Mayawati's garland of cash kicks up political storm

Mayawati, chief of the caste-based Bahujan Samaj Party (BSP), speaks at her party headquarters in Lucknow in this May 19, 2009 file photo.

NEW DELHI (Reuters) - Uttar Pradesh Chief Minister Mayawati came under sharp criticism from national parties on Tuesday for spending what they said was more than $40 million on an anniversary celebration.

The controversy over the display of opulence to mark 25 years of the Bahujan Samaj Party (BSP) gives further ammunition to the Congress party-led coalition in New Delhi, which is aggressively campaigning to win over the key state in 2012.

Dislodging strong regional parties is seen as key to Congress' ability to push through painful structural economic and political reforms to modernise Asia's third largest economy in the years ahead.

Uttar Pradesh is politically important because it is the state that sends the most lawmakers to the national parliament in New Delhi.

Mayawati is dubbed the "Queen of Dalits" for her political clout. Dalits are former untouchables who are amongst India's poorest and most deprived people. Uttar Pradesh is home to about eight percent of the world's poor.

"(She) mocks the people of the state by her extravagance," Congress party spokesman Manish Tewari said. "Her priorities get very clearly reflected."

The BSP said the money was from donations by supporters but has not yet commented on the amount spent on the celebration.

"It is the people showing respect. You can't stop them from garlanding anybody," said Vijay Bahadur Singh, a federal lawmaker from the BSP.

Rival parties charged that Mayawati, a former teacher, spent more than $40 million to bus in supporters from the countryside to fill up an 80-acre ground decorated with flowers.

Television channels re-ran footage of BSP leaders hauling up the several metres-long garland made up of 1,000 rupee ($22) notes and presenting it to Mayawati.

Mayawati has faced criticism in the past for her celebrations and for building parks with massive statues of Dalit icons and leaders including herself. She has also been accused of using public funds for her party, a charge she denies.

While parties have generally had extravagant campaigns, the Congress and main opposition Bharatiya Janata Party have of late sought to project an austere face and limit lavish spending in the face of increasing public and media scrutiny.

Monday's rally was seen as kicking off Mayawati's bid to return to power in 2012 in the face of a rising challenge from the Congress party, which heads the federal coalition and whose top leaders have begun wooing Dalits in the state.

Her supporters say her acts are a source of inspiration to the millions of Dalits who have traditionally been forbidden from displays of well-being and fill them with a sense of pride.

But a lack of improvement of economic conditions under her government has eroded some support and a revival of the Congress party. The BSP has lost some elections after its thumping win in 2007, while the Congress performed better than expected.

(Editing by Paul de Bendern and Jerry Norton)