On Jan­uary 7, 2017, two months af­ter he had an­nounced a ban on the cir­cu­la­tion of Rs 500 and Rs 1,000 cur­rency notes, Prime Min­is­ter Naren­dra Modi, ad­dress­ing the na­tional ex­ec­u­tive meet­ing of the BJP in Delhi, said there was a need to make po­lit­i­cal fund­ing more trans­par­ent and that his party was in favour of elec­toral re­forms.

This gov­ern­ment has in­tro­duced three ma­jor changes since in the me­chan­ics of po­lit­i­cal fund­ing in In­dia— po­lit­i­cal par­ties can now re­ceive for­eign funds; any com­pany can do­nate any amount of money to any po­lit­i­cal party; and any in­di­vid­ual, group of peo­ple or com­pany can do­nate money anony­mously to any party through elec­toral bonds.

All three pro­vi­sions, it has been ar­gued, in­stead of in­creas­ing trans­parency, have made the process even more opaque than ear­lier. Of course, the gov­ern­ment has yielded to the long­stand­ing de­mand of the Elec­tion Com­mis­sion of In­dia (ECI) to lower the limit for anony­mous cash do­na­tions from Rs 20,000 to Rs 2,000, but this pro­vi­sion, its crit­ics ar­gue, will not change any­thing on the ground. “It is mean­ing­less with­out a cap on the amount of money that can be col­lected anony­mously through cash,” says Lalit Panda, a re­search fel­low at the Delhi­based Vidhi Cen­tre for Le­gal Pol­icy. Congress re­search cell head Rajeev Gowda agrees: “Now par­ties will have to show 10 times

more en­tries of less than Rs 2,000.”

How­ever, both the Congress and the BJP have ben­e­fit­ted from this year’s Fi­nance Bill, which made an amend­ment with ret­ro­spec­tive ef­fect to val­i­date any for­eign funds re­ceived by any po­lit­i­cal party since 1976. In 2014, the Delhi High Court had found both the par­ties guilty of ac­cept­ing do­na­tions from a for­eign com­pany, in breach of the For­eign Con­tri­bu­tion Reg­u­la­tion Act (FCRA), 2010, the newer ver­sion of the now re­pealed FCRA, 1976. The mod­i­fi­ca­tion of the def­i­ni­tion of a “for­eign com­pany” ren­dered the verdict null and void. With the amend­ment, the Modi gov­ern­ment has en­sured that funds re­ceived by po­lit­i­cal par­ties since 1976 can­not be in­ves­ti­gated, a stand that has made even the EC un­easy. “The EC has been of the view that no for­eign fund­ing for elec­tions should be al­lowed,” says Chief Elec­tion Com­mis­sioner O.P. Rawat.

For­eign funds in elec­tions are a con­tro­ver­sial is­sue across the world. In France, for­mer pres­i­dent Ni­co­las Sarkozy is be­ing in­ves­ti­gated over al­le­ga­tions that Libyan dic­ta­tor Muam­mar Gaddafi funded his 2007 cam­paign. The con­tro­versy over Rus­sia in­flu­enc­ing Don­ald Trump’s pres­i­den­tial cam­paign in the US is still not over. “This pro­vi­sion may open the flood­gates for ex­ter­nal in­flu­ence on key poli­cies, and po­ten­tially af­fect the coun­try’s strate­gic in­ter­ests,” says Ni­ran­jan Sa­hoo, se­nior re­search fel­low at the Ob­server Re­search Foun­da­tion in Delhi.

For­tu­nately, In­dian elec­tions have so far re­mained free of any known for­eign in­flu­ence, but there is no deny­ing that money, es­pe­cially un­ac­counted cash flow­ing from groups and in­di­vid­u­als with busi­ness in­ter­ests, has of­ten played a sin­is­ter role in the cam­paigns of can­di­dates. And, ac­cord­ing to ex­perts and the op­po­si­tion par­ties, the re­moval of a cap on cor­po­rate do­na­tions and in­tro­duc­tion of elec­toral bonds have fur­ther strength­ened cor­po­rate in­flu­ence in po­lit­i­cal de­ci­sion-mak­ing. Among the known sources of do­na­tions to par­ties, be­tween 2012 and 2016, cor­po­rate con­tri­bu­tions formed a stag­ger­ing 89 per cent of the to­tal funds.

