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HindustanTimes Tue,21 Oct 2014

Cash and votes: 2014 polls appear to be once again driven by slush money

Zia Haq and Gaurav Choudhury, Hindustan Times   April 20, 2014
First Published: 00:43 IST(20/4/2014) | Last Updated: 02:27 IST(20/4/2014)

Cost of renting a chair for a public meeting: Rs. 5 a day. Festoons for Rs. 300 apiece. Helicopter rides: up to Rs. 300,000 an hour. Illegal money sloshing about in India’s costliest election ever: free.

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Even though there are stiff penalties and strict spending limits during elections, offering bribes — some as small as Rs. 100 — is an old ploy to garner votes.

In a Chennai suburb earlier this week, trips to a bungalow by suspicious-looking vehicles alarmed officials of the Election Commission (EC), India’s tough poll regulator. On April 16, when its officials raided the place, the home of a local politician, they found Rs. 51.28 lakh of potential bribe.

Half way through these staggered polls, the commission has seized Rs. 269 crore of unaccounted cash, more than the Rs. 190 crore seized during the entire period of the previous general election in 2009.

Despite corruption being the biggest political agenda, the 2014 elections appear to be once again a game of cash-for-votes. Only it’s bigger this time.

Read: AAP shows how to keep the books cleaner

One estimate, by the Centre for Media Studies, puts the total projected spending at Rs. 30,000 crore ($5 bn), a sum second only to the Rs. 42,000 cr ($7bn) spent during the 2012 US presidential race, the world’s most expensive.

It’s not just cash that flows freely. The polls are awash in bootlegged liquor and freebies, such as saris, cheap jewellery, television sets, bicycles, mosquito nets and even drugs. In tea-producing Assam, liquor is the commonest enticement in tea estates. Elections there have been won by promising a month’s supply to poor plantation labourers, says Shantanu Baruah, a tea garden manager in northern Assam’s Dibrugarh.

So far, the commission has confiscated 1,320 million litre of liquor, enough to fill 400 Olympic-size swimming pools. In Punjab, a state with widespread drug abuse, officials have hauled 104 kg of heroin.

Cash has been seized from the unlikeliest of places — milk vans, roofs of buses and even private planes used by politicians. Newer routes are even tougher to pin down, such as fund transfers on mobiles. “The Rs. 30,000 crore estimate for 2014 is the outcome of an elaborate analysis, based on a variety of past and present trends,” says N Bhaskara Rao, chairman of the Delhi-based Centre for Media Studies. “This is the source and origin of the cycle of corruption in the country,” he says.

Going hi-tech
India is the world’s largest democracy and that’s not the only reason why its elections are spectacular. Campaigning has gone high-tech from colourful. BJP’s prime ministerial candidate Narendra Modi, whose party is seen emerging victorious, is addressing audience across India as a “3D hologram”.

The BJP claims this to be the first-of-its-kind digital rally anywhere in the world. Modi’s speeches were projected via a hologram technology to 100 cities simultaneously. A digital map of locations where the hologram could be visible was published online. The Congress’s spending is reckoned to be lower in comparison to its main rival, but it is splurging heavily on its candidates, mostly wealthy and powerful politicians.

The average constituency size in India — 1.3m people — is bigger than the entire population of some smaller European countries. According to the UK’s Guardian daily, the average Indian MP has 23 times the number of constituents of his British counterpart. That’s indeed a huge number of people to be courted.

Most parties now flaunt branded merchandises, such as photo masks, T-shirts and even umbrellas with party symbols.

A study by the Centre for the Study of Developing Societies, a think-tank, found that, to be politically competitive, candidates must be able to spend up to a certain threshold. However, above that threshold, overspending alone does not correlate to more votes.  Yet, those vying for power with slush money try to outspend rivals.

India’s electoral funding remains notoriously opaque. According to the Association for Democratic Reforms (ADR), which advocates ethical polls, parties receive up to 75% of their funds from unknown sources, especially big corporations.

However, some recent tax-relief measures for political donation do seem to have increased the incentive for transparency. The ADR’s data show that between 2004 and 2009, the Congress got Rs. 172 crore in corporate donations, while the BJP received Rs. 192 crore.

Bulk of these contributions has come through legal electoral trusts, such as the General Electoral Trust of the Aditya Birla Group, Electoral Trust of Tata Sons, Bharti Electoral Trust of Bharti Enterprises, Satya Electoral Trust, Harmony Electoral Trust and Corporate Electoral Trust, the ADR’s analysis says.

A big loophole still is that parties are required to disclose only donations above Rs. 20,000, according to Eswaran Sridharan of the University of Pennsylvania Institute for the Advanced Study of India, who has extensively studied India’s political funding system.

To hide sources, parties tend to claim they mostly receive multiple donations of less than Rs. 20,000.

Known unknowns
According to the Stockholm based International Institute of Democracy and Electoral Assistance (IDEA), India is among very few countries in the world to “allow political parties or candidates to receive anonymous donations”.

“Regulations are focused on individual candidates and not on political parties as critical actors in the democratic political system,” IDEA’s secretary-general Karen Fogg says.

Money power skews the level playing field. The more pernicious danger is that the entire political system runs on murky funding sources, which tend to serve as future kickbacks for political parties. Big corporate financiers expect discretionary favours, such as speedier clearance for business proposals, in return.

To be fair, despite economic liberalisation, Indian businesses remain highly vulnerable to discretionary government favours. “Along with this, flawed political party funding and election expenditure laws drive parties and politicians to misuse the government’s discretionary powers over resource allocation to raise funds for election campaigns and political parties,” according to a paper Sridharan co-authored with MV Rajeev Gowda of the Indian Institute of Management-Bangalore. Political parties have always received illegal foreign money, often funnelled back during elections in “round trips” through Mauritius or the Cayman Islands, analysts say.

India’s electoral system contrasts with most European models as it has no system of state funding of parties for electoral or general purposes, except for free airtime on state-owned Doordarshan and All India Radio, says Sridharan.

In France, for example, frequent corrupt nexus between business and politics was greatly curbed when public subsidies for parties and candidates were introduced in 1988. Corporate donations were banned in 1995. Clamping down on corporate donations, without adequate provisions for publicly or a state-funded system, however can be disastrous. In 1968, Prime Minister Indira Gandhi banned corporate donations to political parties, ostensibly because she feared heavy funding of right-wing opposition parties. This tended to greatly increase “politicians’ reliance on black money” for elections, Gowda and Sridharan note.

“Public funding, along with a whole package of carefully designed measures is the way to go,” Sridharan says.

According to Fogg, although the Election Commission has powers equivalent to those of a civil court (oversight, investigation, prosecution and sentencing), it has minimal impact on spending limits. Yet, given the constraints, the commission still does a gritty job, resulting in elections that are overall free and fair.

Surprisingly, India has no independent laws governing election expenditure “except for one section” in the Representation of People’s Act, says PK Dash, the Election Commission’s director-general in charge of monitoring expenses. “But who can make laws? Only Parliament, provided political parties show the will,” he says.


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