Transparency in poll funding could lead to a clean-up

Let’s aim for transparent funding trails and reduced influence of money on poll outcomes

is a Pune-based economist.

While “political party” is not entirely absent as a mention in India’s Constitution, it finds space only in the 10th Schedule, which was added in 1985, brought about by the introduction of an anti-defection law. Otherwise, could it be that the founding fathers of the republic did not conceive of a central role for political parties? In his historic and concluding speech to the Constituent Assembly, when the final draft of the Constitution was adopted, B.R. Ambedkar famously said that however good a constitution may be, it can be rendered bad if the people called to work it are a bad lot. Conversely, even a badly drafted constitution can work out well in the hands of good people. Thus, it is not the Constitution per se, but rather the working of it through the organs of the state that determines whether democracy flourishes. And this depends ultimately on the people and the political parties they form as instruments to carry out their wishes. Thus, Ambedkar’s speech does mention political parties as instruments of expression of the popular will. But parties were not supposed to become the super powerful Leviathans that they have. It is wholly plausible that an elected legislature can choose a set of people to run the government without any reference to the concept of a political party. Indeed, once elected to the House, a member represents neither solely his or her party, nor solely a geographical constituency, but the entire people of India. This hypothesis of a democracy run sans political parties may sound hopelessly utopian but is theoretically possible. The missing emphasis on the idea of a political party in the Constitution is not an accident.

Not surprisingly then, the functioning of political parties is subject to very little regulation to this day. The regulatory burden on other forms of organizations, such as companies, NGOs, hospitals, schools and even temples, is far greater than on political parties. This is remarkable, considering that every aspect of our society and economy is influenced by politicians and their parties, and they play a pivotal role in our democracy. They are regulated by the Election Commission, which can register but not de-register parties. The conditions that parties must fulfil, laid down in Section 29A of the Representation of Peoples Act 1951, are minimal. How do they function? How are they financed? Can the public scrutinize their accounts? The statutes are mostly silent on this. Even though our democracy functions through political parties, their own inner functioning is not required to be democratic. Parties have also consistently resisted attempts to bring them under the Right to Information Act, even though they de facto satisfy the definition of being a “public authority” under the Act.

Parties provide the vital link between citizens and state. They compete to form the government by fighting elections, which reflect the collective will of the people. All elections cost money, and this cost is increasing by leaps and bounds. The law stipulates an upper limit on spending per candidate, but there is no limit on what a party can spend. Strangely, as per records filed with the Election Commission, candidates do not spend even half their permissible limit. But we know this is misleading.

Actual spending is far in excess of what is reported to the Election Commission. This is unaccounted for and by definition black money. During the 2019 Lok Sabha polls, the estimated total spending was in excess of ₹50,000 crore. Money power cannot guarantee electoral success, so it becomes a race to the bottom. Even Ambedkar had identified this malaise. Till we figure out a way out of this fruitless race, and how to curtail poll expenditure, we must at least shine a spotlight on the funds trail. A necessary reform is to reduce the influence of illegitimate money on elections. How to bring the money in from the shadows, that is.

Electoral bonds introduced in Parliament in 2017 were supposed to be a step in that direction. If the scheme had included complete transparency—who is funding whom and how much, and with a digital trail—it would indeed have been a step in the right direction. Expressing its opinion, the Reserve Bank of India had asked for a digitalonly mode for these transfers. It instead became an anonymous bearer bond scheme, with voters left with no clue or right to know. Anonymity is the opposite of transparency. It also caused an asymmetry, since a government-owned bank had knowledge but not anyone else. No wonder the Supreme Court declared the scheme unconstitutional.

We need at least two major steps in political funding reforms. The first is transparency of both donors and receivers. Who is giving money to whom? Let voters know and then decide. The second and more important step is to reduce the overall influence of money itself on electoral outcomes. Noam Chomsky, the noted political theorist, had said that the 2016 elections in the United States were a watershed event, not because of the rise of Donald Trump, but because of the rise of Bernie Sanders. He said that for more than 100 years, fundraising, spending and winning elections have been strongly correlated. But for the first time, a candidate like Sanders was becoming popular even though he didn’t have the backing of money power. In India too, at the grassroot level of village panchayats and municipal corporations, we are seeing some candidates winning without using the influence of money. Let’s hope that this is a sign of a national clean-up.