The 2017 Fi­nance Act lifted the cap on cor­po­rate con­tri­bu­tions from 7.5 per cent of the net profit of a compa-

ny’s past three fi­nan­cial years and re­moved the obli­ga­tion to re­port such con­tri­bu­tions in the com­pany’s profit and loss ac­count. Be­sides, such do­na­tions do not re­quire the ap­proval of a com­pany’s board of directors. This pro­vi­sion is a con­ve­nient loop­hole for un­scrupu­lous el­e­ments to route black money through bo­gus com­pa­nies.

BJP lead­ers, how­ever, claim that this crit­i­cism doesn’t hold given the trans­parency drive the Modi gov­ern­ment has launched in the cor­po­rate world. “All com­pa­nies come un­der the gov­ern­ment’s Reg­is­trar of Com­pa­nies (RoC, that deals with the ad­min­istar­ion of com­pa­nies). Look at the num­ber of shell com­pa­nies the gov­ern­ment has shut down. So if a com­pany is bo­gus, it will be ex­posed,” says BJP na­tional gen­eral sec­re­tary Bhu­pen­der Ya­dav.

Yet sev­eral ob­servers be­lieve that the in­flu­ence of large in­dus­trial houses in elec­tion fund­ing is just one part of a much larger fi­nan­cial al­liance, which hap­pens mostly at re­gional and in­di­vid­ual lev­els and in­vari­ably in cash and kind, un­de­tected by any agency. In a sur­vey she con­ducted be­tween 2011 and 2014 among 2,500 in­cum­bent politi­cians

Pin Bi­har, Jhark­hand and Ut­tar Pradesh, Jen­nifer Bus­sell, as­sis­tant pro­fes­sor of po­lit­i­cal sci­ence and pub­lic pol­icy at the Univer­sity of Cal­i­for­nia, Berke­ley, found that in­di­vid­ual donors ac­counted for the high­est share in the to­tal funds re­ceived by the can­di­dates—32 per cent for Lok Sabha MPs and 29 per cent for MLAs.

ost-lib­er­al­i­sa­tion, real es­tate and man­u­fac­tur­ing have been the two big sources for po­lit­i­cal fund­ing. This is pos­si­bly be­cause land is a core el­e­ment in both sec­tors. And given the reg­u­la­tory re­stric­tions on land, politi­cians wield enor­mous dis­cre­tionary power over busi­ness ac­tiv­ity in these ar­eas.

“Ev­i­dence sug­gests that politi­cians help builders ne­go­ti­ate the labyrinth of reg­u­la­tory per­mis­sions deal­ing with land in ex­change for cash in­fu­sions around elec­tion time,” says Mi­lan Vaish­nav, di­rec­tor and se­nior fel­low, South Asia Pro­gram, Carnegie En­dow­ment for In­ter­na­tional Peace in Washington. An anal­y­sis of the li­a­bil­i­ties de­clared by MPs elected in the 2014 Lok Sabha elec­tion

re­veals how many of them raised big-ticket un­se­cured loans from many big and small real es­tate com­pa­nies.

But the big­ger worry for the op­po­si­tion par­ties is the elec­toral bond launched this year. An in­di­vid­ual, a group of peo­ple or a cor­po­rate can buy these bonds from des­ig­nated branches of the State Bank of In­dia (SBI) within the first 10 days of ev­ery month. The bonds, with a va­lid­ity of 15 days, are is­sued in mul­ti­ples of Rs 1,000, Rs 10,000, Rs 1 lakh, Rs 10 lakh and Rs 1 crore. These can­not be bought with cash, and the buyer must sub­mit KYC to the bank. Par­ties can en­cash these bonds in their des­ig­nated SBI ac­counts. The donor does not need to dis­close which party he has do­nated to and the party does not need to re­veal from whom it got the bonds. “I don’t want any party to know the ex­act amount I do­nate to ri­val par­ties. The dig­i­tal trail means I can­not of­fend the rul­ing party, which forces me to sup­port it fi­nan­cially even if its poli­cies are not busi­ness-friendly. This is not demo­cratic,” says a cor­po­rate hon­cho, on con­di­tion of anonymity.

