Transparency in business of elections, an imperative

Funding the world’s largest election is an enigma and businesses bankrolling both accounted and unaccounted spending during polls has been in public domain for quite some time now.

On a conservative count, about Rs 50,000 crore or $7 billion would be spent during Lok Sabha elections beginning April 11, if one were to go by projections made by New Delhi-based think tank, Centre for Media Studies. This time round, back home in the chaotic democracy of ours, about 40% increase in spending to elect 543 members to Lok Sabha is expected vis-à-vis 2014 polls that catapulted Narendra Modi as the prime minister.

In the analysis of the expenditure returns filed by different political parties with the Election Commission (EC), the Association for Democratic Reforms has estimated that about Rs 570 would be spent on each voter. Even if one were to stick with this figure, in an emerging economy like ours, this is huge given that over 600 million people live on sustenance of about Rs 90 as wages per day.

In reality, the per voter spending on 900 million odd voters could be exponentially higher. This could be the costliest elections globally given the freebies, liquor, food, travel, movement of security personnel and support infrastructure that was required.

There’s no denying the fact that tracking the funding of this humongous exercise is very tricky even for hardened students of corporate finance as well as political science. Given that about 100 million youngsters will exercise their franchise for the first time at one or the other 10 lakh booths, also sets the stage for inducing transparency into funding this elections of gigantic proportions.

Finance minister Arun Jaitley had announced electoral bonds in the budget last fiscal as the first firm step towards moving to open financing of elections. While enthusiastic corporate donors bought bonds to support their favourite political leaders and parties, there’s very little evidence to demonstrate accountability and transparency in financing the business of elections.

Provisions rendering anonymity to subscribers have only brought in undesired opaqueness to the electoral bonds. Allowing foreign entities, individuals, overseas corporate Indians and high net-worth individuals abroad to buy these bonds needs serious rethinking by the political class and all stakeholders.

If transparency in financing corporate deals is demanded by market regulators and RBI through disclosures, why can’t political parties take the lead to make similar verifiable declarations before the EC?

Given its pan-India presence and holding the reins at the Centre as well as 17 states, the BJP has become the natural beneficiary of not only the electoral bonds but the largesse of five top electoral trusts floated by groups like Tatas, Mittals or Adanis. As per available data, BJP got over Rs 1,084 crore or 94.5% of electoral bonds that were sold till January 1, this year.

Here again, most political parties’ known sources of income were only a hopeless fraction of what they actually deploy to win an election. After the cap on companies funding political parties was lifted through an amendment to Representation of People Act 1951, political parties need to come clean and declare the source of every penny that they spend before, during and after elections.

Many political parties have made exaggerated claims that a major chunk of their finances were mobilised via crowd sourcing from party cadres, supporters and membership fees to even build lavish party offices in different states. Well, partly it could be true though a large chunk of black money from market and real estate could have essentially gone into these ventures.

Spending cap imposed by the EC at Rs 70 lakh per Lok Sabha constituency for a candidate has not helped a wee bit to bring about openness in our electoral processes. Especially, parties in power have leveraged their access to government funds to entice vulnerable and gullible voters.

State financing of elections has often been cited as an effective alternative to curbing corrupt practices or corporate lobbies funding leaders, parties and influential groups.

At the December 2010 session of Congress plenary, then party president Sonia Gandhi had backed the move to introduce state financing of elections. This was seen as an antidote to charges of corruption against the UPA sucked into vortex of “sweet heart deals” with large corporate houses.

Way back in 1998, a panel headed by Indrajit Gupta floated an idea, later supported by Law Commission, on reforms in electoral laws. The Gupta panel had cited the constitutional, legal and public interest as key factors to finance national and state level political parties that garnered a prescribed percentage of votes under the law. This move fell flat as an emerging economy like ours did not have the wherewithal to fund even Parliament elections.

This policy dilemma was set to rest when erstwhile Vajpayee government and later UPA-II changed track. Income tax relief and “pass through” treatment of political donations as expenses by companies, firms and individuals, had only firmed up the option of mobilising funds outside the government system. This also set the stage for electoral bonds introduced last year.

First measure

As claimed by Finance Minister Arun Jaitley, electoral bonds may not necessarily be a ‘substantial improvement’ in transparently financing political parties and elections. While the electoral bonds could only be the first measure, consolidating this move quickly needs to be prioritised.

Anomalies in the scheme will have to be dealt with through mid-course corrective measures. Ways and means to capture entire funding of elections need to be explored through innovative means.

One big way could be to allow donations and financial support to political parties through only banking channels or electronic transfers. Third aspect could be to identify and name all the supporters that also contribute to their campaigns as is done in US, Germany or France.

A wider political consensus to imbibe global best practices needs to be evolved. For this to work, commitment and conviction could be two important parameters that test the mettle of our political class.

(The writer is a New Delhi-based senior journalist)