Ahmedabad: Narendra Modi, the latest icon of the aggressive Hindutva ideology, is sitting pretty in Gujarat with a two-thirds majority. The swearing-in ceremony held this week was such a gala affair that everybody who is somebody made an appearance (Reliance's Anil Ambani included). And, now, everything appears to be hunky-dory for the proponents of a no-holds-barred religiosity.

But scratch the surface and the pinpricks emerge, mostly in the form of a depressing economic scenario in the state. Flush with an unprecedented victory, the Modi government will soon have to settle down to the less exciting task of putting the beleaguered state back on track. And the outlook is less than promising. Consider the following:

Over the past several years, Gujarat's growth in real terms has declined significantly and, alarmingly enough, the fiscal situation has deteriorated rapidly. The period of boom in Gujarat was in 1994-95 when the state experienced a growth of 20 per cent in its net state domestic product (NSDP).

The NSDP growth declined sharply and stood at just a little over 1 per cent in 2000-01. While much of the fall in the growth rate is due to a decline in agricultural growth, even industrial growth, which has long been the pride of the state, fell sharply during this period.

Dismal scene
With industrial growth taking a back seat, fresh investments in the state have not been as forthcoming as before. According to Centre for Monitoring Indian Economy (CMIE), while the total number of projects announced in the state have doubled over the past seven years, with the value of investments announced rising from Rs 84,700 crore in 1993-94 to Rs 1,68,500 crore in 2001-02, the figure for projects under implementation has more or less plateaued at Rs 78,000 crore, or thereabouts.

The situation has worsened with the rate of implementation of projects falling from a high of 66 per cent to under-50 per cent in 2001-02. But the most alarming feature of the Bharatiya Janata Party (BJP) rule has been the worsening of the state's fiscal balances. The state's fiscal deficit rose from 2.03 per cent of its gross domestic product (GDP) in 1994-95 to a whopping 7.52 per cent in 2000-01.

But the state government does not seem to be bothered by these facts. ''Deceleration has not been a feature of Gujarat alone; other advanced states like Maharashtra, Karnataka, Tamil Nadu and Punjab have also shown sharp deterioration in their fiscal deficit. This is because of the overall bad situation in the economy. Highlights of Finance Minister Jaswant Singh's recently released midterm report amply show that the performance of the Indian economy has not been too good. Gujarat has also suffered from this,'' says a source in the state government.

Beating about the bush
That may be so, but the fact remains that Gujarat's performance has been much worse than that of other states. Gujarat has been overspending liberally and, as a result, has had to resort to borrowing heavily. According to data provided by CMIE, Gujarat's annual borrowings have shot up 15 times. In per capita terms, the average Gujarati borrowed Rs 26.35 of fresh debt in 1991-92 and this rose to Rs 344.35 by 2001-02.

The state government's attempted comparison with other advanced states like Maharashtra also rings hollow. For instance, in 1991-92, Maharashtra's per capita fresh debt was comparable to Gujarat's, being Rs 23.1. By 2001-02, however, Maharashtra's per capita fresh borrowings were just Rs 169.8 or roughly half of those of Gujarat.

Gujarat's per capita borrowings were 60 per cent of that of the national average in 1991-92 and by the end of the decade, they were 125 per cent the national average. Very few states have this kind of a performance to ''boast'' of.

Incidentally, Gujarat is India's top recipient of central government loans and advances in per capita terms. The point is illustrated by the following nugget: in 1990-91, the average Gujarati got Rs 92 as loans and advances, as against the national average of Rs 98.

But this figure had turned completely on its head by 2001-02, by which time, the average Gujarati was getting Rs 810 in terms of loans and advances as against the national per capita average of Rs 276. To make matters even worse, under the BJP dispensation, Gujarat has slipped badly on the tax collection front, too.

Cooperative web
And if the losses incurred as a result of the cooperative banking sector scam are added to this litany of woes, the track record of the BJP becomes even more dubious. Out of the 353 cooperative banks in Gujarat, over 40 are on the brink of bankruptcy and eight have already shut shop. Besides, more than 30 banks are not able to honour cheques for amounts as small as Rs 500.

The Modi government has refused to take quick action against the guilty, as suggested by the Reserve Bank of India (RBI) and the Registrar of Cooperatives. The government has even pressurised the RBI against initiating bankruptcy proceedings against certain banks - a step that has hindered small depositors' attempts to claim their money under an insurance scheme of the RBI.

There are strong political reasons for the Modi government's inaction - several BJP stalwarts stand accused in the cooperative bank scam. To give just one example, C R Patil, a BJP strongman (supposed to be associated with Modi's gaurav yatra) has been accused of swindling over Rs 52 crore from two cooperative banks: Diamond Jubilee Cooperative Bank and Panchsheel Cooperative Bank.

Diamond Jubilee Bank has since shut down and Patil is supposed to be absconding. Other BJP members, like Kanaksinh Mangrola, who was the chairman of Suryapur Cooperative Bank, which is history today, are also actively involved in the ruin of the cooperative banks.

''The collapse of cooperative banks in Gujarat is a political issue,'' says a senior RBI official. ''Political lobbying prevents us from taking firm action. Invariably, bank managements are linked to one political party or the other. And it's an open secret that cooperative banks are the main funding source for most grassroots-level politicians.''

Fundamentalism has its share too
With this kind of a track record, it is not surprising that the Modi government was keen to milk the unfortunate Godhra incident to the maximum. The state was already reeling under the impact of one calamity after another in the recent past; having faced droughts, the Kandla cyclone, floods and the devastating earthquake in 2001.

The post-Godhra riots further crippled the economy. The communal pogrom, which lasted for three long months, might have provided fodder for political vultures but it has put the state back by several years.

Says a riot-affected industrialist: ''While natural calamities cannot be helped, the state government has made matters worse for itself by the less-than-stellar performance it gave during the riots. The loss suffered by the business sector during the riots is pegged between Rs 5,000 and Rs 7,000 crore. But even more alarming is the long-term impact on the state's economy.

''Besides, consider the amounts the state has to dispense as riot relief. This is almost a comic situation - first the government allows the riots to go out of hand and then it pays from the exchequer for these very disturbances. Who is funding the mandatory relief to the riot-affected? It is the average Gujarati who ultimately pays the price.''

Look at the irony. Despite all this, it is also the very same average Gujarati who voted Modi back to power with a thumping majority. How far the new government retains the confidence of its people now remains to be seen.