This code of se­crecy en­sures that only the rul­ing party has ac­cess to the in­for­ma­tion about which in­di­vid­ual or com­pany has do­nated to which party. This will re­sult in peo­ple do­nat­ing only to the rul­ing party,” says Ran­deep Singh Sur­je­w­ala, Congress in-charge of com­mu­ni­ca­tion. His col­league Gowda adds: “Elec­toral bonds mil­i­tate against a fun­da­men­tal premise: that the cit­i­zens have a right to know who is fund­ing whom, and, thereby, pos­si­bly in­flu­enc­ing pol­icy out­comes.”

The EC also raised con­cerns about the pos­si­bil­ity of for­eign funds coming into In­dian polls or bo­gus and bank­rupt com­pa­nies do­nat­ing funds to par­ties. “We are now ex­am­in­ing the con­tri­bu­tion re­ports of po­lit­i­cal par­ties sub­mit­ted af­ter the launch of these bonds to check if the gov­ern­ment has ad­dressed our con­cerns. We will get to know the level of trans­parency soon,” says Rawat.

Fi­nance min­is­ter Arun Jait­ley, how­ever, jus­ti­fies the pro­vi­sion of non-dis­clo­sure of sources in elec­toral bonds. “Ev­ery po­lit­i­cal party in its re­turns will have to dis­close the amount of do­na­tions it has re­ceived through elec­toral bonds to the EC. All trans­ac­tions would be through bank­ing in­stru­ments. As against to­tal non-trans­parency in the present sys­tem of cash do­na­tions where the donor, the donee, the quan­tum of do­na­tions and the na­ture of ex­pen­di­ture are all undis­closed, some el­e­ment of trans­parency will be in­tro­duced in as much as all donors de­clare in their ac­counts the amount of bonds they have pur­chased and all par­ties de­clare the quan­tum of bonds that they have re­ceived,” Jait­ley said while launch­ing these bonds. The fi­nance min­is­ter also claimed that past ex­pe­ri­ence showed that lack of anonymity forces donors to “go back to the less de­sir­able op­tion of do­nat­ing in cash”.

The ar­gu­ment does not con­vince the ex­perts. A se­nior EC of­fi­cial says that it is a sad com­men­tary on the state of In­dian democ­racy that do­nat­ing money to one po­lit­i­cal party may in­vite retri­bu­tion from an­other. “Elec­toral bonds may be a step to­wards get­ting rid of black money in po­lit­i­cal fund­ing, but we need trans­parency too,” he says. Ac­cord­ing to Sa­hoo, the non-dis­clo­sure clause will more or less le­galise anony­mous do­na­tions and crony cap­i­tal­ism. “While money will now be sub­jected to a dig­i­tal pa­per trail, me­dia, civil so­ci­ety and pub­lic will not know who pays whom,” he says. In its con­tri­bu­tion re­port of Septem­ber 28, 2018, the Congress has not men­tioned a sin­gle bond con­tri­bu­tion for 2017-18. The BJP hasn’t sub­mit­ted its re­port yet. A scru­tiny of the do­na­tion records of the elec­toral trusts also lends cre­dence to Sur­je­w­ala’s claim.

In­tro­duced in 2013, elec­toral trusts were the UPA gov­ern­ment’s way of cre­at­ing a layer of opac­ity in the process of cor­po­rate do­na­tions to par­ties. These trusts could re­ceive con­tri­bu­tions from var­i­ous com­pa­nies and dis­burse them to var­i­ous par­ties, leav­ing the pub­lic none the wiser about which com­pany was re­ally chan­nelling funds to which party or any quid pro quo trans­ac­tions. In 2017-18, 86 per cent of the con­tri­bu­tions to the 22 reg­is­tered elec­toral

Elec­toral bonds are cloaked in se­crecy; only the rul­ing party gets to know who the donor is

trusts went to the rul­ing party. Be­tween 2013 and 2016, do­na­tions from trusts ac­counted for one-third of all fund­ing that par­ties dis­closed.

It is, there­fore, hardly sur­pris­ing that the quan­tum of do­na­tions re­ceived by the BJP in 2016-17 is nine times more than the five other na­tional par­ties com­bined re­ceived. Ac­cord­ing to the party’s crit­ics, the un­ri­valled fi­nan­cial dom­i­nance is the rea­son be­hind the saf­fron party’s re­fusal to ac­cept the EC’s sug­ges­tion to put a cap on elec­tion ex­pen­di­ture by po­lit­i­cal par­ties.

