The power of self-financing candidates
MONEYBAGS More political parties are banking on selffinancing candidates — a worrying trend as it means only a small subset of the population can realistically hold office
Money matters in Indian elections. In the increasingly high stakes world of election campaigning, aggressive displays of candidate wealth, from cash handouts to alcohol distribution, to big rallies, are becoming more common and more extravagant.
While money plays a key role in most elections across the world, the particular reliance of Indian parties on candidates with great personal wealth is quite a unique phenomenon.
In many longstanding democracies, campaign funding is highly regulated, a lion’s share of the funding comes from the party itself or third-party sources like lobbyists and corporate actors, and the personal wealth of the candidate is less important. But why are Indian parties increasingly dependent upon such wealthy candidates?
To answer this question, one needs to understand how candidates are selected and the policymaking role of legislators in India’s political system.
India’s parties display very low “intraparty democracy” because party’s policy decisions are routinely made by a small coterie of party elites. More importantly, party tickets are typically distributed— or even sold—by these elites in the absence of a functioning democratic process within the party.
Even if a candidate wins his or her seat, anti-defection laws effectively prevent elected representatives from having much of a role in policymaking. In such a scenario, third party actors have few incentives to invest in specific candidates, rather than a party at large. With little opportunity to raise outside funds, candidates must largely finance their election campaigns.
Naturally, this has led to a rise of wealthy candidates. Looking at self-reported candidate affidavits for Lok Sabha elections between 2004 and 2014, the median total wealth of candidates grew by approximately 330% in nominal terms. Even adjusting for inflation, the median wealth of candidates saw a rise of 116% in real terms.
In the 2014 national election, candidates reported a median wealth of ₹23.8 lakh —approximately 27 times the nominal per capita income of India in 2014-2015 of ₹ 88,533—which is, in turn, significantly wealthier than the general population.
There are reasons to be worried about this rise of self-financing candidates in India. First, if candidates need to be wealthy to contest an election, only a small subset of the population can realistically hold office, resulting in legislators that have less in common with the citizens they represent. Second, if parties increasingly look at personal wealth to select candidates, instead of characteristics of “quality” such as education or constituency service, then elected politicians may become worse at representing their constituents.
Finally, and most importantly, if campaigns must be self-financed, then candidates may view contesting elections as an investment rather than a sunk cost, leading to greater levels of corruption in office as legislators try to recoup the costs of contesting elections.
Indeed, related evidence suggests that incumbent politicians enjoy a significant return on their assets. 1 2 3 4
To shed light on the problem, candidate affidavits were digitised for each of the last three national elections, providing details on moveable and immovable wealth, as well as a number of other characteristics such as pending criminal cases and education.
Comparing this data to the election results over the appropriate national elections can be used to understand the relationship between candidate wealth and electoral outcomes. 5 6 7 8
This analysis focuses on moveable wealth, which are assets that can be quickly mobilised for campaign purposes, as opposed to immovable wealth (which consists mainly of fixed assets like real estate). More than 80% of the value of moveable wealth is nested in four types of assets: jewellery, cash, deposits, and vehicles. The biggest source of moveable wealth is jewellery because a relatively small amount of jewellery may contain a lot of financial value, so it can be used to