The approaching assembly elections in Uttar Pradesh have assumed great significance as it is widely perceived that the outcome could affect the fortunes of the National Democratic Alliance government. At the same time, it is imperative to assess the impact that frequent elections during the Nineties have had upon the economy of UP. During this decade this politically important state faced three assembly and four Lok Sabha elections. It is widely accepted that these elections, held against the background of rising levels of awareness among the lower castes of their disadvantaged socio-economic status, played a salient role in accelerating the process of democratization and identity assertion against upper caste domination. The spread of the electoral process into backward regions where Dalits were not allowed to vote earlier and the appointment of Mayavati, a Dalit woman, as chief minister in a socially conservative state was of great symbolic importance providing Dalits with self-confidence. Similarly, all parties have tried to gain the support of the backward castes, leading to the emergence of more backward classes as an important political group. However, frequent elections also introduced a high level of competitive populism throughout the Nineties for which the state has paid a very heavy price in terms of development. By the end of the decade the state was in a debt trap - a vicious circle of low growth rate and fiscal crisis preventing further investment - from which it has yet to recover. The state witnessed high growth during the period 1985-90 when the average annual growth rate reached 5.7 per cent, but it dropped to 3.1 per cent in 1990-92 and reached a low of 2.4 per cent in 1992-96. Between 1991-92 and 1997-98 the fiscal deficit increased at 30.74 per cent per annum and was more than 8 per cent of the gross state domestic product in 1997-98. Due to lack of resource mobilization there was narrowing of the tax base as no new taxes, higher user or service charges were mentioned in the UP budget for 1999, 2000 or 2001. Salaries, pensions and interest payments absorbed three-fourth of total revenues in 1998-99. The debt service increased its claim on total state revenues from 13 per cent in 1985-86 to 39 per cent in 1998-99. The reasons for this alarming state of affairs lie in the pattern of fiscal management by every government in UP in the Nineties. As no party has been able to gain a majority, the state has experienced a number of shortlived governments, which, under the constant threat of elections, have exhibited a lack of political will, inability to make long-term policy decisions, and a singular lack of fiscal discipline. More fundamentally, there is an inherent contradiction between the platform of social justice that every political party has adopted to gain electoral support and the necessities of economic reform. While economic reform requires promoting efficiency, cutting expenditure on welfare and redirecting it towards productive investment and infrastructure; the ideology of social justice pushes parties towards increasing employment by filling the reserved quotas in the government and spending on welfare programmes for the poorer sections. Apart from this, since every party would like to gain an absolute majority, promises are also made to various sections of the electorate such as traders, industrialists, farmers and the middle classes in order to obtain votes. Three aspects closely linked to electoral politics make this clear: rising expenditure on manpower and welfare, lack of resource mobilization and continuation of subsidies. In the early Nineties, Mulayam Singh Yadav as chief minister undertook a drive to provide Yadavs employment in large numbers within the police force and in schools; a move described as 'Yadavization' of the administration. The two brief Mayavati governments spent considerable amounts on Dalit-oriented programmes such as financial aid to Dalit students; for marriage and sickness in Dalit families; increase in the funds earmarked for welfare programmes such as the Indira Housing Yojana and the Ambedkar Village programme; and cultural programmes such as Periyar melas and Ambedkar parks. While some of these programmes helped Dalits, they emptied the coffers of the state, leaving scarce funds for investment in industry, education, infrastructure and health, which in the long run would be most harmful for the poorest sections consisting mainly of Dalits unable to afford facilities provided by the private sector. Kalyan Singh as chief minister appointed 40,000 primary school teachers and 10,000 para teachers and panchayat run school teachers, just prior to the polls in 1999, despite the fact that the UP government had already appointed all the trained teachers required just two months before that. The Bharatiya Janata Party in power since 1997, aware of the deteriorating condition of the state finances, tried to improve the fiscal position of the state. A white paper issued in March 1998 described the deteriorating financial situation and laid the basis for a loan agreement with the World Bank. UP is the first state in the country to get a programme loan for fiscal management. The bank laid down certain conditions that would lead to reduction of the fiscal deficit by 1 per cent every year accompanied by high spending on priority sectors. By and large in the first two years following the agreement the UP government did try to keep to these goals. However, on the eve of fresh elections a series of populist promises have been made, which will make it impossible to keep expenditure down. The list is so long that it looks as if Rajnath Singh and his ministers - aware of the weakened position of the BJP in UP - have spent a considerable part of 2001 making populist promises to ensure that the party performs well in the assembly elections. Despite facing a Rs 82,000 crore debt the chief minister has promised increased salaries to primary and secondary teachers as per the fifth pay commission report which will result in expenditure of Rs1,000 crore. In 1987, the Congress government had decided not to implement the recommendations of the fourth pay commission arguing that it was too heavy a burden for the exchequer. In 1998 also, the BJP government had refused, arguing that the strike by primary teachers was politically motivated by the Congress. In what is clearly a populist step, the government decided in September 2001 to create over 40,000 jobs prior to the elections which would put an extra burden of Rs 300 crore, and has already advertised 7,000 vacancies. These posts will be filled according to the new formula contained in the Hukum Singh or social justice committee report 2001, that is, into three separate categories for the backward classes and two categories for the scheduled castes. Apart from this, in October 2001, the chief minister announced the 'Dr Shyama Prasad Mukherjee' employment scheme for technically unemployed youth and creation of self-employment opportunities for literate unemployed youth under various schemes. Laying the foundation stone of a number of developmental works worth Rs 55 crore in Lucknow, the chief minister also assured the people of new roads, bridges, a stadium, new schools and colleges, and power substations over the next few months. Concessions have been made to small traders, an important section of the support base of the BJP. In October 2001, trade tax was abolished or reduced on 18 items and a compounding scheme announced for over three dozen items. On at least two dozen of these items there was a trade tax of 2-10 per cent earlier which the government will lose. Similarly, at a panchayat of small scale entrepreneurs, a number of concessions were announced, such as a new capital subsidy and interest subsidy scheme, revival of a modernization scheme for some units announced in 1995. In a bid to win over the farmers, the government has decided to raise the price of sugarcane to Rs 100 per tonne by end 2001, despite the crisis facing the sugar industry and the government decision to sell 18 sick units out of the state sugar cooperative. Nor has the government kept its promise to remove subsidies. Rather than raising the power tariff for domestic consumers it has decided to give a subsidy of Rs 122 crore to the UP Power Corporation, which in fact had hoped to gain Rs 900 crore annually from the hike and end its financial crisis. This goes against the recommendations of the UP electricity commission of a hike of 12.08 per cent for domestic consumers and 5 per cent for industrial users in the state. Last week, the World Bank refused to give another loan installment of Rs 1,000 crore to the state, as instead of developmental programmes, earlier loan funds have been used for establishment cost and staff salary. All this points to the enormous economic costs being paid for the misuse of electoral democracy and irresponsible behaviour by politicians whose sole aim is to gain political power and office regardless of the impact on the economic development of the country. Populism based upon caste, class and community has been used by every political party and has brought economic ruin to a state that at independence was one of the best governed. There are signs that voters are becoming impatient and are no longer prepared to put up with neglect of developmental issues, as seen in the action to blacken the face of a political leader undertaken by citizens in Kanpur during the 1999 Lok Sabha electoral campaign. The poor condition of roads, schools, lack of law and order and falling agricultural produce hopefully are issues that will be taken up by parties during this election. What UP requires is a strong and responsible government, which will take up the deteriorating economic condition of the state on a war footing. The signs of this happening are unfortunately not visible in the near future. The author teaches politics at Jawaharlal Nehru University, New Delhi