The BJP re­ceived Rs 251 crore—70 per cent of the to­tal Rs 365 crore re­ceived by 10 po­lit­i­cal par­ties—and spent more than Rs 131 crore—80 per cent of the to­tal ex­pen­di­ture of the 10 par­ties—in the Gu­jarat and Himachal Pradesh as­sem­bly elec­tions last year, ac­cord­ing to an anal­y­sis by the As­so­ci­a­tion for Demo­cratic Re­forms (ADR), an or­gan­i­sa­tion that re­searches elec­toral re­forms. The Congress stood sec­ond with Rs 71.2 crore in col­lec­tions and an ex­pen­di­ture of over Rs 20 crore in the two elec­tions. “We have seen how much the BJP spends even in by­elec­tions. They don’t want a level play­ing field and hope to win elec­tions with money and mus­cle power,” says Ra­jasthan Congress pres­i­dent Sachin Pi­lot, as the state heads for elec­tions in De­cem­ber.

Ya­dav laughs off such crit­i­cism and says that his party is all for trans­parency and ac­count­abil­ity. “We welcome a stricter au­dit­ing process for the ac­counts of par­ties. But put­ting a cap on ex­penses is un­fair, as po­lit­i­cal par­ties have to spread their ide­olo­gies and view to ev­ery nook and cor­ner of the coun­try. For a healthy democ­racy, we must cel­e­brate elec­tions as fes­ti­vals,” he says.

Notes for votes

Elec­tions in In­dia are in­deed rou­tinely con­ducted as fes­ti­vals—of un­ac­counted cash. Ac­cord­ing to the Cen­tre for Me­dia Stud­ies (CMS), a Delhi-based re­search or­gan­i­sa­tion, Rs 35,000 crore was spent in the 2014 Lok Sabha elec­tion, though the of­fi­cial es­ti­mate is just Rs 7,000-8,000 crore, which sug­gests the rest—Rs 27,000 crore—was un­ac­counted for. In the coming gen­eral elec­tion, the ex­pen­di­ture may go up to Rs 50,000-60,000 crore, says CMS. To con­tex­tu­alise this es­ti­mate, the 2018 Union bud­get al­lo­cated Rs 52,800 crore for the health sec­tor and Rs 25,000 crore an­nu­ally for “re­vi­tal­is­ing in­fra­struc­ture and sys­tems in ed­u­ca­tion by 2022”.

The CMS es­ti­mate for 2014 did not in­clude the money that changes hands in the process of get­ting a party nom­i­na­tion, as sev­eral par­ties sell tick­ets al­most openly. For in­stance, in the 2014 gen­eral elec­tion, can­di­dates in Ut­tar Pradesh used nearly Rs 500 crore to get tick­ets, or­gan­ise ral­lies and woo vot­ers, re­veals an of­fi­cer of the state EC’s fi­nan­cial in­tel­li­gence unit.

Such rev­e­la­tions make the cap fixed by the EC on ex­pen­di­ture by in­di­vid­ual can­di­dates ir­rel­e­vant. A can­di­date is al­lowed to spend Rs 70 lakh in 533 big Lok Sabha con­stituen­cies and Rs 54 lakh in 10 small con­stituen­cies. Ac­cord­ing to a US diplo­matic ca­ble re­leased by Wik­iLeaks, one sit­ting Lok Sabha mem­ber had ca­su­ally said in 2009 that he spends an amount equiv­a­lent to the to­tal le­gal limit on the elec­tion day it­self. Though he later re­tracted his state­ment, the late BJP min­is­ter Gopinath Munde ad­mit­ted he had spent Rs 8 crore in the 2009 Lok Sabha poll. Ac­cord­ing to a vet­eran Con­gress­man, a can­di­date re­quires at least Rs 10 crore to win in big ur­ban con­stituen­cies and Rs 5 crore to win in ru­ral ones.

A BJP MLA from As­sam says ex­penses go north­wards in con­stituen­cies with fewer than 10,000 vot­ers. The vic­tory mar­gins are very nar­row and can­di­dates can reach out to ev­ery voter, in­creas­ing the pos­si­bil­ity of per­sonal in­cen­tives. Ac­cord­ing to an MLA from Arunachal Pradesh, “In my state, we have spent up to Rs 10 crore in an as­sem­bly con­stituency, un­like neigh­bour­ing As­sam where they can win spend­ing Rs 70 lakh on an av­er­age.” Iron­i­cally, ac­cord­ing to poll ex­pense re­ports can­di­dates sub­mit­ted to the EC, those in Arunachal Pradesh spent only Rs 7 lakh each on an av­er­age.

