Govts milk UP into a debt trap

Uttar Pradesh’s public and private borrowing has doubled during the past five years and interest payments — totalling Rs 5,448 crore — alone account for one-fifth of entire revenue expenditure.

Today, Uttar Pradesh has the second-lowest per capita income among states (Bihar ranks the lowest), despite the fact that its per capita income was above the nationalaverage before Independence. Its per capita Plan outlay has also fallen to the second-lowest level, again just better than Bihar.However, Kalyan is keeping up an unruffled front, even promising to take the present rate of growth of the industry from 2 per cent annually to 10-12 per cent. He also claims that the industry will soon employ 15 per cent of the state’s total work force as compared to the 8 per cent now.

He is apparently banking on the new industrial policy, which plans to develop high-grade infrastructure in the state and ensure greater participation of private sector for all-round development. However, are the entrepreneurs interested in pumping money into a state which has little besides promises to show, particularly as there haven’t been any concerted efforts to put the derailed economy back on track?

“Merely by announcing policies with cooked-up figures to show a rosy picture cannot assure the real development of the state,” says Pramod Tiwari, Congress Legislature Party leader, reactingto the industrial policy unveiled by the Chief Minister at New Delhi recently. He also points out that the Government has to begin by curtailing non-development expenditure, which is currently eating into its funds.

However, rather than exercising any such restraint, the Kalyan Government has been on a spending spree. It has hiked wages and perks of state MLAs manifold, putting an extra burden on the state exchequer to the tune of nearly Rs 5 crore annually. This unprecedented hike was opposed in the Assembly by only one legislator, belonging to the CPI-M.

His 95-member jumbo ministry too is in no mood for cost-cutting. Soon after Kalyan declared that his government would slash its expenses, many ministers threw the promise to the wind, jetting abroad or to hill stations for the heat, all at the state’s expense.

As a result, Uttar Pradesh’s revenue deficit has seen an increase from Rs 1,149 crore in 1993-94 to Rs 7,696 crore in 1997-98. While revenue recipts increased during this period by just Rs 5,901crore, revenue expenditure went up by a whopping Rs 12,448 crore.

To bridge the gap between receipts and expenditure, the state Government has had to dig into public accounts and the employees’ provident fund. However, the Chief Minister seems to have no qualms about this either.

“This trend of withdrawing from the employees’ provident fund has continued for the past several years and this is treated like a loan which has to be repaid,” is all Kalyan has to say by way of justification.The new industrial policy also promises round-the-clock power supply to industrial units, though not a single megawatt has been added to the state’s power capacity for the past almost nine years.

Obviously, Kalyan or the BJP Government is not solely responsible for the mess Uttar Pradesh is in. Since 1989 when N.D. Tiwari went out as chief minister the state has seen a number of governments headed by Mulayam Singh Yadav, Kalyan Singh and Mayawati come and go.

Each of these governments, generally lacking a majorityand precariously balanced, have had to pander to vote banks for survival. Their regimes were plagued with charges of gross irregularities in the Chief Minister’s discretionary fund.

Kalyan’s government is similarly hanging by a thread and has come back from the precipice twice. The collapse of the economy was cited as one of the reasons for demanding Article 356 in the state. The new industrial policy then could determine Kalyan as well as Uttar Pradesh’s fate.Billed to bankruptcy

(in per cent): 9.30 (1985-90); 34.20 (1990-95); 69.80 (1997-98)