Maharashtra polls: CM used Modi-Shah’s Gujarat model to gain control of state’s co-op sector

Ahead of the Lok Sabha (LS) elections in May this year, two of the state’s biggest co-operative barons and Opposition leaders — Congress’s leader of Opposition,

Ahead of the Lok Sabha (LS) elections in May this year, two of the state’s biggest co-operative barons and Opposition leaders — Congress’s leader of Opposition, Radhakrishna Vikhe Patil, and former Nationalist Congress Party (NCP) minister, Vijaysinh Mohite Patil joined the Bharatiya Janata Party (BJP). Both oversee co-operative empires that span across sugar factories, banks, dairies, schools and professional colleges in their home turfs of Ahmednagar and Solapur districts in western Maharashtra.

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Vikhe Patil’s grandfather, Vithalrao Vikhe Patil, the founder of the co-operative movement in Maharashtra, set up the first sugar co-operative mill in Pravaranagar, Ahmednagar in 1950, while Mohite Patil’s father, Shankarrao Mohite Patil, set up the first co-operative factory in Malshiras, Solapur district, in 1960.

Chief minister Devendra Fadnavis got Vikhe Patil on board by offering his son, Sujay, a BJP ticket, denying the sitting party MP the chance, and offered Mohite Patil’s son a seat in the Legislative council. In turn, the BJP can expect to break into the Congress-NCP bastions in these districts. That’s the official version of the deal.

The induction of these two co-operative doyens marked a shift in state polity as well as the BJP strategy to break into the co-operative sector, controlled by the Congress and NCP. Taking a leaf from the Gujarat model and his party’s top brass, Prime Minister Narendra Modi and party president Amit Shah, Fadnavis has systematically poached the Opposition’s political heavyweights, who also control co-operatives. Several small and big Opposition leaders — Congress minister Harshawardhan Patil, NCP MP Dhananjay Mahadik, NCP MLA Shivendra Bhosale, Congress leaders Amrish Patel, Ranjit Naik Nimbalkar (sitting BJP MP now), Kalyan Kale — with a slice in the co-operative sector, have joined the BJP and some of them will contest the polls on the lotus symbol on Monday.

“In Gujarat, with the blessings of the then CM Modi, Shah took over control of the co-operative banks and dairies almost completely from the Congress. One by one, the big co-operative leaders fell in ranks. It’s like this: What you can’t fight, you join,’’ said Ahmedabad-based political analyst and former journalist Hari Desai. Gujarat’s biggest milk federation Amul is now entirely run by unions controlled by the BJP and Gujarat’s apex bank is also under the party’s control, said Desai. “The BJP, under Modi-Shah, knows how to use power for expansion of the party. They made the co-operative sector Congress-mukt first,” said Desai. This is the maxim that is being used in Maharashtra today. For decades, state politics has been dominated by those who control sugar factories, milk dairies, and co-operative banks; indirectly controlling the lives of lakhs of farmers and the rural economy. For the past two-and-a-half decades, NCP chief Sharad Pawar was seen as the leader of the co-operative doyens, who got their political clout from the institutions they ran, and in turn, were patronised by the governments they were part of. While some of the senior BJP leaders like Nitin Gadkari and the late Gopinath Munde entered the co-operative route and set up their own factories, the balance of power had always been with the Opposition. That is changing now.

The stick and the carrot approach

Not all those who joined the BJP like the Vikhe Patils have been promised a post or will get a ministerial berth; some have joined the BJP to just keep their sugar factory/factories and their political fiefdoms afloat.

At least three of the newly inducted Opposition leaders, including Kale, Mahadik and Mohite Patil, have sent proposals to the state government, asking it to raise loans worth crores of rupees from the National Co-operative Development Corporation (NCDC) on their behalf. And, the state cabinet, in one of its last meetings before the elections in September, cleared a policy to help out such distressed sugar factories by raising such loans through the NCDC.