Rawat be­lieves a cap on the ex­pen­di­ture of po­lit­i­cal par­ties will go a long way in clean­ing up elec­toral fi­nances. “As there is no cap on party ex­penses, many a time a can­di­date’s ex­pen­di­ture is shown in party ac­counts,” says Rawat. Panda says In­dian elec­toral laws are ex­cep­tional, as they do not recog­nise po­lit­i­cal par­ties as cen­tral play­ers need­ing reg­u­la­tion. “Coun­tries like Ger­many even en­trench the need for trans­parency in party funds in their con­sti­tu­tion it­self,” he says.

The CEC also points out that the un­ac­counted ex­penses oc­cur ei­ther be­fore elec­tion no­ti­fi­ca­tion or af­ter the re­sults. Ac­cord­ing to a CMS re­port, in the 2014 Lok Sabha poll, cash started flow­ing long be­fore the code of con­duct was an­nounced on Fe­bru­ary 5. Wher­ever can­di­dates were sure of get­ting party nom­i­na­tions, they went about dis­burs­ing big sums to lo­cal mid-level work­ers or out­lets like pro­vi­sion stores, tem­ples, chit fund of­fices and hawala deal­ers for dis­tri­bu­tion down the line. “We have been told about coupons dis­trib­uted by can­di­dates. The win­ning can­di­date gives cash against these coupons af­ter the re­sults. The EC has no role in that pe­riod,” says Rawat.

Can­di­dates also come up with in­no­va­tive ways to tie funds to elec­toral suc­cess and make those whom they pay ‘ac­count­able’. A se­nior BJP leader from Mad­hya Pradesh, who changed his con­stituency, gave out bikes to key peo­ple in ev­ery vil­lage in the last elec­tion, but said that the reg­is­tra­tion would be done only af­ter

de­ter­min­ing if he got the promised votes.

Not sur­pris­ingly, an ex­am­i­na­tion of the ex­pen­di­ture of can­di­dates in the 2014 elec­tion shows that they spent only 58 per cent of the cap fixed by the EC. In other words, the av­er­age ex­pen­di­ture by can­di­dates was Rs 25 lakh. What’s ironic is that most par­ties of­ten claim the cap of Rs 70 lakh is too low. “The un­re­al­is­tic low limit has shifted elec­tion ex­pen­di­ture un­der­ground. This sit­u­a­tion favours those can­di­dates who have and know how to use ‘black money’, and par­ties of­ten pre­fer such self-financing can­di­dates,” says Gowda.

Elec­tion re­sults in In­dia in­creas­ingly turn on the money power can­di­dates wield. In 2014, the pro­por­tion of ex­pen­di­ture by in­di­vid­ual can­di­dates went up sig­nif­i­cantly to around 40 per cent of the to­tal elec­tion ex­pen­di­ture, re­ported a CMS study. In the Kar­nataka as­sem­bly elec­tion, the share of ex­pen­di­ture by in­di­vid­ual can­di­dates went up by 75 per cent, re­ports an­other CMS sur­vey.

Can­di­dates are ex­pect­ing a 40 per cent rise in their poll ex­penses in the up­com­ing MP as­sem­bly elec­tion. “In 2013, we spent Rs 90 lakh, of which the party pro­vided Rs 25 lakh,” says a sit­ting MLA in the state. In 2018, most MLAs feel, poll ex­penses will touch a min­i­mum of Rs 1.5 crore per con­stituency. In as­sem­bly elec­tions, the EC ceil­ing is be­tween Rs 20 lakh and Rs 28 lakh.

Nee­lan­jan Sir­car, a se­nior fel­low at Delhi’s Cen­tre for Pol­icy Re­search, ex­am­ined the digi­tised af­fi­davits of the can­di­dates of the past three gen­eral elec­tions and found that can­di­dates from com­pet­i­tive par­ties (de­fined as those that were one of the top two fin­ish­ers in a con­stituency) were ap­prox­i­mately 20 times richer than can­di­dates from non-com­pet­i­tive par­ties. “Of the 21,000 can­di­dates who con­tested the past three gen­eral elec­tions, the wealth­i­est 20 per cent of the can­di­dates were more than 20 times more likely to win than the poor­est 20 per cent,” says Vaish­nav.

