Bankruptcy Looms Large

MAHARASHTRA chief minister Manohar Joshi never had it good. But the latest bout of criticism of his government does not come from mere political rivals. In a recent ruling, Chief Justice of the Bombay High Court M.B. Shah described Maharashtra as the most badly administered state in recent times.

Shiv Sena supremo Bal Thackeray now admits that investment is flying out of Maharashtra with the "speed of a typhoon". State finance minister Mahadevrao Shivankar (BJP) has warned the government that the coffers are fast emptying. Governor Dr P.C. Alexander has taken the unprecedented step of summoning bureaucrats to ascertain the state of Maha-rashtra's finances. Joshi alone has been left to defend the quagmire that one of India's richest states appears to be sinking into.

Indeed, the situation is so grim that Sharad Pawar says he shudders to think of the Congress ever ruling Maharashtra again. With an annual plan outlay of Rs 7,500 crore, the state will have to end up paying at least Rs 2,500 crore on its borrowings (as of today Rs 4,000 crore) as interest beginning year 2000 when the next election is scheduled. The apprehensions of Pawar and other Congressmen stem from the fact that they believe the 2000 election will go in favour of their party.

Says senior Congress leader Chhagan Bhujbal: "We all believe that the Congress will return to power in 2000 because the common man is fed up with the Sena-BJP combine. But with so much debt how will we ever begin to deliver the goods? Humko joote padenge (the people will punish us)—and all for no fault of our own." The Congress has even given up the the idea of toppling the Sena-BJP government, hoping to capitalise on the follies that will be committed in the run-up to the elections.

Ram Rao Adik, who handled the finance portfolio in the earlier Congress government, says Maharashtra has been brought to such a mess because of the inexperience of the BJP-Sena government. "They have no concept of planning and expenditure. For some cheap populism, they kept announcing schemes and overshot their plan outlay, and so they kept borrowing. Now I am told they are planning to cut their planned expenditure by 50 per cent."

Adik believes nothing can be more tragic than such continued mismanagement. "A simple lesson taken from personal finances could have helped. You don't borrow if you do not have the capacity to pay back. And you do not spend if you cannot earn fast enough."

Three-and-a-half years after the Sena-BJP combine took over, things do not look rosy for Joshi at all. While his government is being roundly criticised for bungling the state's finances, he is also facing problems from the Sena's alliance partner, the BJP. A cold war continues between the chief minister and his deputy, Gopinath Munde. Both often take diametrically opposing stands on key issues, including the stormy Srikrishna Commission report on the 1992-93 riots. Munde and a section of the local BJP believe that Joshi should not invite the wrath of the judiciary by shielding Thackeray. In fact, if the Sena chief had any kind words for his chief minister, it was only after Joshi publicly rubbished the Srikrishna report. Otherwise, Thackeray appears to be losing confidence in Joshi and has made known his displeasure a number of times.

THE Sena-BJP alliance was always tenuous. But successive electoral wins kept the allies and the government in place. Things, however, began to go rapidly downhill with the perceived waning of Thackeray's charisma which appears to be the root cause of the troubled relations between the Sena and the BJP on the one hand and Thackeray and his rebellious ministers. BJP leaders now admit their party relied far too much on the Sena chief's mass appeal in the elections.

Thackeray, on his part, has been sharply critical of the Vajpayee government, much to the chagrin of local BJP leaders. "I will never rule with such a coalition. You have to keep looking up for the sword hanging over your head. One has no time to think of the people," Thackeray told a roomful of Mumbai's leading businessmen early last week.

Now, the BJP's local leadership is also being critical of the Sena. Thus, the BJP's Mumbai unit president Kirit Somaiyya startled everyone when he spoke out against Thackeray's pet project: free housing for slum dwellers in the metropolis. There was a tacit admission on the part of Somaiyya that the scheme was unworkable, that it would never take off and it would end up taking the people for a ride.

The apparent scapegoat was minister for housing, Sureshdada Jain, who belongs to the Sena. But it was clear that other concerns were at heart. "The BJP believes that one's projects need not all be politically motivated. When it comes to state finance for this and other projects, you have to be cautious. These cannot be financed at the cost of the common man," Somaiyya told Outlook.

Resentment against the Sena has been brewing in the BJP ever since the poor showing of the combine in the last elections. At a brainstorming session after the electoral debacle, the president of the state unit of the BJP, Suryabhan Wahadne, declared that the party had relied too much on Thackeray and too little on its own resources. This remark may not have gone down well with BJP leaders like Pramod Mahajan but reflected the mood within the party.

For the moment, some nimble footwork on the part of Thackeray and Pramod Mahajan has silenced Somaiyya and others but there is a general realisation in the BJP as well as the Congress that the Joshi government has goofed up. The oft-quoted examples are the Enron power project and the functioning of the Maharashtra State Electricity Board and the Maharashtra State Road Transport Corporation—both of which are in the red.

Enron, for its part, should have gone on stream from 1997 but is still unproductive because the Sena-BJP was scoring points off the Congress in their first year in power by first cancelling and then renegotiating what is considered an even more disadvantageous deal with the multinational power corporation. The dealings with Enron gave the wrong signals to foreign investors and many projects slated to be in Maharashtra moved to southern pastures. Among these were a steel and an automobile project.

The flight of foreign projects has been so pronounced that the conciliatory business community was compelled to list its woes to Thackeray. For instance, the prestigious Wharton Business School promoted by the Ambanis, which should have come up in Mumbai, was weaned away by Andhra Pradesh's Chandrababu Naidu just because of some dilly-dallying on the part of the state government.

Thackeray's acknowledgement of the vacillation that has lost them several projects brought out the rebel in Joshi who challenged his leader on his facts. "Thackeray's impression is perhaps based on the wrong information supplied to him by other sources," Joshi said. The fact, however, remains that the growing evidence of graft and the fiscal mismanagement is bleeding the state and in the words of Adik, "it is on the verge of liquidation". Recently, contractors working on the prestigious Krishna Valley development project had to go on hunger strike for their dues, running into several crores.

But Adik, like many other Congressmen, says there is a way out—though he doesn't spell out the plans to revive the state's economy. "All I can say is that when Chandra Shekhar was the prime minister, India was on the verge of bankruptcy. But P.V. Narasimha Rao's government ended up with flush finances and billions in foreign exchange. We will meet the obligations even if they are not ours." It is, however, easier said than done.

Can Maharashtra afford to blunder along the path it is treading? The state being the focal point of the economic resurgence the Union finance minister harps on, many businessmen in the nation's commercial capital are of the view that Joshi's plans for the next two years need to be closely monitored.