Ahead of the 2019 assembly elections, the Congress leader Satej Patil, a former minister of state for home in Maharashtra, actively campaigned for the party’s candidate for the Kolhapur South assembly, who is also his nephew, Ruturaj Patil. The Patils belong to an influential family in Kolhapur district, situated in Maharashtra’s sugar belt. It runs various enterprises including schools, colleges and the DY Patil Sahakari Shakar Karkhana, a sugar cooperative that has around thirty-thousand farmers as members.
Historically, the Congress and the Nationalist Congress Party have enjoyed electoral dominance in western Maharashtra because of their hold on its sugar cooperatives. This nexus generated financial and organisational muscle which resulted in electoral successes. But, in the past five years, many of the parties’ sugar barons defected over to the ruling Bharatya Janata Party. By Satej’s own admission, the ruling party has succeeded “in dislodging the Congress and NCP from the sugar cooperatives.”
Maharashtra produces the highest amount of sugarcane in the country after Uttar Pradesh. While the latter largely has private sugar mills, the model of cooperatives is dominant in Maharashtra. In 1950, the industrialist Vitthalrao Vikhe Patil set up the first sugar cooperative in Ahmednagar district. Around that time, cooperatives were established in various spheres, such as banking, credit societies, marketing societies, fisheries and poultry. But sugar factories remained the cream of the cooperatives and became a political currency in Maharashtra.
A senior Congress leader, who has been an active politician since 1990s, explained how sugar cooperatives were operating under the NCP and the Congress’s rule. Farmers did not sell their cane to a cooperative, but gave out the produce to it. The mill would crush the cane, deduct the cost of production and distribute the remainder among the farmers. “The beauty of the system was that since there was no sale, the factory did not have to pay income tax. In addition, the chairman of the mill would inflate the cost of production, fudge the numbers, create false accounts and bills and use benami transactions to divert the money to fund elections,” he told me.
This created a paper trail, but if no one looked at the evidence, the mills were safe, he said. “So, as long as the state government was ruled by the Congress and NCP, both the MLAs and sugar factories were safe,” he added. The financial gains allowed sugar barons to branch out their business ventures to different sectors, primarily the labour-intensive education and health sectors.
More importantly, the sugar barons who were politicians could deploy the cooperatives’ members for election campaigning, the Congress leader told me. This was possible as the cooperatives forged a close relationship with its members by providing additional services. The mills sold fertilisers at a lower cost than the market price and provided drip-irrigation facilities to its farmers. They also stood in as guarantors to loans taken by sugarcane farmers. As a result of this relationship, the NCP and the Congress preferred to give tickets to sugar barons rather than their own workers. This weakened the parties’ structure in western Maharashtra.
In Maharashtra, and elsewhere in the country, many sugar mills are debt-ridden. Satej said that the cooperative business model is such that the mills have to take on loans to operate. A mill realises the price of its sugar output in one–two years, whereas it is supposed to pay farmers within fourteen days of receiving the cane, according to the Maharashtra Regulation of Sugarcane Price (Supplied to Factories) Act, 2013. The accumulation of these loans erodes the net worth of the sugar mill, making banks reluctant to lend money to rollover the existing debt.
When the Congress and the NCP coalition was in power, the state government would guarantee the loan to these cooperatives, according to Satej. But in the last five years, the BJP has not guaranteed loans to the cooperatives run by Congress and NCP leaders. “If they don’t give the guarantee, I am finished,” Satej said. “That is the stick which the BJP government used.”
The BJP leaders controlled an existing network of sugar factories, but they also tried to take over the network of the Congress and NCP, Smruti Koppikar, a senior journalist told me. “You can’t have political leverage without having a network on the ground,” she said. “The levers of control have been shifting for a while, but in the last two years have decisively shifted towards the BJP.”
Since the BJP came to power in the state, many senior members of the NCP and the Congress switched over to the ruling party. Satej said of the nineteen sugar cooperatives in Kolhapur district, only four remain in the control of the Congress and NCP. This seemed to be the case in most of western Maharashtra. “The cooperative sugar factories have a day-to-day relationship with farmers. The BJP wanted to break this clout and so they poached the established leaders,” Satej said.
Ahead of the 2019 Lok Sabha elections, the veteran NCP leader Vijaysinh Mohite Patil left his party to switch over to the BJP. Vijaysinh is a director of the Maharshi Shankarrao Mohite-Patil sugar cooperative based in Solapur district. Radhakrishna Vikhe Patil—whose grandfather, Vitthalrao, had set up the first sugar cooperative—was elected the MLA from Shirdi five times when he was in the Congress. He joined the BJP shortly after the Lok Sabha elections this year. Radhakrishna is one of the directors of Vitthal Vikhe-Patil Cooperative Sugar Factory, based in western Maharashtra’s Ahmednagar district.
Dhananjay Mahadik, who served as the member of parliament from Kolhapur between 2014 and 2019 when he was in the NCP, switched over to the BJP on 1 September this year. His family runs the Bhima Sahakari Sakhar Karkhana Ltd, a sugar cooperative with a negative net worth of Rs 30 crore. In the same month, Harshvardhan Patil, who served as the cooperatives minister from the Congress during 1999–2004, also deserted the party to join the BJP.
The senior Congress leader echoed Satej’s assessment. “There was a panic and one after the other, the leaders started migrating from Congress and NCP to the BJP,” he said. “That is the secret—it has nothing to do with ideology,” he added.
His comment does not seem unfounded. In September, the Enforcement Directorate filed a money-laundering case against the NCP chief Sharad Pawar and his nephew Ajit Pawar, among others, in connection to the alleged Rs 25,000-crore Maharashtra State Cooperative Bank scam. Earlier, an audit report by the National Bank for Agriculture and Rural Development had revealed a breach of several banking laws in the bank’s distribution of loans to sugar factories and spinning mills, and subsequent default on repayment and recovery of such loans.
“The Congress-NCP combine is facing an existential crisis because if the yardstick for winning elections is financial muscle and manpower, then we are losing,” the senior Congress leader said. “But despite the loss of the cooperatives, if people still gravitate towards the combine then we have a chance.”
In the second week of October, Prithviraj Chavan, the former chief minister and the Congress candidate for western Maharashtra’s Karad South constituency, told a group of reporters, “The BJPs campaign is purely based on defections.” Since Maharashtra was created, in 1960, Congress has won the Karad South assembly constituency. “We hope to focus on the failure of the BJP-Shiv Sena government in the last five years,” he said, referring to the Congress’s electoral strategy. “Although, we could have been a more effective opposition,” he added.
When I asked Supriya Sule, an NCP member who is a three-time member of parliament from Maharashtra’s Baramati constituency, about the BJP’s attempt to dislodge the NCP-Congress from the sugar cooperatives in an interview published earlier, she was evasive. “It is unfortunate that this government does not like institutions, and they hurt institutions, which is a problem in the long run,” she said. “I don’t know why people look at sugar factories as bad, they create wealth and jobs for farmers.”