Maharashtra moving in the right direction: Wolfensohn

By Our Special Correspondent

MUMBAI, NOV. 7. The World Bank Chief, Mr. James D. Wolfensohn, today put at ease Maharashtra policy-makers - politicians and bureaucrats - alike when he told them that as a lender he put stringent conditions, ``not because we are against you but with you; the conditions are for your good'' . Later he told reporters that the State policies, including efforts at reforms, were moving in the right direction. Two things seem to have gone down well with Mr. Wolfensohn and his officials, who spent an hour over breakfast with the Chief Minister, Mr. Vilasrao Deshmukh, and his team: the year-old White Paper on the State's finances which are in bad shape and the decision to split its power utility into three companies. The fact however is that unless the unbundling takes place, no funds can flow to Maharashtra.

All concerned from the Maharashtra side later heaved a sigh since they seemed to have timed the decision to break up the Maharashtra State Electricity Board (MSEB) into three undertakings, one each for power generation, transmission and distribution amid widespread complaints from all politicians that the utility was in bad shape, for his visit. The decision was taken on Saturday night by the Cabinet after the World Bank had said months ago that ``reforms are starved of funds.''

Mr. Deshmuk, in his presentation to Mr. Wolfensohn made two points: 1. Many ``concerns of the Bank are being addressed to your (Mr. Wolfensohn) satisfaction by the State Government''after ``inheriting a difficult legacy'' from the previous Government during whose tenure the bond between the Bank and the State had weakened.'' 2. Since the Bank was pressing for expeditious reforms on the power front, the process itself should receive assistance from the lending agency.

Maharashtra, had been told by the Bank that its power sector was so badly off - even in comparison with poor States such as Uttar Pradesh and Orissa - that no funds, either for the power sector or any other development activity, would be made available until mistakes were corrected. But officials who attended today's meeting felt that Mr. Wolfensohn was ``positive about all we have done and would be doing.'' Rightly, Maharashtra did not expect that Mr. Wolfensohn would announced straight away a changed stance and declare that funds for urban transport renewal, piped drinking water supply to rural areas and sewage treatment would start flowing soon after the all-too-brief meeting where the Reserve Bank Governor, Mr. Bimal Jalan, was also present. All that was intended was to brief Mr. Wolfensohn about the Government's ``honest intentions'' and ``they have gone down well with him.''

According to Mr. Jayant Patil, Finance Minister, Mr. Wolfensohn seemed to appreciate that ``our recent history was against us and the present serious efforts to retrieve the initiatives in managing public finance cannot be ignored by the World Bank. From our point of view, it was a successful meeting. The undertone was positive, optimistic.'' Mr. Wolfensohn realised ``we are trying hard to bring the State back from the brink. We will even pitch for higher allocations once the Bank opens its treasuries to us.''

Mr. Patil told The Hindu later that ``we have to realise that not populism, but a will and ability to bring funds to run new development schemes, alone will open people's minds to our ability to run the State. There is no other way to convert the people's minds to our point of view.'' Maharashtra has been at pains to explain to its people that funds were scarce, they were either frittered away or mismanaged in the past and that now that chickens have come home to roost, reforms have to be in place.

The Words used by Mr. Wolfensohn, when talking to reporters after the breakfast, were music to Maharashtra's policy -makers: He ``admired'' the steps taken for fiscal management, he felt that the unbundling of the MSEB was ``in the right direction'' and the meeting ``was a positive step''. What he heard was a wonderful start to his nine-day trip to India. The World Bank would be ``supportive of the development efforts but not to run the Government''.

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