States: Uttar Pradesh: Crisis Solution

Kalyan does not spare even his ministers as he strives to stem the financial crunch.

"Main Uttar Pradesh ko Uttam Pradesh banane ki koshish kar raha hoon (I am trying to transform Uttar Pradesh into the best state in the country)."
--Chief Minister Kalyan Singh at a rally near Lucknow on November 25

"Kalyan Singhji ise Uttam Pradesh banane ki koshish kar rahe hain, magar abhi to yahan pichrepan ki hore lagi hai (Kalyan Singh may be trying to make it the best state, but there is only backwardness here)."
-- Prime Minister Atal Bihari Vajpayee at the same rally

Ask the 2,000 employees of the Uttar Pradesh Electronic Corporation (UPTRON), which closed seven of its eight units early this month, and chances are that they will agree with the prime minister. So will nearly half the state's 10 lakh government employees who have not received their pay packets for the past two months. As Uttar Pradesh faces a huge financial crisis, the prospect of a quick transformation appears grim. Says Shiv Shankar Dubey, general secretary of the 35,000-strong UP Diploma Engineers' Mahasangh: "While employees are on the verge of starvation and the state is sinking to the level of Bihar, the Kalyan Government is doing nautanki (drama) in the name of financial discipline."

If the chief minister is to be believed, his decision to close down the loss-making public-sector UPTRON was part of his move to save the state from the financial crisis. To be fair, Kalyan's scalpel has not spared even his ministers and senior bureaucrats. Starting last week, Kalyan has ordered cuts in their allowances (see box).

According to Sushil Kumar Tripathy, principal secretary (finance), the exercise is aimed at sending out the message that the Government will take tough measures before the financial situation gets out of hand. For instance, he says, the ban on leave encashment is likely to save the state treasury Rs 500 crore while similar caps on bonus and DA would add Rs 877 crore to the provident fund kitty. Such measures have become imperative as the state's coffers are near empty. Kalyan maintains the debt-ridden economy he inherited has forced him to impose financial discipline. As early as March he released a "white paper" on the state's economy and asked senior bureaucrats to educate ministers on better financial management. Piqued, the ministers ticked off the bureaucrats for "exceeding" their authority.

Kalyan then set up a nine-member Cabinet Committee on Economic Affairs to tackle the crisis. But the ministers paid no heed and even prevailed upon Kalyan to fill 70,000 vacancies of Class III employees. The bureaucrats' plea that it would cost the Government Rs 4,000 crore annually fell on deaf ears. Kalyan also brushed aside suggestions to hike school fees and tariff charged from farmers.

The chief minister is obviously wary of initiating any measure that may make his Government unpopular. Even so, the turnaround steps that he has initiated saw workers livid. Last week, UPTRON employees burnt an effigy of the prime minister in Lucknow the day Vajpayee visited his constituency.

Official figures reveal that while the state's revenue receipts have risen by 44 per cent over the last five years, expenditure has shot up by 89 per cent. As a result, fiscal deficit increased from Rs 3,710.93 crore in 1992-93 to Rs 11,023.98 crore in 1997-98. The state's external debt has almost doubled from Rs 26,920 crore in 1993-94 to Rs 50,524 crore in 1997-98.

Economist Hiranmay Dhar feels the political instability in the state since 1993 has been largely responsible for this situation. Revolving-door governments resorted to populist measures to strengthen their vote banks, leaving huge dents on the exchequer. Over the past five years, the governments of Mulayam Singh Yadav, Mayawati and the bsp-BJP have spent over Rs 3,000 crore on the construction of parks, stadia and statues while 103 bridges and a host of other projects remain incomplete for want of funds. The 92 members of Kalyan's ministry themselves consume an estimated Rs 3 crore each annually.

It's Uttar Pradesh's sorrow that previous chief ministers have squandered public funds on populist programmes. Instead of learning any lesson, Kalyan too is following that path to expand his constituency.

DISCIPLINE MEASURES

Cut in the out-of-pocket allowance of ministers under which a minister could claim up to Rs 1.5 lakh a month without submitting vouchers.
Withdrawal of ministers' free rail coupons worth Rs 85,000.
Ban on police escorts in the state capital Lucknow.
Restriction on air travel for ministers and bureaucrats.
Ban on foreign trips for ministers and senior officials.
No leave encashment except in the case of Class III and IV employees.
Voluntary surrender of 50 per cent of ministerial salary and allowances till March 1999.
Bonus and increased DA to go into employees' provident fund instead of cash payments.