Did de­mon­eti­sa­tion help?

The Novem­ber 8, 2016, de­mon­eti­sa­tion ex­er­cise—less than six months be­fore elec­tions took place in five states, in­clud­ing the most po­lit­i­cally sig­nif­i­cant one, Ut­tar Pradesh—was seen by many at the time as a de­ci­sive step to­wards weed­ing out cor­rup­tion from elec­tions. But ground re­ports from suc­ces­sive elec­tions since in­di­cate that de­mon­eti­sa­tion failed to free In­dian pol­i­tics and gov­er­nance from the politi­cian­busi­ness­man nexus. “If you look at the 2017 Ut­tar Pradesh elec­tion, cash seizures in­creased three­fold,” says Vaish­nav.

On April 30, in the run-up to the Kar­nataka as­sem­bly

poll, an EC re­lease said that the probe wing of the state in­come tax depart­ment had seized Rs 19.69 crore in cash, four times what the agen­cies had seized in the 2013 state elec­tion. In May 2016, in an un­prece­dented move, the EC was forced to re­scind the poll no­ti­fi­ca­tion for two as­sem­bly con­stituen­cies in Tamil Nadu, where EC of­fi­cials re­ported large-scale dis­tri­bu­tion of money and gifts to elec­tors. Again, in April 2017, the EC can­celled the by­poll in RK Na­gar con­stituency in Chen­nai amidst al­le­ga­tions that the state health min­is­ter may have dis­trib­uted cash to vot­ers.

Ac­cord­ing to a CMS re­port, the Kar­nataka as­sem­bly elec­tion in May this year was the most ex­pen­sive state poll ever held in the coun­try. Po­lit­i­cal par­ties and their can­di­dates spent Rs 9,500-10,500 crore, more than twice the ex­pen­di­ture in the 2013 state poll. The fig­ures seem even starker when you con­sider the Union bud­get al­lo­ca­tion for the Dig­i­tal In­dia pro­gramme: a mere Rs 3,073 crore, be­sides Rs 10,000 crore for the cre­ation and aug­men­ta­tion of tele­com in­fra­struc­ture, the back­bone of a dig­i­tal econ­omy.

State fund­ing a so­lu­tion?

The prime min­is­ter has been known to advocate state fund­ing of elec­tions to clean the elec­toral sys­tem, though his col­league Jait­ley said last year in Par­lia­ment that it was not con­sis­tent with In­dian re­al­ity to pre­sume that no pri­vate do­na­tions would be used if the state funded elec­tions. Even the EC has op­posed the idea. “State fund­ing with­out any check on cor­po­rate do­na­tions and black money in elec­tions won’t cleanse the sys­tem,” says Rawat. Var­i­ous gov­ern­ment com­mit­tees and com­mis­sions have rec­om­mended that state fund­ing of elec­tions be con­sid­ered only af­ter some pre­req­ui­sites, such as in­ter­nal democ­racy in po­lit­i­cal par­ties and com­plete trans­parency in their fi­nan­cial af­fairs, are met.

Di­rect state fund­ing of po­lit­i­cal par­ties is prac­tised in 86 per cent of the Eu­ro­pean coun­tries, 71 per cent in Africa, 63 per cent in the Amer­i­cas and 58 per cent in Asia. Its sup­port­ers say that pub­lic fi­nance can help pro­tect the po­lit­i­cal process from di­rect, quid pro quo kick­backs or cor­rup­tion and cre­ate a level play­ing field for par­ties, can­di­dates with less re­sources and new en­trants. There is, how­ever, no guar­an­tee that pub­lic fi­nance will re­duce elec­tion ex­pen­di­ture. In coun­tries like Italy, Is­rael and Fin­land, which have ex­per­i­mented with pub­lic find­ing, there has been no sig­nif­i­cant drop in ex­penses. In the US, elec­tion ex­pen­di­ture con­tin­ues to soar. Only a hand­ful of coun­tries like Ger­many and Ja­pan have been able to re­duce their poll ex­pen­di­ture by any sig­nif­i­cant ex­tent. Be­sides, de­spite pub­lic fi­nance, the re­liance on pri­vate do­na­tions has not de­creased in coun­tries such as the US and Is­rael.

