Identifier
Created
Classification
Origin
09MUMBAI397
2009-10-14 12:36:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Consulate Mumbai
Cable title:  

MAHARASHTRA ELECTIONS: EASY RIDE FOR INCUMBENTS WILL LIKELY

Tags:  PGOV ECON EAGR IN 
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ZNR UUUUU ZZH
P 141236Z OCT 09
FM AMCONSUL MUMBAI
TO RUEHC/SECSTATE WASHDC PRIORITY 7490
INFO RUCNCLS/ALL SOUTH AND CENTRAL ASIA COLLECTIVE
RUEHNE/AMEMBASSY NEW DELHI PRIORITY 8714
RUEHCG/AMCONSUL CHENNAI PRIORITY 2130
RUEHBI/AMCONSUL MUMBAI PRIORITY 2720
RUEHNEH/AMCONSUL HYDERABAD PRIORITY 0053
RUEHCI/AMCONSUL KOLKATA PRIORITY 1918
RUEAIIA/CIA WASHDC
RHEHAAA/NSC WASHINGTON DC
UNCLAS SECTION 01 OF 03 MUMBAI 000397 

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: PGOV ECON EAGR IN
SUBJECT: MAHARASHTRA ELECTIONS: EASY RIDE FOR INCUMBENTS WILL LIKELY
DIM PRESSURE TO REVAMP AGRICUTLTURE AND INFRASTRUCTURE

REF: MUMBAI 364

MUMBAI 00000397 001.2 OF 003


UNCLAS SECTION 01 OF 03 MUMBAI 000397

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: PGOV ECON EAGR IN
SUBJECT: MAHARASHTRA ELECTIONS: EASY RIDE FOR INCUMBENTS WILL LIKELY
DIM PRESSURE TO REVAMP AGRICUTLTURE AND INFRASTRUCTURE

REF: MUMBAI 364

MUMBAI 00000397 001.2 OF 003



1. (SBU) Summary: In the Maharashtra state elections October
13, the incumbent Congress-Nationalist Congress Party (NCP)
Democratic Front (DF) alliance appears poised to return to power
despite lackluster governance, according to interlocutors and
pollsters. The main reasons are the splintering of the
anti-government vote by the emergent Maharashtra Navnirman Sena
(MNS),an unappealing Shiv Sena-Bharatiya Janata Party (BJP)
opposition, and the broad trust enjoyed by Congress leaders at
the center, and Congress Prime Minister Manmohan Singh's
popularity in particular. A larger majority for the Congress at
the expense of its coalition partner could give the party's
leaders more leeway to address the state's major challenges,
such as power shortages, lagging infrastructure, and uneven
investment in agriculture. However, another five-year mandate
may encourage DF leaders to continue their short-term governance
strategies, which over the last ten years have substituted
populist sloganeering for meaningful reform. End Summary.



Exit Polls Predict Incumbents' Return

-------------- --------------




2. (SBU) After several weeks of frantic campaigning, voters went
to the polls in the state of Maharashtra on October 13.
Political leaders have been barnstorming the state; the
Congress, in particular, has brought in national leaders over
the last few days, including Prime Minister Manmohan Singh, who
campaigned in Mumbai on Sunday, as well as Congress Party
President Sonia Gandhi, and son Rahul Gandhi. While the votes
won't be counted until October 22, two major exit polls
predicted that the Congress-NCP coalition would emerge
victorious for a third time in a row, winning 125 to 135 seats
in a 288-member house. Both the polls predicted that the Shiv
Sena-Bharatiya Janata Party (BJP) coalition would garner between
110 to 120 seats. The polls estimated that the Maharashtra
Navnirman Sena (MNS) of Raj Thackeray, a Shiv Sena spin-off,
would get between 8 to 12 seats. The exit polls are in
consonance with two earlier major opinion polls that gauged
voters' intentions in the last week of September.




3. (SBU) According to political scientist Suhas Palshikar,
polls in Maharashtra have historically exaggerated the Congress
advantage slightly, due to the tendency of voters to club
together votes for both present and former members of the
Congress party. However, despite this proviso, Palshikar was
certain that the Congress-NCP would have an edge in government
formation. The polls' prediction echoed the commonly-heard view
that the DF would return to power in the state. Senior
Maharashtra Times editors Pratap Asbe and Ashok Panvalkar told
Congenoffs that the four urban conglomerations of Mumbai, Nasik,
Pune and Thane contribute 100 out of 288 seats to the assembly,
after the recent redrawing of constituencies. The MNS would
likely siphon votes from the Shiv Sena-BJP alliance in these
seats, ensuring that the DF returns to power.



Poor Governance No Bar

--------------




4. (SBU) The widespread opinion in the state -- even by members
of the ruling coalition - is that the DF has largely squandered
its ten years in power, making the most minimal attempts to
implement infrastructure, power, irrigation, and other
development projects. Their greatest advantage is the positive
image of the Congress government at the center, and the respect
most Indians have for PM Singh. Indeed, PM Singh himself
acknowledged in a campaign speech, "We could have done better in
your state." His most persuasive argument for voting for the DF
was that its tenets and philosophy were "secular." Many of the
state's most successful programs were those initiated by the
central government - such as the National Urban Renewal Mission
and the Prime Minister's Rural Roads Mission -- and implemented
by the Maharashtra bureaucracy. The debt relief package for
farmers announced in 2006 was also largely conceived and funded

MUMBAI 00000397 002.2 OF 003


by the central government, and implemented through India's
government-run and cooperative banks. A Pune businessman told
Congenoff that state-level Congress politicians are benefitting
from the goodwill that exists for Prime Minister Manmohan Singh,
and young Congress leader Rahul Gandhi. "There is a wide belief
that these two mean well, and talk sense," he said.




