Maharashtra's primacy will be restored, says Deshmukh

Maharashtra's chief minister Vilasrao Deshmukh has completed 100 days of being firmly in the saddle.

In a free-wheeling conversation with Business Standard, Deshmukh says the state is in a financial revamp mode, while also emphasising topmost priority being accorded to the revival of the Dabhol Power Company's (DPC) power project to meet the state's energy shortfall.

On his plans for the remainder of his term, Deshmukh predicts affordable air travel becoming a reality for state agriculturists, sustained demolition of post-1995 encroachments in Mumbai city and continued political fireworks between the Congress and alliance partner the Nationalist Congress Party (NCP).

Excerpts from an interview:

On his 100 days in office:
This 100 days has been a different experience from my earlier innings as chief minister of Maharashtra. Then I was heading a eight party coalition. This time it is just the Congress and NCP, which allows for greater stability, which is an essential for development. In the last term we were constantly worried about the stability of the government.

However, I have mixed feelings as the state has been witness to various calamities such as drought, hailstorms, more than 250 people died in the Mandhar Devi temple accident, train accident, tsunami, 100 people died in a the hooch tragedy etc.

Similarly, there has been a big strain on the state treasury and administration for cotton procurement under the state's cotton monopoly scheme. There is a bumper crop and international prices are low in the absence of demand. Initial estimates indicate that we may suffer at least Rs 1,500 crore loss on cotton procurement.

On the deteriorating financial situation in the state:
Till 1995 there was a Congress government in Maharashtra. In 1995 Shiv Sena-BJP came to power. Till 1995 no loans were raised for undertaking development projects. The total accumulated loans stood at Rs 16,000 crore from 1960 to 1995.

From 1995 to 1999, this loan portfolio went up to Rs 48,000 crore. When we came back to power, we got caught in a debt trap of their making. They had raised terribly high-cost debt at 16 and 17 per cent having short-term repayment schedule.

We inherited several incomplete projects. We were forced to raise further debts to complete the projects.

Now the state's debt portfolio stands at Rs 1,10,000 crore. But 50 per cent of the loan is Government of India (GoI) debt. Now, the 12 Finance Commission is likely to recommend some concessions on Central government loans.

I have been given to understand that there will be a waiver component on GoI loans, reduction of interest and a longer tenure being given for repayment. When this happens, things will improve tremendously for the state. We are also seeking to raise cheaper loans.

On World Bank assistance:
The WB has assured that they would give us $one billion loan. But this is yet in the informal domain. We are yet to get a firm confirmation on paper.

There was also some discussion on the WB backing the state government's borrowing plan. When it happens, Maharashtra will revert to its original position, its original glory as a fiscally prudent and responsible state.

Air travel for farmers:
There are several airstrips located in district headquarters. These are only being used for VIP flights. If these were to be connected and some lower tariff domestic flights permitted, it would be a great boon.

Nashik is first on our agenda. From March 1, Air Deccan has committed to starting flights to Nashik. Similarly, Latur, Nanded, Amravati, Akola, Dhulia, Ratnagiri and Jalgaon and wherever no regular flight services exist would be included. We only have regular services to Aurangabad, Nagpur and Pune. Now Kolhapur has been already connected.

The tariffs will be reasonable. Currently, the flight to Surat is pegged at Rs 1,500. We expect similar rates here.

On sustaining difficult decisions such as the current slum demolition drive:
I have certainly taken some hard decisions. Even in my previous tenure, I opened up the cotton procurement to private ginning and spinning mills despite protestations from all around. I did so many things but there was a lot of anti-propaganda.

This time it is the demolition drive. But I must say that most of the print and electronic media, barring one or two, have justified my actions and backed my decision. Unless we are supported in good measure, such hard decisions cannot be taken.

You must remember only Maharashtra has passed legislation that protects pre-1995 slums. The same act also bars any further slums coming up. It has been made a cognizable offence. One who constructs, supports as well as government officials from the respective areas where slums have come up post January 1995 are liable to be punished under the law.

It is true that our party has promised even regularising slums up to 2000. But my difficulty is unless we amend the act, we are bound by law. Only the courts may allow slums which came up post 1995. I have requested my party president to convene a meeting of the co-ordination committee, place these issues before it and guide us about how we may fulfill all the promises made.

Vision for Mumbai:
Fortunately, here I would like to say that our Prime Minister Manmohan Singhji has a very special place for Mumbai city in his heart.

He has said in the press and to me that his attachment with the city is special after he spent five years here as RBI governor. He is very keen. With his encouragement we have decided to go ahead with Mumbai's development projects. We want to make Mumbai a world class city.

When Shanghai is spoken about, it does not mean we want to make Mumbai into Shanghai. Shanghai is just an example of development that was preceded by a vision its mayor had and the dedication and political backing that transformed it to what it is today.

Mumbai has always been a very beautiful city. I am very keen that the city becomes an eminently livable city.

On free power to farmers and power shortfall in the state:
It must be remembered that no farmer had sought free power. It was more of a political issue. The Shiv Sena announced plans to give free power if elected to power.

We went ahead and implemented free power for 23 lakh agriculturists. We must understand that the state government was already giving power at 50 per cent tariff to agriculturists. So with free power, our expenditure has only been additional to the tune of Rs 800 crore.

We are certainly assessing the impact of free power. Whether theft of power has increased, use has gone up. Yes there is a huge power deficit situation. As per the estimates, by 2010 if no further generation capacity is added, we will have a shortfall of 7,500 mw. Currently, we have a shortage in excess of 2,500 mw.

So our first priority is to restart the DPC project which will immediately provide us with 2,000 mw of power. We have been asked by the Centre if we would purchase the power from DPC. We have said we need the power and are willing to pay in the range of Rs 2.30 to Rs 2.40 per unit.

We are also expecting another 1,000 mw from the Tarapur atomic power station in a span of three months. We are also adding to the generating capacities of the Parli and Paras thermal power plants.

In Maharashtra, we have very few hydel projects. Except for Koyna, we mostly depend on thermal power. In Koyna too, there are some restrictions on the water use for power generation and how much water may be diverted for agriculture. Some new sites for setting up smaller hydel projects have been identified. In Uran, we want more gas supply to increase power generation by a further 500 mw.

On working relationship with NCP. Pre-poll tie up to continue for forthcoming self governing body elections.

We already have a pre-poll alliance with NCP. As we are in power in New Delhi and Maharashtra, the alliance should continue. There are no major issues. It is just some fireworks. We are two different parties. Each party wants to grow (which is generally at the expense of other parties) so there are bound to be fireworks.