By early 1998 all the indices pointed to a worsening fiscal situation. Of far more concern for the Shiv Sena and the BJP was the outcome of the Lok Sabha poll at that time which proved the sharp decline in their popularity. The RBI and the state government's figures show exactly what happened next: a mind-boggling 77.6 per cent growth in non-development expenditure in tandem with a 9.7 per cent decline in development expenditure. Such was the profligacy even as other things were going out of control: falling revenues, rising interest payments and subsidies. Neither the fact of a long-term decline in the ratio of revenue to expenditure exacerbated by the industrial recession, nor the Pay Commission awards -- arguments trotted out by officials -- can explain this extraordinary phenomenon. It was, plain and simple, the government plundering the exchequer to buy popularity.

What can the new government do? Plenty. It is important firstly tobring out a white paper on finances, as promised, as soon as possible and in a language that ordinary people can understand. A great deal rests on Vilasrao Deshmukh being able to communicate well with the public. If he is not seen to be sincere but to be politically biased, he will not be able to impose the hard financial discipline that is absolutely essential to restore Maharashtra's financial health and confidence. Even so it will not be easy to cut subsidies and to start levying higher user charges for power and water. The still uneasy alliance between the Congress and the NCP will make it tough to avoid populist measures. But Deshmukh should take heart from Andhra Pradesh which was also in financial straits when Chandrababu Naidu began his first term as chief minister. People in Maharashtra can and should be persuaded that money spent on subsidies is never enough to go around and actually feeds corruption, that they will be better off if money is spent on improving the physical and social infrastructure.To be convincing, the government must first practice austerity itself.