5. (SBU) The DF's lackluster performance is largely due to the
constant demands of politicking within the DF coalition.
However, many voters, aware of the major development successes
achieved in neighboring Gujarat, voice dissatisfaction freely
about how little this government has achieved. For instance, in
a survey carried out by Hindustan Times, a whopping 84 percent
of self-selecting respondents indicated that none of the major
political parties can solve the problems of food price inflation
and unemployment. Overall, while there are compelling issues in
rural Maharashtra -- food prices, power shortages, farmer
suicides -- rural voters are likely to support those candidates
they can identify with most closely on local, caste, or
religious affinities in the hopes of sympathetic treatment or
patronage on an individual basis, as experience has proven that
politicians have failed to actually do anything systematic about
these problems.



Since Everyone is Awful, Let's Try the New Guy

-------------- -




6. (SBU) The widespread dissatisfaction with the mainstream
political parties has helped the MNS. Despite the MNS's
reputation for using thuggery and intimidation as a political
tool, curiously, many of its candidates are social activists,
professionals, and first-time candidates who have not been
affiliated with any political party in the past, offering the
widest selection of fresh faces among all the parties. Aiming
to capture votes from people dissatisfied with the mainstream
political parties, MNS posits itself as a new party unencumbered
by family dynasties and long-time loyalties. The party also
offers an opportunity for aspiring politicians to join at a
senior level. As Raj Thackeray struggled to build his party in
the state, he welcomed candidates across the ideological
spectrum. Raj hopes that he can win seats with good local
candidates, and worry about party unity later. He will surely
take votes away from Shiv Sena and BJP candidates in almost all
constituencies; even if MNS candidates don't come close to
winning, they may draw enough votes away from the Sena or BJP
candidate to tip the race to the DF. Political pundit Kumar
Ketkar told PolCons that Raj Thackeray will continue to be a
major force in state politics in the coming election, and
throughout the next five years at the least.



"Rebels" Complicating the Election

--------------




7. (SBU) In this election, there is a record number of
independent candidates -- over 1800 -- including 117 "rebels,"
party members who have been denied the right to contest and have
chosen to run anyway outside of their parties. The seat sharing
agreements -- where coalition parties determined which party
would field the candidate in a constituency -- produced the
first round of rebels, as the leading candidate from the
"losing" party chose to run anyway. Many erstwhile claimants to
a party ticket have also turned rebel candidates, as tickets
went to family members of leading politicians or outsiders. The
majority of rebels are from the DF stable, indicative of the
continued tension within the coalition. Tellingly, given the
enormous sums of money running for office now requires, the
plethora of independents may also be an indication of rising
overall prosperity; as Maharashtrians begin to make money in
business -- legitimate and illegitimate -- they see politics as
the next logical step. With the rise in real estate prices
throughout the state, newly-prosperous large farmers and
developers have entered politics, knowing that control over land
allocations is the key to the fortunes of their family and

MUMBAI 00000397 003.2 OF 003


clans. The Congress has said that these rebels will be taken
back into the party if victorious; indeed, this has given rise
to a "black market" of political support, as some NCP and
Congress leaders have surreptitiously supported the candidates
of their choice, whether the "official" candidate or not.



Tough Decisions on the Horizon for the Next Government

-------------- --------------




8. (SBU) Given the non-performance of the Congress-NCP
government over the last ten years, Maharashtra is in many ways
approaching a crossroads, and the next government will need to
make some tough decisions. First, Maharashtra will need to
consider restructuring its agricultural sector. The 150
cooperative sugar-mills of South Central Maharashtra (controlled
by leading politicians of Congress-NCP and BJP) are sick,
propped up only by repeated infusion of subsidized government
loans. The sugar-cane crop is a water guzzler, and
Maharashtra's water table is sinking fast. The sugar belt needs
to diversify to less water-intensive crops, and the government
needs to incentivize other crops, so that farmers can shift to
higher value crops, or move off the land. But a power structure
dominated by sugar barons is unlikely to show the political will
to dismantle the sugar industry.




9. (SBU) Second, urban infrastructure is under severe stress due
to development, industrialization, and economic migration. In
the four major cities of Mumbai, Pune, Thane, and Nasik, it is
estimated that 50 to 60 percent of the people live in
non-permanent housing, or slums. From some of the best
infrastructure 30 or more years ago, roads, sewage lines, and
water pipes are all in various states of disrepair. Property
rates are anachronistically low in cities, and do not pay for
utilities. The mainstay of Mumbai's operating budget comes from
"octroi," an entry tax for goods coming into the city which
burdens the poor unfairly. With the Union Government's
announcement that India will move to a General Sales Tax regime
by April 2010, the removal of octroi looms large on city
government finances. City governments have to find new and
better ways of financing their operations, and they cannot
implement tax and utilities price reforms without backing by the
urban development and finance ministries of the state.




10. (SBU) Comment: As India's second largest state, and a major
Congress/BJP battleground, a victory for the Congress and allies
would be a major confidence booster for the Congress-led
coalition at the center. It would further demoralize the BJP,
and cause consternation for the Shiv Sena. One hopes that a new
DF coalition - with greater urban representation, due to
redistricting -- could lead to the development of more
infrastructure projects such as the Bandra-Worli sea link, a
focus on Mumbai to arrest its decline as a city, and a resolve
to improve the investment and business environment. However,
since the DF coalition consists of two rivals competing for the
same rural vote share, there is no guarantee that the coalition
will not again squander its potential in competitive populist
moves, like building a $70 million monument to Maharashtra's
17th century icon Shivaji, rather than meaningfully reforming
state agriculture which could trade short term pain for long
term sustainability - always a difficult political proposition.
End Comment.
FOLMSBEE