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Why the MSC bank is so important to state politics

The Nationalist Congress Party’s state executive was scheduled to meet on May 12 to discuss the strategy for the coming days.

mumbai Updated: May 11, 2011 01:33 IST
Shailesh Gaikwad

The Nationalist Congress Party’s state executive was scheduled to meet on May 12 to discuss the strategy for the coming days. However, following the decision of the Reserve Bank of India to dissolve the board of directors of the Maharashtra State Cooperative Bank, the agenda has changed. For the NCP — the party of cooperative barons who control rural politics in many parts of Maharashtra — the tough action against the bank and its implications will now be a priority issue.

Why is the MSC Bank — the principal funding agency for all cooperative banks in the state — so important? The answer lies in the importance of the cooperative sector in state politics.

In most parts of Maharashtra, the network of cooperative bodies – sugar factories, dairies, credit societies and banks – form the backbone of the rural economy and hence the politics of that area. Those who control this network dominate local politics. Control over financial institutions in the cooperative sector also gives leverage to ruling members when it comes to contesting elections.

The cooperative sector plays a significant role in local politics across the state except in Mumbai, the Konkan and most of Vidarbha. The ruling class in this sector is mostly with the Sharad Pawar-led NCP, even though the Congress has a considerable share. And, the NCP derives most of its strength from the cooperative sector. Little wonder then that the RBI action has angered the party that suspects the Congress is out to corner its chief.

“It seems the action is aimed at weakening our grip on cooperative credit societies and banks. The timing is crucial. The elections to zilla parishads are due in a few months and there would be efforts to prevent us from using our strength in the cooperative sector,” said a key NCP minister.

Many in the Congress insist the action was long overdue. “There was urgent need for discipline in the cooperative sector. It will send a clear signal that the sector is not to be used for personal or political gain,” said Dr Ratnakar Mahajan, former executive chairman of Maharashtra State Planning Board.

So, will the tussle lead to serious political implications for the ruling alliance? According to NCP sources, the party is now keen to go it alone in the coming zilla parishad and municipal elections. “We will suffer some damage if we don’t forge an alliance with the Congress, but we can retain the district bodies we have. The Congress will find it difficult to win the municipal polls and the beneficiary will be the Opposition,” said an NCP minister.

However, the party is unlikely to pull out of the state government. “There is no point in losing the government in the face of local elections. The next assembly election is three years away and we have ample time to decide,” he said.