“Majority of the political leaders, who left us and joined the BJP, feared threat of inquiry in the running of their mill or for an incentive like a loan from the NCDC for their sick sugar factories. After maligning the co-operative sector for so-called mismanagement by us, the BJP has conveniently taken into their fold the very same leaders,” said NCP chief Jayant Patil. NCP has been the most hit by defections; the party lost 20-odd leaders ahead of the Assembly polls. It also has the maximum leaders, who run co-operative institutions.

CM Devendra Fadnavis has denied allegations of favour and threats, though he admitted the government had received proposals from sugar co-operatives, including from recently-inducted Opposition leaders (mentioned above) for loans. “The cabinet took a policy decision which will be applicable to all those who send us such proposals. We have agreed to help the distressed sugar industry, but with the finance department’s pre-conditions which state that such help will not be given to units with negative net worth,” said Fadnavis, denying that loan assistance was a carrot dangled to the Opposition leaders to jump the ship. The CM added that his government had offered assistance to several sugar factories of Opposition leaders because the industry was facing troubles and they could, in turn, help out cane farmers.

Before the BJP started engineering deductions, it tried to ‘reform’ the sector. In 2016, the Fadnavis government brought in two amendments to the Maharashtra Co-operative Act, 1960. One of the amendments made way for the appointment of independent experts on the boards of all co-operative bodies including banks, dairies and sugar factories. The Opposition leaders had then cried foul, terming it as a back-door entry for the ruling parties.

The government also issued an ordinance barring all directors on boards of co-operative banks which have seen financial irregularities and administrative mismanagement from contesting elections for two terms or 10 years. This has been challenged in court. But, the ordinance can potentially keep majority of the NCP leaders from contesting elections to co-operative bodies, thereby freeing up space for the BJP. To just give one example, the Maharashtra State Co-operative Bank (MSC), the apex bank of all co-operatives, had 25 NCP leaders elected to its board when it was dissolved following an audit that pointed to mass irregularities. All of these leaders have been indicted in the co-operative department inquiry and would be ineligible to contest any election to a co-operative body for 10 years. This is the same case that had led to an Enforcement Directorate case against Pawar last month. While Pawar was not on the board of the bank or any of the institutes it lent to, the case in many ways signified the proverbial last nail on the co-operative sector and the Opposition’s hold on it.

Co-op sector in MahA on weak legs

Unlike Gujarat’s strong co-operative dairy sector, in Maharashtra, the co-operative movement has been undercut by political mismanagement and privatisation.

Even before the BJP government came to power and started undermining the Congress-NCP’s clout, the sector was on weak grounds, say political analysts. “The political mismanagement, corruption and globalisation had already weakened the foundation of the state’s co-operative sector. Currently, only a handful of district co-operative banks are working, the rest have collapsed. And, many politicians, who controlled co-operative factories or dairies, have started their own private units and brands,” said Nitin Birmal, a political analyst.

The MSC bank scam best illustrates what went wrong with many of the district co-op banks in the state. The apex bank’s board of directors doled out unsecured loans to co-operative units of their own or political colleagues with blatant disregard to banking norms — offering loans to sugar co-operatives with negative networth, defaulters — for purposes not mentioned in loan applications or even related to co-operative businesses, etc.

Birmal pointed out that the collapse of the rural co-operative banking sector could also be blamed on the BJP government’s decisions like demonetisation and insistence on the nationalised banks for direct benefit transfers.

The sugar industry still holds charm for the politicians even though majority of the co-operatives are floundering. Several political heavyweights like NCP’s Ajit Pawar, Jayant Patil, Amit Deshmukh (son of former CM Vilasrao Deshmukh), BJP minister Pankaja Munde (daughter of late Gopinath Munde) own private sugar factories and distilleries.

“As much as 45% of sugar from the state now comes from private factories now. Sugar co-operatives failed to keep up with private factories because of lack of professional management, technical know-how, political interference, etc. But, here’s the irony: Out of the 91 private sugar factories in the state, only 35 are run by private entrepreneurs, the rest are still run by politicians and are profitable,” said B B Thombre, owner of the Natural Sugar brand in Maharashtra. He added that in many cases, such politicians can continue to exercise their clout through their private factories in their constituencies. Thombre spent the initial two decades of his career in the co-operative sector and has managed sugar factories for both Deshmukh and Munde.