“The suc­cess sto­ries of Canada, Swe­den and, to some ex­tent, Ja­pan, tell that an ef­fec­tive pub­lic fund­ing model has two el­e­ments: re­duc­ing the de­pen­dency on cor­po­rate or pri­vate money by strict re­stric­tions on ex­pen­di­ture lim­its, strong reg­u­la­tions and dis­clo­sures, and in­fus­ing white money through state fund­ing or in­cen­tivis­ing other fund­ing op­tions, such as tax-free do­na­tion,” says Sa­hoo.

Ev­i­dence from the global ex­pe­ri­ence also sug­gests that pub­lic sub­si­dies in fos­ter­ing com­pe­ti­tion depends on how they’re dis­trib­uted. In coun­tries like Rus­sia, pub­lic po­lit­i­cal fund­ing has been used to sti­fle po­lit­i­cal com­pe­ti­tion and pro­mote au­thor­i­tar­i­an­ism. “In fact, the 2001 pub­lic fund­ing law in Rus­sia has led to a sit­u­a­tion where it is al­most im­pos­si­ble to chal­lenge the rul­ing party,” says Sa­hoo. Canada and Fin­land have tasted moder­ate suc­cess while it has re­sulted in in­tense com­pe­ti­tion from newer par­ties in coun­tries like Is­rael, Italy and Mex­ico.

What next?

In De­cem­ber 2016, the EC sent a long list of sug­ges­tions for elec­toral re­forms to the Union gov­ern­ment. This is not the first time the body has writ­ten to a cen­tral gov­ern­ment on the is­sue. Like in the past, the gov­ern­ment has taken lit­tle ac­tion on the sug­ges­tions re­lated to elec­toral fund­ing—ex­cept in lim­it­ing cash do­na­tions to Rs 2,000. “In­dia’s po­lit­i­cal fi­nance re­form has been stymied by two ma­jor fac­tors: a lack of po­lit­i­cal will for re­form, and an econ­omy in which the state ex­erts a heavy hand, thus in­cen­tivis­ing il­licit fund­ing,” says E. Srid­ha­ran, aca­demic di­rec­tor of the Univer­sity of Penn­syl­va­nia In­sti­tute for the Ad­vanced Study of In­dia in Delhi.

The roots of the pro­lif­er­a­tion of un­ac­counted money in elec­tions can be traced to the struc­ture of po­lit­i­cal fund­ing, which al­lows par­ties to rig their books any way they want. Ac­cord­ing to ADR, the six na­tional par­ties de­clared an in­come of Rs 1,559 crore in 2016-17, of which Rs 711 crore, or 46 per cent, came in do­na­tions from un­known sources, such as ‘sale of coupons’, ‘re­lief fund’, ‘mis­cel­la­neous in­come’, ‘vol­un­tary con­tri­bu­tions’, and ‘con­tri­bu­tion from meet­ings’. The de­tails of mak­ers of such vol­un­tary con­tri­bu­tions are not avail­able in the pub­lic do­main. The Bahu­jan Sa­maj Party has been declar­ing for the past 11 years that it has not re­ceived any do­na­tions above Rs 20,000. “Full trans­parency should be paired with bet­ter en­force­ment, in­de­pen­dent au­dits of the ac­counts of po­lit­i­cal par­ties and a zero tol­er­ance pol­icy to­wards those who lie or ob­fus­cate their of­fi­cial cam­paign ex­pen­di­ture state­ments,” says Vaish­nav.

The ap­par­ent dis­dain for trans­parency was ev­i­dent when po­lit­i­cal par­ties re­jected the Cen­tral In­for­ma­tion Com­mis­sion or­der of June 3, 2014, bring­ing them un­der the purview of the Right to In­for­ma­tion Act. If the Modi gov­ern­ment re­ally means busi­ness, bring­ing po­lit­i­cal par­ties un­der the RTI would be the first big step in that di­rec­tion.

The BJP re­ceived do­na­tions nine times more than the five na­tional par­ties in 2016-17 —with Rahul Noronha


MAHA RALLY A Naren­dra Modi road show in Varanasi be­fore he filed his nom­i­na­tion pa­pers for 2014

QUEEN OF DOLES The late Jay­alalithaa made the free­bie cul­ture an in­alien­able part of Tamil Nadu pol­i­tics

LAP­TOP NA­TION Many politi­cians have used the dis­tri­bu­tion of free lap­tops to stu­dents as an in­vest­ment in their own po­lit­i­cal fu­ture. Seen here, stu­dents in Lucknow

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