ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Withering Away of Canons of Financial Propriety

It is a matter for concern that in Maharashtra, a state which was once considered among the best governed in the country with sound financial management, serious questions are being raised whether a state of financial emergency needs to be declared under Article 360 of the Constitution which would be the first instance of its kind after independence. Why has the situation come to this pass and what needs to be done to set it right?

Maharashtra has been in the lime light in the recent months for all wrong reasons – communal violence in Malegaon and other places in the state, the Enron controversy, controversy surrounding the cotton monopoly scheme, bickering among the coalition partners in the government and above all its rapidly deteriorating financial situation. Amazingly, in the state which was once considered to be one of the best governed states in the country with sound financial management, serious questions are being raised whether a state of financial emergency needs to be declared under Article 360 of the Constitution which would be the first instance of its kind in the country after the promulgation of the Constitution. Interestingly, in a recent press conference, the chief minister has stated that the state government has approached the World Bank for financial restructuring of the state, but it will not be possible to reduce subsidies in the state. The wheel does not need to be reinvented. There can be no magic solutions in a soft state. It is time to ask why the situation has come to this pass and what needs to be done to set it right.

It must be noted at the outset that the winds of change following the ushering in of economic reforms and the process of liberalisation and globalisation at the national level have not even remotely touched most of the states. While the country is talking about second generation economic reforms, the states are still groping in the dark even on initiating first generation reforms, as is evident from the record of Maharashtra.

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