When figures don’t add up, beware

It took 15 years for the Congress-NCP government to bring the 8-12 hours of load shedding across towns and villages in Maharashtra

Some years ago, when the Shiv Sena-BJP government between 1995-1999 was overdrawn on its account with the Reserve Bank of India on more than one occasion, I thought to question Maharashtra’s previous finance minister Ramrao Adik on why this should be happening so often.

His was an enduring lesson I learnt in terms of my personal finances too. “These people have no idea how to manage budgets,” he told me scathingly. “As with personal finances, so with government funds, you have to apply a simple rule - you do not spend more than you can earn, you do not borrow more than you can pay back. And in paying back you have to make sure you have enough left for a rainy day. And always, always save and save as much as you can for an unforeseen emergency. And always resist the temptation to overspend on a whim.You will then never be in trouble.”

I am not sure I followed all those cautionary exhortations in my own life but I know the Sena-BJP government didn’t - neither then, nor now. Adik had then warned Sharad Pawar it would take them 15 years to mop up the mess after the Sena-BJP regime and he was prophetic in that regard. The first saffron regime in the state tied itself up in knots over payments to Enron, it took some hard fighting by the next Vilasrao Deshmukh government to get Maharashtra out of the looming financial wreckage in 2000-01 on account of a financial deal that had mortgaged everything to the now defunct US power giant. Had Deshmukh honoured the deal, Maharashtra would surely have gone bust.

I am beginning to believe that grapevine because of two shocking statements from two ministers in the Maharashtra cabinet within the span of a week. First, the minister for sanitation told certain bureaucrats in western Maharashtra while they must complete the targets for building toilets, they should not seek funds from the government for the same. Now each toilet is supposed to cost upwards of Rs 35,000 and civic bodies fund the owners for undertaking this construction. Predictably, they have been left wondering how to rid the state of open defecation without the funds to build a toilet in every home.

Barely could they get over this, that the tribal development minister informed Zilla Parishad CEOs not to ask for funds for any new development projects in tribal areas, again leaving them wondering how to modernise and connect Adivasis to the mainstream without any fresh funds for newer projects.

It is obvious that the government has spent more than it has earned and borrowed more than it can repay on two counts - the first is the loan waiver for farmers where it had been rather more honest than the UP government in seeking to write off loans upto Rs 1.5 lakh and must find the funds for that from all sources, even if it means robbing Peter (tribals and poor villagers) to pay Paul (farmers). I suspect in many instances the Peters and the Pauls might be the same persons, doubly jeopardised by these government decisions.

And now they are borrowing beyond their means and leading the state towards further financial mess in seeking funds for chief minister Devendra Fadnavis’s pet Samruddhi Expressway. Initially banks refused to fund this Rs48,000-crore project and the government put pressure on other flush institutions such as CIDCO to realise the funds. When that proved insufficient, the government asked banks to fund contractors promising to stand guarantor for 60 per cent of their borrowings.

Lacking a few thousands to build toilets and access roads for tribals, but having enough to stand guarantee for a multi-crore project? I was always weak at arithmetic. I guess I have to go back to school for my figures still don’t add up!