Mulayam gets a headache

Aditi Phadnis comes away from Lucknow shocked at a callow government that has managed to get away with all its trespasses and excesses.

It was a botched operation to beat all botched operations. The meeting of the Congress Working Committee started at 7.30 pm amid a frantic buildup that the Mulayam Singh Yadav government in Uttar Pradesh was going to be dismissed and President's Rule imposed.

All the elements to do so were in place: the governor had sent a report to the centre apprehending the Yadav government would try to rig the vote of confidence due in the Lucknow assembly on February 26; the Supreme Court had passed an order ruling the defection of 13 MLAs in 2003 as illegal, and that, therefore, the present government was illegal too; and top legal guns like minister of science and technology, Kapil Sibal had held press conferences and given obliging TV bytes explaining the Supreme Court ruling to reporters who apparently knew no better. All that was needed was orders from The Party and Yadav was history.

That the CWC met and launched straight into a discussion on inflation told its own story.

After the meeting had finished hammering the finance minister relentlessly on rising prices, Pranab Mukherjee raisedthe question for which the CWC had actually been convened: What was to be done with Uttar Pradesh?

The discussion was high octane but lasted only 20 minutes. Mukherjee laid out the political problem: the government wanted to dismiss the UP government, make no mistake, and was strengthened by the judgement of the Supreme Court which ruled that the manner in which 13 Bahujan Samaj Party (BSP) MLAs had crossed the floor three years ago, had been illegal.

And so the Yadav government has been and continued to be in saddle illegally. But the Left parties had reservations about the imposition of President's Rule, Mukherjee explained.

Therefore there would be a significant ally deficit in Parliament when the matter came up there.

Congress keen to strike, afraid to wound?

"Mrs (Sonia) Gandhi was all for dismissal. Everything about her body language said so," said a former chief minister member of the CWC.

"Accordingly everyone said what she wanted to hear." The only one to strike a note of caution was water resources minister Saifuddin Soz.

"The MLAs have not yet been disqualified. The matter rests with the speaker," Soz said. Some apprehensions were raised regarding the role of President A P J Abdul Kalam. Finally, it was decided that this was a matter for the government to take action on.

The government appeared unmoved by the legal punditry. Instead of dismissing Yadav, it called for elections two days later. Washed away were all the Congress plans of having tough advisors to the governor, who, once President's Rule was imposed, would straighten things out in the state.

As MLAs belonging to the Rashtriya Lok Dal, who had pinned their hopes on President's Rule, raged about the Congress's lack of guts, Mulayam Singh Yadav's ministers purposefully moved into election mode.

"Don't let the Congress set foot outside. They tried to dismiss us. We should paralyse them," said MLAs in speeches. Yadav himself was trenchant.

"There's a foreign hand behind this government," he thundered at election meetings, whether in Kanpur or Mahoba. It was game set and match to Yadav.

Those who argue that good economics means good politics, and that if the state is reasonably wealthy, the government would automatically translate into good governance, will find themselves at a loss in UP.

Few remember that unlike Bihar, where the bifurcation of the state left Jharkhand with the mineral wealth and Bihar with the salary burden of a non-performing lower bureaucracy, with UP it was the reverse.

When the state was divided between Uttar Pradesh and Uttaranchal (now Uttarakhand), UP's salary bill went down dramatically and its net fiscal position improved. Add to that that only a fifth of all industry was located in the hill areas, and planners saw a window of hope for economic resurgence.

But this was not the only reason for hope. Way back in May June 1998, when Kalyan Singh was chief minister, UP embarked on a ruthless drive to set its finances right.

It took a White Paper by the Kalyan Singh government and his first budget to tell people that the government needed to shape up or ship out.

From being equal to the country average in 1950, the per capita income of UP had declined to 35 per cent less than the all-India average. Annual per capita growth had slowed down to less than 1 per cent in the 1990s, even as the rest of the country was surging ahead after the first spurt of liberalisation.

As a result of high deficit for over a decade, debt service had increased its claim on total state revenue from 13 per cent in 1985-86 to 32 per cent in 1997-98 and 37 per cent in 1998-99.

Instead of using current or revenue account surpluses to partially finance public investment, the government was borrowing from every available source to pay ongoing debts. Something needed to be done and the time was now.

UP struggles to turn around

Five men were responsible for some of the turnaround. Led by chief secretary Yogendra Narayan, the team comprised S C Tripathi (principal secretary, finance), H C Gupta and Paul Joseph (principal secretary cum commissioner of trade tax), Pankaj Aggarwal (IT secretary) and B M Joshi (economic advisor).

