Rajasthan: Playing the populist card

The major criticism levelled against Vasundhara Raje in Jaipur is that she is a Chief Minister in absentia. But that would be unfair, given the fact that the Maharani, as she is called by the people in Rajasthan, embarked on a Dhanyavaad Yatra soon after the Bharatiya Janata Party (BJP) was voted to power in the state.

Raje did set a 100-day performance target (she completes 100 days on March 31), and has not disappointed in addressing the concerns of her core electorate comprising kisan, karmachari and naujavan (farmers, employees and youth).

Within three months of being voted to power, Raje implemented the merger of 50 per cent of the dearness allowance with the basic pay of state government karmacharis, following the Centre's decision. The fulfillment of the election promise did bring about cheer in a section of the populace, but also added Rs 400 crore to the revenue expenditure of the state.

Similarly, another decision that struck a chord with the naujawan, who helped bring her back to power, was to clear the backlog in teachers' appointment.

About 36,000 jobs were created by clearing the backlog in the very second Cabinet meeting of the new government. No immediate estimates of the additional expenditure are available, but the move will do its bit to worsen the finances of the state.

Significantly though, Rajasthan is one of the 3-4 states, which may benefit from a structural adjustment loan (SAL) facility likely to be extended by the World Bank.

The Union finance ministry is already processing the application and the loan, if granted, will be dovetailed to address the medium term fiscal reforms programme (MTFRP) of the state.

Among the major challenges that Raje faces is reforms in the state's power sector. Election promises like 14 hours of daily power supply in rural areas will be a tough call because the transmission and distribution losses in the state are as high as 45 per cent. While Raje has earmarked Rs 3,000 crore to reduce the T&D losses to 20 per cent over the next 3-5 years, it is easier said than done, reckon state industry chambers.

Three years ago, the state government had split the electricity board into three distribution companies. The restructuring, however, has failed to help the distribution companies turn around. Having exhausted their borrowing limits, they continue to depend on the state for financial support.

According to state government sources, apart from the power sector, Raje's focus areas will be irrigation, small-scale industry and tourism. These sectors will not only generate additional employment but also provide a boost to the state economy.

Given Raje's political clout at the Centre, she has already managed to get Rajasthan's Plan outlay for the current fiscal hiked from the original Rs 4,258 crore to Rs 5,504 crore.

External assistance and funds under centrally-sponsored schemes too have been released during the last three months to help the government fulfil several of its election promises.

LN Nathuramka, former reader in economics at the University of Rajasthan, said the Plan expenditure in February had seen an unusual increase to Rs 1,516 crore, compared with Rs 596 crore in the previous month.

"The additional expenditure has found its way into power, roads and other infrastructure," he said. On the flip side, the higher Plan outlay meant that the outstanding debt of the state had risen from Rs 12 crore a day to Rs 13 crore a day, he pointed out. According to him, it would require drastic long-term measures to pull the state out of the current mess. v For example, he quoted an NIPFP study which said that over 50 per cent of the Rs 8,000 crore total subsidy was non-merit and did not reach the target audience.

"It is too early to talk about Raje's performance since the government itself is not yet fully in place. These are initial stages. The Cabinet itself has less than 10 ministers now," he said.

Some of the corporate-friendly measures like cutting the stamp duty from 0.5 per cent to 0.2 per cent will have to wait till the government presents a full Budget. Raje has, however, made the right noises by announcing the setting up of three separate task forces on economic reforms and development, employment generation and tourism.