Bhupesh Bhandari: Akhilesh's bumpy ride

Akhilesh Yadav, all of 38, was sworn in as Uttar Pradesh’s youngest-ever chief minister on Thursday. The function was attended by businessmen Anil Ambani, Sanjay Dalmia and Subrata Roy, political heavyweights Parkash Singh Badal, Chandrababu Naidu, Om Prakash Chautala and Prakash Karat, and film star Jaya Bachchan. Forty thousand people gathered at the La Martiniere grounds to watch the man who humbled the first family of Indian politics take the oath of office from Governor B L Joshi.

Akhilesh has so far played his cards really well. Immediately after the election results came out, he said that Netaji (his father, Mulayam Singh Yadav) will be the chief minister. Akhilesh said it so emphatically that many were left in no doubt that he would certainly become the chief minister! They were right. But, by then, he had played the part of the respectful son in front of the whole country. In a country where such signals matter quite a lot, Akhilesh seems to have made the right gestures.

His real test starts now. Akhilesh has no administrative experience, though everybody cannot stop talking about his organisational abilities. But he could always turn to his father, who has been the state’s chief minister on three occasions (1989 to 1991, 1992 to 1995, and 2002 to 2007) and has also served as defence minister in the Union Cabinet (1996 to 1998). So it is quite possible that Mulayam Singh Yadav will still have a say in how the country’s most populous and politically sensitive state is run over the next five years.

On the positive side, Akhilesh has inherited a government that is in sound financial health. The former chief minister, Mayawati, administered the state with efficiency and minimum fuss. Uttar Pradesh is one of the few revenue-surplus states in the country. The surplus was Rs 3,500 crore in 2010-11, and is expected to rise to Rs 5,604 crore by the end of the current financial year. Uttar Pradesh’s public debt came down from 42.7 per cent in 2007-08 to 38 per cent of the gross state domestic product (GSDP) in 2010-11. Its fiscal deficit in 2010-11 was a healthy 2.7 per cent of GSDP. In each of the five years of Mayawati’s rule, Uttar Pradesh utilised over 95 per cent of the Plan expenditure. The state, senior state bureaucrats would claim with pride, had gone for ways and means advances (to bridge short-term liquidity gaps) from the Reserve Bank of India for all of 16 days in Mayawati’s first four years (2007 to 2011).

On the negative side, all eyes are now on the long list of freebies the Samajwadi Party (SP), led by Akhilesh, announced in the run-up to the state elections: free tablets for all students who pass the 10th standard and free laptops for those who clear the 12th standard, free education for girls up to graduation, waiver of farm loans, pension for farmers, free water for irrigation, subsidised credit, free power to small farmers and weavers, and unemployment allowance of Rs 1,200 per month. The Giri Institute for Development Studies, based in Lucknow, has calculated that the loan waiver will cost between Rs 10,000 crore and Rs 15,000 crore. (See “Akhilesh’s steep cost of victory”, March 15, Business Standard.) But it will be a one-time outgo. The other expenses are recurring in nature.

The Giri Institute reckons that the tablets and laptops will cost the Uttar Pradesh government Rs 1,800 crore every year, free power Rs 1,500 crore, free water for irrigation Rs 600 crore, and unemployment allowance Rs 1,200 crore. The cost to the state government on these schemes alone works out to Rs 5,100 crore per annum — just Rs 500 crore short of the budget surplus for 2011-12. True, the SP government will scrap some schemes launched by the Mayawati government to fulfill the poll promises, though Akhilesh has said that vendetta is not on his agenda. Still, the portents are ominous. Not once did Akhilesh, or any other SP leader, spell out during their election campaign how these additional resources would be mobilised. And these are schemes no future government in Lucknow can afford to roll back.

Not to meet the promises could be disastrous for Akhilesh. There has begun a scramble all over Uttar Pradesh amongst young men and women to register themselves at the employment exchanges — only those who are registered and haven’t got a job will get the unemployment allowance. Erased from public memory quite some time ago, these exchanges are now in huge demand. You can be sure that a whole ecosystem of corruption will soon develop to get all kinds of people registered here for the allowance. The irregularities that have occurred in the public distribution system for decades, and the Mahatma Gandhi National Rural Employment Scheme for years, are certain to occur here too.

Meanwhile, industry seems to be happy with the return of the SP. Mayawati didn’t really go out of her way to woo business, though her government is credited with the unprecedented real estate development in Noida and Greater Noida. In 2009, in order to counter the economic slowdown, her government announced a new land acquisition policy whereby developers needed to pay only 10 per cent of the land cost upfront and the rest in installments over several years. This also led to huge controversies over land acquisition by some developers. Apart from that, Mayawati doesn’t have much to show.