Mumbai: In a move that’s likely to benefit politicians from across parties, especially the Bharatiya Janata Party (BJP) and the Ajit Pawar-led Nationalist Congress Party (NCP) that are part of the ruling alliance in the state, the Maharashtra government has decided to allow financially weak sugar cooperatives to take loans from the Maharashtra State Cooperative Bank on a state guarantee.
The state cabinet approved the decision Wednesday saying the loans will be given at an interest rate of eight percent per annum, which is lower than that of the National Cooperative Development Corporation (NCDC). The loans sanctioned by the NCDC are given at an interest rate of over 9.5 percent, state government sources said.
A statement from the state government said, “The sugar factories will not be able to use this loan for any reasons other than the ones specified by the government. A total of 32 conditions will have to be fulfilled.”
According to the conditions, cooperative sugar factories that have already borrowed money from the Maharashtra State Cooperative Bank will have to first clear their entire existing debt before seeking any reconstruction of loans on the state government’s guarantee, the statement said.
“The Maharashtra State Cooperative Bank had sent a proposal saying it can extend loans with a set of its conditions. The state government put a couple of its own conditions too and the cabinet decided to pass the proposal. The proposals will go to the bank. The bank will do the calculation and will give a loan if it thinks it is appropriate to do so,” NCP minister Dilip Walse Patil, who holds the state cooperative portfolio, told ThePrint. He, however, did not spell out the conditions.
Wednesday’s cabinet decision reverses a previous decision of the Eknath Shinde-led government of not extending state guarantees to financially weak sugar cooperatives. This decision was taken through a government resolution dated 4 January this year when the ruling coalition only comprised the BJP and the Shinde-led Shiv Sena.
A Congress leader who did not wish to be named told ThePrint that state guarantees have traditionally been used by parties in power to have a system like the “license raj permit”.
He added: “Governments in power grant it to particular favourites. There is no problem with giving such guarantees, but there have to be strict rules.”
According to state government sources, Deputy Chief Minister Ajit Pawar, who also holds the finance portfolio, was particularly in favour of Wednesday’s decision, and Deputy CM Devendra Fadnavis also supported it.
In the past two months, since the Ajit Pawar-led NCP faction joined the government of the BJP and the Eknath Shinde-led Shiv Sena, Pawar and Fadnavis have clashed on the issue of cooperatives at least twice.
ThePrint has reached both Ajit Pawar and Fadnavis on text messages for comment on the issues on cooperatives. The article will be updated once a response is received.
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The cooperatives conflict
In Maharashtra, over the years, political leaders, especially from the NCP and Congress, have wielded political power over entire regions through farm and sugar cooperatives and district cooperative banks.
In the last decade, the BJP has been aggressively trying to break the Congress and NCP’s hold over rural Maharashtra by attempting to weaken their influence in the cooperative sector.
The Ajit Pawar-led NCP faction joined the government in July this year, and since then there have been at least two instances of rifts between the BJP and the Ajit Pawar-led NCP on issues related to the state cooperatives sector.
In the two months that the parties have been allies, the BJP and the Ajit-led NCP have both overturned decisions related to the cooperative sector taken by the each other that were politically not in their best interests.
Last week, Deputy CM Fadnavis intervened and got an order that had been issued at the behest of his colleague, Deputy CM Pawar reversed as it did not suit certain cooperative sugar factories led by BJP leaders, two senior state government officials told ThePrint. Pawar also holds the state finance portfolio.
In June this year, the NCDC approved margin money loans of Rs 549.54 crore for six sugar cooperatives routed through the state government on the latter’s guarantee, according to a state government resolution that ThePrint has seen. The six sugar cooperatives include those headed by BJP’s Ranjitsinh Mohite Patil, Dhananjay Mahadik, Harshvardhan Patil and Raosaheb Danve.
Deputy CM Pawar, after taking over the finance portfolio in July, raised certain objections last month to granting state government guarantees to these loans. The above-mentioned government sources said, he held a meeting with the state cooperatives department and inserted more stringent conditions on the loans.
According to the conditions inserted at the behest of Deputy CM Pawar in a government resolution seen by ThePrint, the sugar cooperatives receiving the loan had to give an assurance letter of the directors’ individual and several liability, get the board of directors’ resolution to that effect, mortgage the factory’s immovable property as reflected in the report of the unit’s additional solicitor and ensure it is reflected on the 7/12 extract of the property.
A 7/12 extract is a document from the land register maintained by the revenue department of the Maharashtra and Gujarat governments.
The above-mentioned sources said, the affected BJP leaders heading the said factories took up the issue with Deputy CM Fadnavis, raising their objections to the additional conditions, following which the conditions were scrapped through another government resolution issued by the state cooperative department.
Similarly, last month, NCP ministers heading the state cooperation department, overturned a decision of the Eknath Shinde-led state government taken in May, before the Ajit Pawar group rebelled against the Sharad Pawar-led NCP and joined hands with the government, the officials said.
The decision, seen as a strategy of the BJP to weaken the influence of Congress and the NCP in the cooperative sector, was to bar inactive members from voting in cooperative body elections and the state government had even promulgated an ordinance to amend the Maharashtra State Cooperatives Act accordingly.
A leader from the Ajit Pawar-led NCP who did not wish to be named said there is no tug of war between the BJP and NCP over cooperatives anymore. “It is true that some people don’t run these factories professionally. But, many people do and there is a lot to gain for the state as well as parties from it. There are many agricultural workers, farmers dependent on these factories. The state gets revenue from these units with the molasses, the alcohol produced, the excise duty involved, the power generation through this and so on.”
“The BJP has also realised that. And besides, it is not fair that we roll out red carpets for our international investors and not help out our own in need,” he added.
BJP’s attempts to make inroads
The former Devendra Fadnavis-led government of the BJP and the undivided Shiv Sena, which was in power between November 2014 and October 2019, took a number of decisions that could potentially dilute the Congress and NCP’s dominance of the cooperative sector.
For instance, according to reports, the then government decided to bar directors of all cooperative banks put under an administrator from contesting elections to the board for ten years.
Then, ahead of the 2019 Lok Sabha elections, the BJP got some Congress and NCP heavyweights from the cooperative sector such as Radhakrishna Vikhe Patil, Harshvardhan Patil, Dhananjay Mahadik, Ranjitsinh Mohite Patil to defect.
The undivided Shiv Sena led by Uddhav Thackeray, meanwhile joined hands with former rivals NCP and the Congress to form the Maha Vikas Aghadi (MVA) government in Maharashtra following the 2019 assembly elections in the state.
In 2021, the Narendra Modi government setting up a new Cooperation Ministry under Union Home Minister Amit Shah was seen by leaders from the Congress and NCP as an attempt to exercise the Centre’s control on what is a state subject.
Last year, after CM Eknath Shinde walked out of the Thackeray-led Sena with a group of MLAs supporting him — leading the MVA government to collapse — the government formed by him in alliance with the BJP, also set up its own asset reconstruction company primarily with the intention of improving the health of the state cooperative sector, restructuring financially weak cooperatives, government and semi-government firms that have a direct link with the state government.
(Edited by Poulomi Banerjee)
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