POLITICAL DIARY

New Delhi, 11 July 2009

Electoral Funding

POLITICS CHARITABLE? REALLY!

By Poonam I Kaushish

Whoever said charity begins at home was dead on. Specially when it comes to our polity. 

The latest buzz word heard in the corridors of Parliament are charitable trusts. Ostensibly to clean the clogged, polluted and corrupt electoral arena. In politics and yet charitable? You got to be kidding me!

Towards that end, the Union Finance Minister Pranab Mukherjee grandiosely announced major electoral reforms for funding political parties through ‘electoral trusts’. Though donations to parties are already tax-free, the trust route would provide an alternative to corporates that wish to finance polls, but don't want to be identified with a party. This would bring transparency into party funding, as companies and individuals would be barred from doing so directly. And help reduce black money in elections, he added.

So far so good. But the moot point is: does it fulfil its objectives--stop generation and use of black money, besides getting the parties to submit their audited accounts regularly. No. Will it stop the use of money power which has become the bane of India’s electoral polities? No way. Will it decrease corruption? Not at all. Bring about the much-hyped and promised transparency? Are you kidding? Or, will it lead to “remote control” of politicians, parties and even Parliament? And make the political system subservient to India Inc?

Think. Can donations to political parties ever be “charitable” in nature? Charitable donations can be to an organisation or trust for eradication of poverty, spread of education, but “where is charity in politics? Politics is not a charity” Besides, nowhere does the proposed law spell out whether the source of the contributions would have to be “revealed” by the donors.

Not only that. The proposal lacks vision in respect of who would set up the trusts -- the Government, corporate houses or individuals -- and whether disclosure of the source of money was obligatory on the donors. Asserted a former Election Commissioner, “Donations are welcome but they could be an easy way to launder black money if disclosure of the source is not made mandatory. Transparency on political funding, as in the West, is a must before exemption is allowed.”

Questionably, would the donations be altruistic? Or will these be according to the corporates preference for political parties and their ideologies? Or would these be on the basis of pure simple quid pro quo? How else does one explain the phenomenon of the donation cup over flowing whenever a party is in power, at the Centre or in States?

Donations for 2003-04 show how the fortunes of the ruling party differ from the one out of power. While the Congress ‘officially’ received just Rs 2.81 crore, the BJP managed over Rs 11.69 crore. Money was paid through little-known trusts, or in some cases, directly by the business groups.

Interestingly, a cursory glance of affidavits filed with the Election Commission reveal the bizarre realities of Indian politics. It showcases significant contributions from several business houses that have directly benefited from the party in power. A metal and mineral baron who had funded the BJP in 2000, became the proud owner of 51% of Balco, the PSU aluminum major.. This was sold for $121 million by the NDA Government sparking off protests for its alleged undervaluation.

Perhaps taking a cue a steel magnate paid Rs 50 lakhs to the Congress in 2003 and within months was inducted into the Party.  However, in the 2004 Lok Sabha poll he was one of the highest donors to the BJP even though he contested on Congress ticket and won. Truly playing both ends against the middle. Scandalously, the BJP was also funded by a Delhi-based builder, who was rewarded with highway construction contracts.

Clearly, the relationship between industry and politics has been symbiotic and part antagonistic. History tells us that during Nehru’s rule, corporates funded the Congress and secured leverage over the shaping of policies on state regulation of the economy, obtaining permits, licences and quotas.

His daughter Indira cleverly amended the Company Law to bar such contributions  ensuring that the ruling party alone got the funds --- of course under the table. The flood-gates of corruption were now open. Licences and permits were unabashedly hawked thereafter --- like chaat and moongphali. Post 1969 became notorious for "briefcase politics" - the transfer of vast amounts of black money in the form of cash into the coffers of the Congress.

Though her son Rajiv allowed Company donations, the Party found  a novel method. Instead of funds from corporates it took recourse to kickbacks from foreign firms in defence and infrastructure deals. Fund-raising became centralised and certain businessmen were used as conduits and the monies parked in secret bank accounts abroad. La Affaire Bofors.

Narasimha Rao’s era too was enmeshed in slush funds, the hawala scandal, which highlighted the sleazy method of political funding. During the coalition era corporates funded the dominant party in every State, rather than funding only one or two parties at the national level. Thus, according to its interests, a company ended up financing one party in a State and its rival in another State.

Following the Supreme Court's order in 1996, that parties should identify and acknowledge corporate donations in their book of accounts, both the Congress and the BJP averred that they would prefer contributions from companies by cheques. However the obverse was true. In 2004 Congress requests to 25 top industrial houses asking for donations to fight the Lok Sabha election met with a lukewarm response.

It is no secret that parties spend huge amounts for elections. But the economics of running an election campaign are a hush-hush affair. Primarily because they use elections to amass wealth not only for their parties and themselves but for future elections too.  Like politics, elections have become a business --- like businessmen the politicians in the election business balk at the idea of controls and regulations. That is why no political party, however vocal about the matter while in opposition, has made a sincere attempt at stanching the flow of black money into the electoral arena.

Sadly, there is brazen hypocrisy and humbug in what transpires under the framed rules. Today, a candidate spends over Rs.10 crore per election instead of Rs.25 lakhs allowed by the Law. Hypothetically, the minimum amount needed by each party for the 545 Lok Sabha seats would be Rs.5450 crore. Multiplied by 10 candidates per constituency, it adds up to a mind-boggling Rs.54,500 crore. Are we expected to believe that this amount will now be collected by cheques, only cheques? What would happen to India’s parallel economy?

True, over the years the Government has tried to bring in legislation to regulate party funds -- distribution and spending of party funds during non-elections and elections. Getting them to maintain regular accounts and make audited accounts available for inspection. It even held out threats of de-recognition if parties filed false and incorrect election returns. But nothing worked. Even as poll costs continue to increase.

Unless one determines the sources that should be legally tapped for campaign expenses there is little hope of minimizing the evil influence of unaccounted money power and vested interests. Company donations will at best add up to a few drops in the electoral bucket. 

What is the way out? One, donations should be evenly spread out, not necessarily equally, but perhaps in some proportion to seats in Parliament. Two, State funding of elections. Three, the fund to be apportioned on the basis of votes secured by candidates in the election. Four, the amount be released to individual candidates, and not to political parties. Five, 50% of the fund to be released as an advance before an election, on the basis of previous performance.

In sum, given that political parties function as private limited companies, each with its own secret war chests, we still have a long way to go before we can make elections honestly free and fair. True, a beginning has been made. But the licence for brazen electoral corruption and political ghooskhori is far from over. ---- INFA

 (Copyright, India News and Feature Alliance)