Maha mess

Updated: Oct 29 2004, 05:30am hrs
The curtain finally came down on the Maharashtra drama on Wednesday with the NCP ceding ground to the Congress. As part of the quid pro quo between the two parties, struck after days of endless wrangling, the NCP will get three additional ministerial berths in exchange for giving up its claims to the chief ministers post. With this, the political uncertainty in the state comes to an end. For the moment there has been some kind of rapprochement but that does not mean the relationship between the coalition partners will be harmonious. On the contrary, the bitter wrangling is bound to have left the NCP, which on its own has a larger number of seats, smarting. For the people of Maharashtra that could be bad news. The state is already reeling under a severe financial crisis. Government debt is at an unprecedented high of Rs 1,03,000 crore. The fiscal deficit is Rs 18,460 crore and revenue deficit is Rs 8,702 crore. Once a byword for best administrative and fiscal practices, Maharashtra is fast becoming a basket case. Power blackouts are likely to soon become a daily phenomenon with the shortfall expected to increase to about 2,500 mw a day.

Both parties have made extravagant promises in their manifestoes. The Congress-led government will now have to decide whether it can afford to honour those promises in view of the states empty coffers. Faced with increasing public spending and declining revenues, the new government will find it increasingly difficult to meet its financial obligations. Only recently, the government faced a major embarassment when financial institutions served notices to attach the secretariat for default in payment of dues by cooperatives to which the government was the guarantor.

The World Bank in its observations on Maharashtras finances observed that a lot of taxpayer money is spent on sops on power, water, cotton and sugar. Resources spent in these areas are fiscally unsustainable and/or unproductive, and very few benefits reach the poor. The Union finance ministry too has expressed serious concern over the guarantees of over Rs 10,000 crore given to ailing cooperatives during 2002-03.