"In 1999-2000, Sushil Tripathi sought financial restructuring. He told us: do a diagnostic. We recommended some measures, he took them fully on board," said V J Ravishankar of the World Bank.

The report recommended fiduciary and administrative measures. The most urgent measure was to improve revenue collection. Narayan and Tripathi cajoled, browbeat and blackmailed the government into getting the bureaucracy to act.

As trade tax commissioner, it was Paul Joseph's job to force people to pay tax. There were two problems: the government was not collecting revenue; and there was collusion between officers and tax payers.

The administration whipped itself into action. Amazingly, revenue collections improved. By the time Mayawati came to power in 2002, state government officials were regularly monitoring collections "" to the extent, officials recall, that chief secretary during Mayawati's regime, D S Bagga would hold meetings with district officials: "Last month your district yielded a significantly higher level of revenue. Why have collections fallen now?" he would ask district officers.

Revenue collections continued to improve, but lack of stability took its toll on economic restructuring. BJP changed its chief minister. Ram Prakash Gupta couldn't recall the names of half his ministers. Mayawati came and went amid high drama. The Kumbh Mela and elections intervened.

Some administrative measures suggested by the World Bank were adopted. Others were dumped midway as the government did not find them politic.

Power sector reforms remained half done "" in western UP, the problem was power theft; in eastern UP, diesel operated pump sets resulted in high water prices deterring irrigation and inefficiently low utilisation of pump sets.

The UPERC established, regulation came to the power sector in 1999. But tariff revision remained half done for political reasons.

From revenue deficit to revenue surplus

In 2005-06, revenue from sales tax soared. The suspicion is this has largely to do with the state opting not to join the VAT regime.

But there is no doubt it is also a factor of enforcement. Currently, UP has 6-7 per cent revenue surplus. This has led to an increase in capital spending, especially on roads.

Officials in Lucknow said between July and December 2006, Rs 8,600 crore had been spent on roads. By March 31, this figure should touch Rs 17,000 crore.

"Roads are important. They spell out the visible political gain from economic restructuring," said Ravishankar.

This is not all. The stellar achievement of Mulayam Singh Yadav's government has been the stabilisation of sugarcane rates.

"Earlier, we farmers would not get paid by mills for four, five, six years. Now, the government has fixed rates for sugarcane and it is corporatised. The mills will watch your fields, advise you on the best time to cut the cane, supervise the cutting and even transport it to the factory gates for crushing," said Tahir Syed, a gentleman farmer and absentee landlord.

"Very soon, nothing will be grown in UP except sugarcane. You have to post lathait (guards) to ensure your wheat is safe. But sugarcane is another matter. You can leave it to the mills," Syed said.

The state government's sugar policy is so attractive that in the last season, 64 private sector sugar mills have been set up in UP. What this will do to the water table is worrying everyone.

But problems remain

In his first tenure as chief minister, Mulayam Singh Yadav displayed some idealism towards governance.

He was influenced by the West Bengal experience where the Left Front had come to power and remained lodged largely because of the loyalty of the lower bureaucracy which was permeated by party cadres.

But it has taken him two terms to realise that dream. And he is attempting to create a west Bengal in UP with a vengeance.

UP currently has "presumptive vacancies" "" the number of policing officers required over the next five years "" numbering around 2.5 lakh. Mulayam Singh has already appointed 30-40,000 constables.

This, police officers say, is illegal: because these boys are all between the ages of 18-20 appointed against a five-year presumptive vacancy.

There's more. In a sterile employment environment, there's a scramble to get these jobs. So people are queuing up to the fifth floor of the Secretariat to secure them. Money is said to be changing hands.

Because the procedure of selecting policemen is less than transparent, their antecedents have not been checked properly.

In the last month there have been two major robberies in Unnao and Lucknow. Policemen have been involved in both. Because of considerations other than merit "" money, mostly "" the candidate is declared elected without verification of antecedents.

So history sheeters have managed to get jobs as policemen. They are now being hunted out and their services terminated. To be a policeman, you must not have a criminal record.

The message has gone down in the state bureaucracy that Yadav will take care of you if you take care of his interests.

In an unprecedented move, in November last year, chief secretary N C Vajpeyi, attended a "seminar" organised to mark three years of the Yadav government. There, he made a speech referring to Mulayam Singh's son Akhilesh (also an MP) as "bharatiya yuvaon ke hriday samrat" (the prince of the youth).

