BSP win a sweetener for sugar mills

BSP wins UP legislative elections, raising hopes of sugar mill owners, small entrepreneurs.

Dalit leader Mayawati and her Bahujan Samaj Party (BSP) today emerged victorious in the elections to the Uttar Pradesh legislative Assembly, raising the hopes of sugar mill owners and small entrepreneurs in the state.

As sugarcane farmers and large landowners do not form a part of her vote bank, Mayawati is expected not to raise further the minimum support price for sugarcane when mills go on stream in October this year.

"If you look at her three tenures as chief minister, she has been more realistic about cane pricing," said the head of a Delhi-based firm that has two mills in Uttar Pradesh. 
 

BACK WITH A BANG
UP Assembly elections 2007 results
BSP	206
SP +	97
BJP +	51
INC +	22
Others	26

The Mulayam Singh Yadav-led Samajwadi Party government in the state had raised the support price for sugar to Rs 125-130 a quintal from Rs 115-120 a quintal in the last crushing season that ended in April, resulting in payment arrears of over Rs 2,000 crore on the books of the mills.

"What did the Samajwadi Party gain by raising the cane prices, when the money never reached the farmers," said a leading sugar producer.

Small and micro enterprises, which form the BSP vote bank, are expected to get some positive treatment from the new government. "There could be a substantial focus on the small and marginal sectors," said Lucknow-based economist Arvind Mohan.

There are around 1.5-1.8 million such units in the state, giving employment to over 7.5 million people.

"About 30 per cent of such units have closed down, thanks to the government's policy of promoting a few big industries," said DS Verma, secretary, Indian Industries Association, an association of small-scale units of Uttar Pradesh.

Overall, investors said with Mayawati in a position to form the government on her own, there would be political stability in the state for the next five years.

"Governance at the local level will improve," said a Delhi-based businessman whose senior manager was kidnapped in Uttar Pradesh three years ago. "I will ensure a society free from corruption, fearlessness and crime, and provide development," Mayawati said in a press conference today.

The stock market also signalled its approval of the prospects of political stability in the state. The BSE Sensex, which had opened 137 points down, rallied after the election results started coming in and ended the day 25 points up. Sugar stocks went up 3-11 per cent on the BSE.

The BSP-led government is also likely to review the state's stance on value-added tax (VAT), which was fiercely opposed by the Yadav regime owing to protests from a section of traders.

Mayawati was vague on her economic priorities during the run up to the elections. The BSP issued no manifesto but a four-page appeal to the people, which was unclear about the party's policies and programmes.

Still, many economic observers said the fate of the policies launched by the Samajwadi Party government during its 45-month regime was now uncertain. "If she tries to pursue her aggressive political agenda in the economic sphere, the industrial climate in the state will only worsen," said the Lucknow functionary of a business association.

The first institution expected to come under Mayawati's scanner is the UP Development Council, headed by Samajwadi Party General Secretary Amar Singh and having Anil Ambani, KV Kamath, Adi Godrej and Amitabh Bachchan among it members.

Observers said it would be interesting to see how she reacted to the Anil Dhirubhai Ambani group's power project at Dadri.

The state government's agriculture policy, which promotes contract farming and exempts large retail chains and companies from mandi fee while procuring fruit, vegetable and grain directly from farmers, could also be reviewed by the Mayawati government.

A similar fate could await the release of hundreds of crores for a large number of projects in Saifai, Mulayam Singh Yadav's ancestral village.

On the positive side, Mayawati will inherit overflowing coffers of the state government. As much as Rs 25,000 crore is lying unutilised with the state.