A combative Indian prime minister on Wednesday defended a massive scheme to bail out debt-ridden farmers and sharply attacked the opposition in a speech seen by analysts as a further pointer to early elections.

Mixing aggression with poetry, Manmohan Singh told parliament the $15 billion loan waiver, announced on Friday, was the only way to rescue farmers from debt he blamed on the previous Bharatiya Janata Party-led (BJP) government.

"What we have done is nothing more than picking up the unpaid distress bills which the NDA government has left behind," he said, referring to the BJP-led National Democratic Alliance coalition.

The Hindu nationalist BJP was unexpectedly dumped out of office in 2004, partly by the votes of the poor who felt excluded from its "India Shining" election platform.

BJP leader Lal Krishna Advani rejected Singh's criticism.

"The government has been absolutely false and baseless particularly in respect of farmers," he said before walking out of the parliamentary chamber.

The debt plan formed the centrepiece of a populist budget commentators said was designed to woo rural voters ahead of general elections due by May 2009, and strengthen the ruling Congress party's hand if they come sooner.

Many analysts expect early polls, with communist allies who provide the government with crucial support threatening to pull the plug if it goes ahead with a controversial nuclear energy deal with the United States that Singh strongly supports.

"The loan waiver decision has put the government on a very strong footing," said political analyst Mahesh Rangarajan.

"The prime minister's confidence is coming from a political calculation. The opposition has been caught on the wrong foot."    

Political commentator Pran Chopra agreed. "He (Singh) is implying without using the words that an election is near," Chopra said. The decision to write off the farmers loans has been criticised by the opposition, which says the budget did not provide funds to cover the huge handout.

They add the scheme will not benefit the millions of farmers borrowing from private money lenders.

But Singh defended the move, saying it would clean up banks' balance sheets and stimulate economic activity. - Reuters