On January 11, he attended a Kurmi Sammelan along with the chief minister and sat on the podium with political leaders. Why should the chief secretary attend a political function?

Police officers, when posted out, are now required, in full uniform, to call on the CM before they assume charge, rather than their immediate superiors in the force. Why should they?

The net result is a perception that law and order has broken down in UP. The chief minister has time and again cited figures of cases filed in police stations with statistics about how these were investigated and solved at the level of the station house officer.

But law and order is all about perception. And the perception is that criminals rule in UP. The latest instance to strengthen this was the Allahabad High Court order that more than 600 persons had been given personal security by the government illegally: in other words, policemen were guarding criminals at the orders of the state government.

The people of UP know Yadav and may forgive him his transgressions. All said, Mualaym Singh Yadav is an indefatigable politician, attending and addressing as many as three to four meetings every day. But in the parallel, there is a transfer-posting industry carrying on in full public view.

Between Mulayam Singh, his brother Shivpal Singh, his cousin Ramgopal, another brother Dharmesh and son Akhilesh, the Yadavs have wrapped up UP.

The other political forces: the Congress (which recently overhauled its entire party structure in the state) and the BJP are so internally divided, they pose no threat to him.

The CPIM is against several actions the Yadav government has taken "" including giving away land to a private builder for a high-tech city in Chandausi, near Varanasi.

Officials say the situation is ripe for an implosion of UP. Staying out of VAT has swollen finances, but this is illusory. Law and order and governance is whimsical and capricious.

The saving grace is that no communal incidents have occurred in UP. If there is a change of political guard, that could happen as well.

ASSETS UNKNOWN

Now that elections have been declared in Uttar Pradesh, Mulayam Singh Yadav will have to file a list of assets owned by him. What he will file and what he will conceal has become a matter of intense speculation in Lucknow.

In 1998, a public interest litigation case was filed by Congressman Vishwanath Chaturvedi in the Supreme Court. The PIL alleged that Yadav, his son Akhilesh Singh Yadav, Akhilesh's wife Dimple Yadav, son Prateek Yadav had amassed assets far in excess of their wealth. In an affidavit in the court, Yadav has said:

A property was purchased in Etawah (his home constituency) for Rs 13,51,000 vide a DD drawn on Bareilly Corporation Bank but "the said land was agreed to be sold for an amount of Rs 2.5 crore to M/s Liza Builders Pvt Ltd, Moradabad".

Another Etawah property was purchased for Rs 10 lakh and the amount was paid through cheque.

Property purchased in the name of Dimple Yadav for Rs 38,55,040 vide an HDFC Bank demand draft. It is now in the joint name of Akhilesh and Dimple.

The petitioner has "incorrectly" referred to a property in Friends Colony (Lucknow) as a flat "whereas it is actually a plot in Friends Colony and the same had been purchased vide DD from SB account no. 3610 in Bareilly Corporation Bank".

Dimple withdrew Rs 8 lakh cash on June 22, 2004 from Bank of Baroda to purchase a property worth Rs 7,75,000.

Dimple holds shares worth Rs 2,24,700 in Anurag Automobiles and Ankur Rice Industries but "it is incorrectly stated she has shares in companies for Rs 13 lakh".

On several acres of agricultural land, the affidavit states that these were "purchased over several years jointly with other family members and are shown in the income tax returns of different years". Does not mention assessment years of income tax filed.

On Prateek, his son from second wife Sadhana, Mulayam's affidavit states that the Etawah land purchased by Sadhana in the name of her "minor son" was agreed to be sold to Liza Builders for Rs 2.5 crore and an "advance of Rs 1 crore has been received for the same"

Another property in the name of Prateek was purchased for Rs 1,89,30,000 and a loan of Rs 1,10,00,000 had been taken from Akhilesh. For the remaining amount, the advance received from Liza Builders was "utilised".

Property in Lucknow was purchased in the name of the Samajwadi party for Rs 1,10,00,000 and stamp duty of Rs 11,10,000 was paid.

Another property in Lucknow was purchased for Rs 15,00,000 in the name of his wife Malti Devi in 1999 and was transferred to Akhilesh Yadav.

All of them (Mulayam, Akhilesh, Dimple and Prateek) have "their own agricultural income from trading in agricultural produce". The Supreme Court was not satisfied and asked Yadav and his family to produce income tax and wealth tax returns for the last six years, all cash, credit card and bank transactions and other details of property. Yadav's lawyers have produced this but have pleaded that they be kept secret. The judgement on this case has been reserved by the Supreme Court.