Uttar Pradesh coffers almost empty

MANDATE 2004/ Fiscal bungling - Politically-expedient decisions worsen matters

Even as the BJP and the Samajwadi Party (SP) have been harping on developmental issues, the finances of the country's largest state has reached a precarious condition.

According to an official estimate, the state's revenue receipt could meet only 60 per cent of the salary expenditure for government employees.

Obviously, the state government faces crisis after every three months to pay salaries to the state employees.

Officials are constantly involved in fire-fighting operations to meet even salary expenditure. In such circumstances, the state government is all set to devise a new method of shifting the liability for two years by enhancing the retirement age of employees.

Though the state government's approach would spell disaster to the state's finances, political masters are certainly not worried by the long-term implications. Two-year is certainly a long term in politics. Yadav is certainly more keen to win over the state employees than managing the state's finances.

But those watching the state's political economy from close quarters confirm that the successive government for the past 15 years have been indulging in this kind of profligacy.

In 1996, the JL Bajaj committee recommended a slew of measures to enhance the state's revenue receipt and made suggestions for tax reforms. One of the recommendation emphasised the need of introducing a tax on the growing service sector.

That the service sector contributes around 46 percent in the state's domestic product (SDP) highlights the relegated role played by the industries and the agriculture in the state's economy.

But all recommendations were ignored. For the past five years , the tax revenue is stationary, fixed around Rs 20,000 crores. Tax rates have not been revised for over two decades. That the traders' lobby wields considerable clout was indicated by the manner in which Yadav opposed the VAT.

"This has certainly led to the emergence of a perverse tax structure" commented Mohammad Muzammil, a professor in the Lucknow university's economic department.

Muzammil's views are shared unequivocally even by serving officials who felt constrained by limitations imposed by their political masters irrespective of their parties.

As a result, UP now figures far below Bihar in terms of development in health and education. The apparent implication is that the development was hardly an electoral issue in these elections.

If Yadav's grand-show of parading leading industrialists of the country with super-star Amitabh Bachchan has had no impact on the electorate, deputy Prime Minister LK Advani's roadshow of highlighting India's development was also lackluster affairs in its UP's leg.

In Lucknow, the public meeting addressed by Vajpayee and Advani attracted less than five thousand people- a poor show by all standards. Perhaps the genesis of the sari-distribution show leading to death of 22 persons could be traced to this poor show.

Lalji Tandon in his zeal to display his clout okayed the plan to mobilize people from far-flung areas to distribute free saris. The resultant tragedy has virtually taken the sheen off from the India Shining campaign.

This is only confirms that the caste, religion and other local factors will determined the electorate's behaviour in substantial number of 80 Lok Sabha seats in the state. There is hardly any discernible dominant issues in these elections.