OffStumped For All Things Right of Center, Bringing a Right of Centre Reality Check to Indian Politics, News Media Reporting and Opinion now in Hindi अब आप के लिये हिंदी मे.

Pratibha Patil yesterday filed her nomination papers for the Presidential election. Accompanied by Prime Minister Manmohan Singh and Congress chief Sonia Gandhi, 72-year-old Patil filed the documents before the Returning Officer and Lok Sabha Secretary General P D T Achary at the Lok Sabha Secretariat. Pratibha Patil  is pitted against Vice President Bhairon Singh Shekhawat even as the Bharatiya Janata Party (BJP) questioned her moral right to hold the country’s highest office.  an unrelenting BJP stepped up its campaign against Patil, alleging that a sugar factory owned by her owed huge sums of money to a cooperative bank.

Sharad Pawar came to he rescue with the below remarks

“never there was an enquiry under Maharashtra Cooperative Societies Act against her as a person or as a director of the Pratibha Mahila Sahakari Bank Ltd, Jalgaon”.

“In 45 years of my public life, as a voter or being associated with elections, I have never seen this kind of mud-slinging.”  

If you are still wondering what he is referring to, well allow Offstumped to give you an organized tour of “Sugar Sweet Entitlement” – Mutually Convenient and Assured by the State of Maharashtra. If you suffer diabetic values then this aint for you, no amount of political insulin can help that entitlement challenged liver of yours.

The tour begins with a grim recollection of Maharashtra in 1981 when A.R. Antulay was the Chief Minister.

If you thought Entitlement Consciousness in India was of recent origin, think again.

”Indian agriculture has become history’s greatest known patronage system,” says Valale Chacko, vice president of the Farmers Federation of India in 1981.

About 15,000 farmers protested in Nagpur demanding a higher minimum support price as production costs had risen 300 percent but prices only 100 percent.

Why did production costs go up – because Fertilizer, electricity for the pumps, diesel fuel for tractors and transportation cost more.

And why did they cost more  – because the Government set their prices as well.

State patronage covered almost every aspect of farming. Apart from fixing purchase prices, the state controls seed, fertilizer, electricity and diesel fuel, and it extends developmental credit and several kinds of subsidies and incentives through Government-owned banks.

At the heart of this patronage – the Government controlled Minimum Support Price. The entitlement disease eventually saw A.R. Antulay fall thanks largely to Arun Shourie’s explosive journalism. Antulay had established at least five ostensibly charitable trusts that collected contributions from people and companies doing business with the government. The contributors included builders, sugar refiners, banks and contractors who routinely depend on the state government for licenses, building permits and the supply of rationed raw materials

Well that was the Indira Gandhi era folks, we now fast forward to 1987 to the Rajiv Gandhi era when

several state governments and politicians are putting pressure on New Delhi to change a 1975 ban on setting up new distilling and brewing industries. The restriction also seeks to prevent the expansion of existing capacity.

And we are introduced the world of Sugar Sweet and mildly tipsy Entitlement enjoyed by the Co-operatives in Maharashtra.

Many state governments also get around the ban by giving licenses to sugar cooperatives, which convert molasses into alcohol and manufacture countrymade brews

nearly half of national liquor production was  ”country” or cheap rum-like liquor made by the sugar cooperatives

Why were state governments going out of their way to favor Sugar Co-operatives to produce liquor ?

In 1985 in Uttar Pradesh alone distillers paid 1.8 crores in excise levies

But the clinching year is 1994. The year that saw the Sugar Factory founded by Pratibha Patil receive 5 crores by the State Government from the Mumbai District Co-operative Bank which btw where underwritten by the State Government of Maharashtra.

In her speeches in 1991 on Agricultural Grants and 1993-1994 Annual Budget that saw Pratibha Patil lobby hard for allowing Co-operative Banks to fund Sugar Factories, Pratibha Patil made passionate call for the Government to help boost Sugar Exports through Affirmative Action.

the export-import policy should not be biased against the agricultural producers

The sugar industry has earned a name for India in the world. It is one of the leading industries I the world, it has an export potential and industrial base.

sugar has the highest potential of export in this country today, and it is the largest agro-based industry in our country

If agro-based and indigenous industries are going to help us to improve the BOP position, I do not know why the Government should not come forward to help them

Well in 1993-1994 Pratibha Patil’s 2 main pleas for the Sugar Lobby were heeded.

Co-operative Banks loaned them large funds while a helpful Food Minister in Kalpanath Rai (in the P.V. Narasimha Rao Cabinet) delayed millions of tons of Sugar Imports allowing sugar companies to earn hundreds of millions of dollars in windfall profits in the first half of 1994. March 1994 also saw the Central Government launch the Incentive Scheme for new Sugar Factories and expansion Projects.

So what was the incentive all about ?

It allowed the Sugar Factories to expand manufacturing capacity expeditiously and to sell a higher percentage of the Sugar produced via exports. But the 1993-1994 incentive scheme came with a very interesting rider.

The beneficiaries of the incentive scheme shall ensure that surplus funds generated through sale of the incentive sugar are utilized for the repayment of term loans, if any, from the Central Financial Institutions/ Sugar Development Funds/ Commercial Banks/ Cooperative Banks.

Clearly Pratibha Patil as the founder of the Sant Muktabai Co-operative knew what she had signed up for when her Co-operative secured a Co-operative Loan.

On Jan 23rd 1999 Congress President Sonia Gandhi visited Edalabad in Jalgaon district to inaugurate the Sant Muktabai Sugar Factory.

Pratibha Patil’s Sant Muktabai Co-Operative availed of this incentive scheme for the period from 1998-1999 to 2005-2006. So how is it that it failed to pay up the loan, mysterious as that may be in in May 2002 Muktabai and other Sugar Co-operatives made news for all the wrong reasons.

In an unprecedented action, the registrar of co-operatives has issued orders for filing of criminal complaints against boards of directors of 10 big sugar co-operative factories in Maharashtra following revelations of excise duty evasions by them.

You can see how the Incentive Entitlements from the Central Government were abused by the Co-operatives. Now that they were allowed to export a higher percentage of Sugar, the factories availed excise duty concessions on export quota sugar, but sold it at a high price in the open market.

Gaikwad said each of the factories might have siphoned off Rs 2 crore each by selling the export quota sugar in free-sale market

In June of 2002 it came to light that the factories which were required to provide proof of exports (a condition to avail the 1993-1994 incentive scheme) had failed to submit proof of export within the stipulated time of six months.

In October of 2002 The chief commissioner of central excise and customs, Pune, had slapped notices on 24 sugar factories in the region to recover Rs 8.7 crore due on account of excise duty evasion.

But the telling aspect of the scandal was that all these factories, most of them loss-making, were controlled by state ministers, former ministers and sitting MPs.

Offstumped Bottomline: That folks about sums up Affirmative Entitlement for the Political Class in Maharashtra, Sugar and Sweet. When Sharad Pawar expresses moral indignation he misses the point that this is not about corruption.

This is not about being clean and loyal.

This is about leveraging the culture of entitlement through lobbying.

This about being unmindful of conflict of interests. 

This is about abdicating all sense of financial responsibility by having the State underwrite your mis-management.

This is not the kind of leadership this nation needs in the 21st century.

We now know what a potential Pratibha Patil Presidency will come to mean – Mutually Convenient and State Assured Entitlement for the Political Class.

This is the exact opposite of what President Kalam stood for when he returned the Office of Profit Bill.

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