There is a considerable body of thinking in India that political funding is the nodal centre of unaccounted and illicit money transfers, and is the primary cause of corruption of the body politic. Party funding is often equated with political funding, as is demonstrated in much of the political rhetoric following demonetisation. But political funding need not be limited to party funding, and may encompass election expenditure of candidates at various tiers, federal, state and local. It is also important to distinguish such funding from political corruption that may involve funding of members of legislative organs of political parties directly, members of the executive branch of the government or even of the judiciary.
In India much of the known extent of corruption is strongly associated with the bureaucracy, command organs, public sector, and other constitutional and statutory bodies. Further, even civil society institutions such as the media can act both as the conduit of corruption or harbour it as such. All political corruption involves an unfair, and most often unlawful, use of public office to secure a private gain. In the process common good, which a public office is supposed to serve, is appropriated for partisan ends. However, given the fact of competitive electoral democracy, political parties cannot be denied legitimate ways of aggregating their corpus funds, and a candidate is entitled to seek resources for his/her elections. When do these two modes of political funding seriously compromise public purpose?
In India political parties are expected to file their income tax returns every year although they do not have to pay income tax. According to a recent resort to the Right to Information Act, the Association for Democratic Reforms found that the total income of all political parties in India from 2004-05 to 2014-15 was ₹11,367.34 crore, in which the share of the Congress and the BJP was more than half. Till recently political parties were required to disclose donations only for amounts higher than ₹20,000. From such known donors, for the period mentioned above, political parties received ₹1,835.63 crore, i.e. 16%, of their income, and another 15% they raised by way of membership, sale of coupons, interest on deposits, etc. The rest, i.e. 69%, of the income of political parties came from unknown sources, and this segment has been steadily on the rise during this period.
Party funding
If we disaggregate these numbers, a much more complex picture emerges — for some regional parties, more than three-fourths of income came from unknown sources. While the income of national parties increased by 313% from such sources during this period, that of regional parties increased by 652%. It is also important to bear in mind that the corporate sector in India that contributes to political party kitties has generally not favoured the disclosure of the name of the donor, for obvious reasons. A large number of multinational companies that have entered India following liberalisation, and have tended to root themselves in a region, may tend to favour a party prominent in the area while not antagonising its national counterparts.
The recent demonetisation move has affected the ‘undisclosed’ sources of income of political parties, positioning a ruling party such as the BJP in a much more advantageous position. The recent Budget announcement of the Finance Minister that every cash donation above ₹2,000 needs to be acknowledged in the IT returns further constrains flow of funds to parties other than a ruling party. As a result, political parties that are not ruling parties at present may tend to resort to greater subterfuge in the process. However, it is important to stress that between 2004-05 and 2014-15 the average income of all the political parties in India was just over ₹1,000 crore, and comes to about ₹2,000 crore at present annually. Even the income of large parties such as the BJP and the Congress is just about the budget of a modest university in India. Therefore, while the dossiers of political party funding need to be made transparent, the larger breach may lie elsewhere.
Funding of elections
The big political funding in India, however, goes into election expenditures. The funds that a political party advances to its party candidates in an election vary from one candidate to another, and there is much variation across political parties in this regard. In the 2014 Lok Sabha elections, 263 members of the House claimed that they received a total of ₹75.59 crore from their parties, which averages out to roughly ₹28 lakh each. These are mere peanuts at the hustings!
We can safely assume that an MLA spends on an average about ₹5 crore to get elected. The legal limit of ₹28 lakh is far off this mark. Assuming that there are five contending candidates in a constituency, and even if each one of them does not spend as much, but just half of their elected counterpart, an amount of about ₹15 crore will be spent in each constituency, which with about 4,215 MLAs in India works out to an about ₹13,000 crore per annum. While the legal limit that a Lok Sabha candidate can spend is ₹70 lakh, a victorious candidate on an average does not spend less than ₹10 crore for the purpose. Suppose we assume again an average of five candidates per constituency, and halving the amount to losers, about ₹30 crore will be spent in each Lok Sabha constituency, and given 543 members of the Lok Sabha, about ₹3,300 crore per annum. That this is not far off the mark is corroborated by the Centre for Media Studies, which estimated that an amount of ₹30,000 crore was spent by the government, political parties and candidates in the 2014 Lok Sabha elections. Then there are elections to the Upper Houses, both at the Centre and in some States, and the local governing bodies. While there are a few instances of people spending their own money in elections, someone else doles it out to others.
One of the important considerations before political parties in selecting their candidates today is whether they can foot the expenditure of their election. Often other considerations, such as the background of the candidate or his or her ideological commitment, become secondary. Once a candidate is so elected, he has to make returns for this patronage, or at least hold out such a promise. The striving of an MLA to become a Minister at the earliest is built into the logic of this system of patronage. The return from political funding need not always be a substantial gain, such as land or coal blocks; it could be deferred advantage, defeat of an adversary, ideological support, incentive to desist from a proposed action, postponement of a proposed action to a favourable point of time, a third party advantage, etc. In a country such as India, political funding may seek to ensure a certain measure be not implemented or be implemented in a certain way rather than another. Given the significance of public opinion in a democracy, political funding may just be employed to create favourable public opinion.
The way out
The key to regulate political funding therefore lies in bringing down election expenditure and ensuring that it provides an opportunity to get the best public men and women to participate in the institutional life of Indian democracy. One of the ways suggested for the purpose is holding simultaneous elections to the Lok Sabha as well as the State Assemblies. While a return to this practice that prevailed till 1967 is worth exploring for other reasons, it may not lead to any significant reduction in the election expenditure as such. Better and close monitoring of the election process by the Election Commission has ensured that overt modes of violation at the hustings are checked. But political entrepreneurs have always found ways of subverting official vigilance and spend lavishly to gain competitive advantage.
There are, however, many short-term and long-term solutions that are feasible without disparaging competitive electoral democracy, such as citizen activism that keeps a close watch over campaigning. But in the longer run, political patronage itself needs to be reined in. This calls for not merely a decentralisation of power in more substantive ways, but also reordering the relation between the legislature and executive.
Valerian Rodrigues is Professor at the Department of Political Science, Mangalore University.
