VZCZCXRO9752
PP RUEHAST RUEHCI RUEHDBU RUEHLH RUEHNEH RUEHPW
DE RUEHBI #0397/01 2871236
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 
 
 
¶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