Political parties in Kerala are facing a cash flow problem because of local and global factors in a poll year. And the Election Commission’s decision to hold the elections in the southern state in mid-May – and not April as anticipated by almost all political parties – has just made matters worse.

On Saturday, the poll body announced that Kerala’s 140 Assembly constituencies would vote on May 16, the last phase of polling. But with almost all parties having started their campaigns as early as January, parties are looking at their dwindling resources with alarm. Party leaders are worried that they don’t have the money to fuel their campaigns for the next 70-odd days till polling.

Campaigning requires money. Often, it is more than what the Election Commission deems is sufficient. For instance, the poll body has capped campaign expenses per candidate at Rs 28 lakh. However, Kerala Election Watch officials said each candidate can spend in excess of Rs 1 crore for a month-long campaign.

It doesn’t help that traditional sources of funds – from the liquor industry, the farm sector, and remittances from Non-Resident Indians in the Gulf – have dried up because of a prohibition-induced slump in the liquor industry, a downward trend in the prices of local cash crops, especially rubber, and the adverse impact of declining crude prices on NRI-owned businesses in West Asia.

Show me the money

Kerala’s bar owners were once the main contributors to election funds of most parties. But the ruling Congress-led United Democratic Front or UDF government’s introduction of phased-prohibition in the state – under which only five-star category bars are permitted to serve liquor – has caused massive losses among bar hotel owners. Though the government eventually permitted these outlets to serve only beer and wine at their outlets (as opposed to hard liquor), it hasn’t helped. This means that bar hotel owners are in no position to fund any political parties. In fact, the owners have decided to present any politician asking for donations with details of their liabilities.

Senior leaders of the Opposition Left Democratic Front or LDF, led by the Communist Party of India (Marxist), had hinted at reviewing the liquor policy if the LDF was elected. But these leaders fell silent after prohibitionists, led by the Church, urged people to defeat those attempting to sabotage prohibition. The Left leaders fear that making a firm commitment on reopening bars before the polls would affect the Left’s prospects adversely.

Remittances from the Gulf was another major source of funds. But the steady decline in crude oil prices over the past year has affected the businesses of Indians in the Gulf, who are unable to donate either. A recent analysis by the Associated Chambers of Commerce and Industry of India has said that the crash in crude oil prices would impact remittances from the Gulf especially to Kerala and Punjab.

The scope of raising funds from the domestic sector is limited too as big corporate firms are not based in Kerala, and the farm sector, which has bailed out parties in the past, is in the doldrums with the prices of cash crops, especially natural rubber, diving in the last year.

Tightening belts

Kerala Pradesh Congress Committee vice-president and legislator VD Satheeshan said running a campaign for more than two months was an expense most parties could not afford.

His party has been careful in raising funds in the wake of bribery allegations faced by about half-a-dozen of its ministers, including Chief Minister Oommen Chandy and Excise Minister K Babu in connection with the bar bribery and solar scams.

During the Lok Sabha election in 2014, the Kerala Pradesh Congress Committee collected Rs 1.5 lakh from each of its Assembly constituency committees. But it has reduced the amount to Rs 25,000 following the scandals. The All India Congress Committee, which helped its state units liberally in the past, is scraping the bottom of the barrel after the Congress lost power at the Centre, and is therefore unable to help with cash too.

The Left parties are in the same boat. In the last five years, the CPI(M) has been out of power in both its bastions – Kerala and West Bengal – leading to a drying up of party coffers. The Left has traditionally raised a major chunk of its funds through bucket collections, but the agrarian crisis and industrial recession have ensured their buckets return next-to-empty this time.

During the 2014 Lok Sabha elections, a funds crunch forced the Left to consider affluent candidates. The CPI(M) ended up giving the ticket for the Ernakulam Lok Sabha seat to Christy Fernandez, a former Gujarat cadre IAS officer, while the CPI gave the Trivandrum ticket to Bennet Abraham, a member of a powerful self-financing education group. But this payment-for-tickets caused a controversy.

While the CPI admitted that money was involved in the selection of candidate for the Trivandrum seat, and even initiated disciplinary action against two leaders, the CPI(M) still denies the allegation that a cash rich cashew exporter paid for the candidature of Christy, who had served as chairman of the Cashew Export Promotion Council.

The Bharatiya Janata Party is hoping to make a debut in the Kerala Assembly this year. Though it is unlikely to get much help from within the state as it is not expected to win power, its national unit may help with funds as party president Amit Shah is keen to end the party’s electoral drought in the state.

Rising expenses

Like everything else, campaign expenses have been increasing over the past few years too. Major expenses include that on promotional materials like banners and pamphlets, fuel, vehicle rentals, loudspeakers, boarding and lodging, preparation and distribution of voter slips and fetching electors to polling stations.

But with polling contests becoming tougher over the years, in addition to traditional expenses like the ones stated above, parties are forced to spend huge sums of money to connect with voters. The current trend is to hire star speakers and performers, and take campaigns to the electronic media and cyberspace.

Kerala Election Watch coordinator T Raveendran said that he did not expect the funds crunch to make the poll campaign any less expensive. He added that Election Watch was keeping track of expenditure, adding that the National Election Watch would attempt to devise a mechanism to scan poll expenses of parties realistically at a meeting in Hyderabad next week.