Political Diary

New Delhi, 10 November 2012

Of Party Loans & Donations

BLACK CAN NEVER BE WHITE! 

By Poonam I Kaushish

Yawn, corruption continues to dominate the political stratosphere. On one end is Janata Party President Subramanian Swamy’s tirade about the Congress’s Maa-beta Sonia and Rahul’s company Young Indian getting an Rs 90 crores unsecured interest-free loan from the Party to take-over Associated Journals Ltd and revive National Herald newspaper started by Nehru. On the other, the IAC’s list of those with black money in Swiss banks. No matter, the kala karo campaign went phut!

It had too. The issue is not whether the Congress’s loan complied with the Income Tax and Representation of People Acts or why the Government refuses to disclose the ‘black’ offenders. But raises two larger questions: Opaque company donations and audit of Party funds and the need for an annual compulsory audit of funds.

Call it telepathy but only last month the Election Commission took up both issues by writing to the Government advocating RPI amendments to make it mandatory for Parties to declare monetary contributions received by cash or cheque to ensure transparency.  Also, all contribution received by them should have audit reports attached to their declarations.

Most scandalously, presently Parties only report contributions above Rs 20,000 to the EC under law. This not all. Believe it or not, only 11.89 per cent of Congress’s total funding of Rs 774 crore and 22.76 per cent of BJP income in the 2009-10 and 2010-11 of Rs 426 crore came from donations above Rs 20,000, according to reports submitted to the EC. Notwithstanding, the Congress received Rs. 2,008 crore, BJP Rs. 994 crore, BSP Rs. 484 crore, CPI(M) Rs. 417 crore and SP Rs. 279 crore between 2004-05 and 2010-11.

Interestingly, Mayawati’s BSP, which declared an income of Rs.172 crore for the last two years, said while donations accounted for Rs. 99 crore, it received zilch contributions over Rs.20,000! The CPI(M) said of its total income of Rs.149.85 crores, only Rs. 1.93 crore were donations of which 1.29 per cent were above Rs.20,000.

Undeniably, these donations from undisclosed sources, aka black money run through the veins of all Parties. Even a list of known donors released by civil society groups reveals that 26 of 50 top companies which ‘donated’ to the Congress, are in the mining, coal, real estate etc and have greatly benefited by their saanth-gaanth.

Take for instance Sterlite Industries, a subsidiary of the Vedanta group donated Rs. 6 crore to the Congress in 2004-05 and 2009-10, its subsidiary Madras Aluminum Company Ltd contributed Rs. 3.5 crore and The Public and Political Awareness Trust of Vedanta paid of Rs.9.5 crore and in lieu it took over public sector giant Bharat Aluminum Co Ltd, BALCO. Another steel magnate paid Rs 50 crores and rewarded with highway construction contracts.

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.

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 elections are perceived as a “rentier” profession, with huge post-poll rewards, 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 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.

Think. While the election expenditure limit stands at Rs.16 lakh for Vidhan Sabha and Rs.40 lakh for the Lok Sabha, the reality is different. Over Rs 20 crore is spent for the former and Rs 50 crores in the latter. Hypothetically, the minimum amount needed by each party for the 545 Lok Sabha seats would be Rs. 10900 crore. Multiplied by 10 candidates per constituency, it adds up to a mind-boggling Rs. 10,0000 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?

Pertinently, in most cases, candidates “sponsor” their funds, albeit corporate donations and money skimmed off scams. According to National Election Watch with around 3,000 serious candidates contesting 543 Lok Sabha seats, the cash spent in every Lok Sabha poll is over Rs 30,000 crore.

This comes from “black money” from illegal gratification in Public-Private-Partnership projects, social welfare schemes, land allotments and as the 2G telecom scandal and Coalgate expose from natural resource allocations. Despite, the EC`s tough monitoring it has been unable to stem the relentless flow of unaccounted cash.

In a milieu where are netagan have much to lose and the public everything to gain by a transparent funding system, one way to reduce the scourge of black money and cleanse the electoral cesspool is to introduce a system of detailed audit of all registered Parties. This could be done by the EC and CAG jointly executing a quarterly audit of Party funding and expenditure and made public. Failure to get a certificate would disqualify the Party from putting up a candidate in the next Assembly or Lok Sabha poll.

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

True, this might not eliminate corrupt funding of candidates but could help reduce it. Further, the Government must try to bring in legislation to regulate Party funds -- distribution and spending of Party funds during non-elections and elections. Get Parties to maintain regular accounts and make audited accounts available for inspection. It must hold out threats of de-recognition if Parties filed false and incorrect election returns.

Clearly, 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. 

Undeniably, Parties will continue to stonewall all efforts to clean up the electoral system as over 90 per cent of the money they receive is “black”. Hence irrespective of whether a Party is in power, donations must be made public as the aam janata has the right to know whether a Party’s stand on a policy is influenced by the source of its funding.

Towards that end, there must be compulsory social audit of political funding by the EC. Corruption cannot be ended if the way Parties are funded does not change. Until Parties make transparent the way they collect and spend money, corruption will thrive, suborn the civil service and corrode accountability in the system. Time to stop Parties from functioning as private limited companies, each with its own secret war cheats. Else say goodbye to black becoming white! ------INFA

(Copyright, India News and Feature Alliance)