Economic Highlight

New Delhi, 26 November 2018

Election Funding

MONEY MAKES INDIA GO ROUND

By Shivaji Sarkar

Money decides political course! Indian elections are rarely free of the role that money, gifts, liquor, and much more play. Worse, this has not changed for decades.

1n 1967, a major political party campaign in certain areas of Uttar Pradesh was not about caste or campaign, and was left to the last few days to influence the voters of certain areas, inhabited by poor or other workers. They valued liquor and their women cash. Both were distributed after sun down as close to the polling day. The medicine usually worked. Even in a dishonest campaign there was honesty!

A company manufacturing jeeps had given brand new ones to the party in 1967 elections, when Lok Sabha and State Assembly polls were held simultaneously. After extensive use in campaigning, most of these went back to the company, which refurbished and sold these to gullible customers. Many did not go back and in return the company reportedly got many concessions as the party retained power.

Some years later, a correspondent saw suitcases travelling and cash being paid for sundry works and a lot to the voters in Delhi. Many were being paid for supposed work done. But there was neither a receipt nor a bill. “It is trust with workers”, a party leader had quipped.

In the present elections in five States -- Madhya Pradesh, Rajasthan, Chhattisgarh, Telangana, and Mizoram -- all those old methods are working but different leaders have found new ways to collect funds. Some were called Mataji or Bhabhiji fund and some by other ubiquitous names. It is a myth that mere hundreds of crores of funds collected by parties are lubricating the election machinery. Goa, Manipur and Karnataka have also shown the power of money.

It’s a wonder how much money is in circulation. No guess works. The bigger surprise is how in a poor country, where corporate are supposed to gasp, farmers commit suicide, workers are not paid wages, how this large money flows in. The source of such bounty, though not totally unknown, is also not easy to pinpoint.

The Association of Democratic Reforms had given some data. And as per this the number of crorepati MPs has increased from 30 per cent in 2004 to 58 per cent in 2009 and 82 per cent in 2014. And thus there are many self-financing candidates.

The political parties say that even if there is little chance of winning many approach for tickets because that is licence to collect or extort from businesses, corporate and other local funders. A part may even flow into the parties and even bureaucrats contribute.

Unfortunately, there is no credible data on the actual costs of the election expenses. The Election Commission on March 4, 2014 raised the limits to Rs 70 lakh for big States and Rs 54 lakhs for smaller States. Earlier it was Rs 40 lakh and Rs 22 lakh respectively. Such figures no doubt are there just to satisfy the Election Commission (EC). All voters, spread in many districts with 10 to 30 lakh people in each constituency, cannot even be reached with this money. (The Government’s poll expenses were Rs 11.60 lakh crore in 1971 and Rs 1,113.88 lakh crore in 2004).

One wonders why the EC has put such a Spartan cap. Just going by its figures, say if there are on an average 10 candidates in a constituency they together spend 7 crore and in 544 constituencies the expenses officially would work out to Rs 3708 crore. It is a ridiculous sum. Even if all this socialistic figures are taken into account, the expenses made by parties are not added to the expenditure, though the EC is contemplating how to do that.

This apart there are many indirect funding by “friends” and “supporters”. The cost of using official carriers or defence aircraft by ruling party and hiring aircraft by all political parties are another grey area. Some of the official organs of the Government say they end up having funded elections as the expenses incurred remain unpaid by parties. Then there is a huge cost on media, including social media, advertising, surrogate ads, ‘paid news’ and host of other expenses which are rarely officially accounted for.

The EC says reduction of campaign time has reduced expenditure. But when elections in States like UP are held in four phases, the candidates who contest the election in the last phase in actuality have to spend much more than the others. The candidates say that since the EC introduced a new system and imposed the code of conduct, unofficially the average campaigning time has increased to a minimum of two months or more.

This means even on routine expenses on workers, organizing meetings, funding many marriages of friends and acquaintances increase. There would be few contestants who can pay such expenses from their pockets. It is raised through “donations”. And there could be a quid pro quo.

The belief that such finances come from titans is also possibly not true. Much of the action is at “mezzanine” level as former Chief Election Commissioner TN Seshan had said. That is the medium sized firms, businesses, real estate and builders.

The politicians are stated to help them in many regulatory processes and also in keeping off the taxmen and extortionists at bay. A Ludhiana pakorawalla was caught in an income tax raid and had to cough up Rs 60 crore recently. Such people also help politicians.

But still politicians are trusted by people because they save them from the wrath of bureaucrats, policemen, regulators and lubricate the system. They many times act as the negotiator between an official raider and the supposed offender. In many States, even an inflated electric bill is settled with their intervention.

These may be termed illicit funds but most of the fundings are a kind of insurance for protection. That is huge money and no guess would be correct. Demonetisation or not the cash flow in the Indian system has not come down. Prior to the present election to five states, the RBI came out with figures of high cash flow. Withdrawals from banks had tremendously gone up. There are also unconfirmed reports that many politicians had to access cash at payment of a premium to the underground market. Note-ban thus has made the currency tradable.

Even political parties assess the monetary power of candidates. Some parties are known to sell their tickets to the highest bidder. Democracy, former Congress leader Late VN Gadgil used to say, is an expensive proposition. Crony capitalism thrives through elections. ---INFA

(Copyright, India News & Feature Alliance)