given its path dependence, lower capital expenditure also reduces the quality of government spending in subsequent years.  

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