State funding is a possible solution but it alone will not do away with the black money-electoral politics nexus

Yogendra Yadav Yogendra Yadav

I am in favour of state funding of elections. When we think of politics and money we tend to focus on how to control black money in politics which in turn finds expression in fixing expenditure limits on candidates and political parties. I think we need to shift our focus to how to infuse white money in politics.

And instead of being obsessed with a ceiling on expenditure incurred by candidates and political parties, we should spend our energy on seeking a floor-level fund for everyone who is a serious contender in the electoral arena, if we want to ensure a level playing field.

Black money dominates politics as there is an acute lack of white money in the field.

We all love to lament dirty money in politics, but few of us bother to put a small bit of our legally earned money in politics. Since we have failed to develop healthy traditions of political funding, we need to think of some shortcuts.

State funding of elections is part of a possible solution, though state funding by itself will not do away with the nexus of black money and electoral politics.

Infusing white money

A political party/ candidate which/ who enjoys political support should not be thrown out of the political arena simply because of lack of funds. Any scheme of state funding of elections should be designed in such a way that it infuses a substantial amount of white money into politics in ways that are transparent and flexible. I have a simple proposal: at the end of every election, every candidate should be reimbursed at the rate of ₹100 for each vote secured by that candidate in the elections.

The money may be divided equally between the candidate and her party, to be deposited in a special bank account for this purpose. There could be a minimum qualifying cut-off of, say, 1% of valid votes polled, so as to deter non-serious candidates. There could also be a ceiling on reimbursement, say, twice the maximum permissible expenditure for a candidate in a constituency, so that a candidate and her party do not get more than what they need. The candidates should be allowed to adjust any permissible item of their election expenses against this amount. A party should be free to use their share on any expense already incurred on elections or any expense on political activity till the next election.

Would it cost a bomb? Over a five-year period, across one round of parliamentary and Assembly elections, it would cost around ₹5,000 crore. That is about 0.05% of the Central government’s Budget for five years. What about black money? Yes, it won’t disappear. But the dependence of political leaders and parties on black money will reduce.

Why pay more money to already cash-rich political parties for whom this may mean nothing? Because if the party workers know that the party has access to some legitimate funds, they would be able to make demands on their party. It would increase internal democracy and reduce the clout of moneybags within these big parties.

Is it worth it? Well, let us consider the fact that this amount is about half of what businessman Vijay Mallya walked away with. To my mind, something that improves the quality of our democracy is the best value for money and will go a long way in ensuring a clean democracy.

yogendra yadav is National President of Swaraj India and a psephologist/academic formerly with Lokniti, Centre for the Study of Developing Societies, New Delhi

RIGHT

It is based on the presumption that there would be no private funding. This is antithetical to democracy

Manish Tewari Manish Tewari

State funding of elections is that apparition that cannot fructify but refuses to fade away. Indian political parties, unlike western democracies, are not mere platforms to put some people into elective public office but are like standing armies that need continuous nourishment. They provide a calling card to millions who otherwise may not have a worthwhile identity or independent standing in the social and economic milieu — the syndrome of whole-timers, pracharaks and party apparatchiks, respectively.

Thus there are two aspects to the financing of the democratic process: the financing of elections from the panchayat level to Parliament, and the funding of political parties that is not election-specific but is an exercise in perpetuity for reasons enunciated above.

Disclosing sources

Candidates for various levels of elections are funded by myriad sources: friends, individuals who believe in the cause or ideology a candidate/ political party espouses, non-governmental organisations, corporates, NRIs, foreign governments and even criminal syndicates seeking patronage and protection. Any substantive initiative aimed at bringing transparency, accountability and cleanliness to the vexed question of political financing needs to address these aspects concurrently.

Under the existing legal dispensation, election candidates are obligated only to reveal their spending and keep it theoretically within limits prescribed by the Election Commission, a ceiling routinely violated with impunity by every candidate in every election. They are under no obligation to disclose how much money they have collected and where it has come from. This needs to change. All candidates must reveal the sources of their electoral funding statutorily. In addition to the expense statement, a daily collection statement detailing the identity of the donors with their PAN card, Aadhaar card number, and full financial details must be filed with the expenditure observer overseeing every election.

Insofar as political parties are concerned, the Supreme Court must take suo motu cognisance of the recent Association of Democratic Reforms report that documented that 69% of the income of political parties between 2004-05 and 2014-15 came from unknown sources. This is happening because of a deliberately inserted exemption: Section 13 (A) subsection (b) of the Income Tax Act, 1961 that exempts political parties from even keeping a record of the source of donations below ₹20,000. Read in conjunction with Section 29 (C) of the Representation of the People Act 1951, it provides the legal architecture and immunity for the opacity manifest in political and electoral financing processes. It is a bit of chicanery if not insidiousness that it was a previous National Democratic Alliance government that in 2003 had raised the limit of anonymous donations from ₹10,000 to ₹20,000, and now the Finance Minister says in his Budget speech that it would be brought down to ₹2,000. This is nothing but a mere eyewash since the law mandates that no records of donations below this threshold need to be maintained. Therefore, any and every political party will now claim that a substantive bulk of their donations has come from donors who have contributed ₹2,000 or less.

This exemption needs to be quashed by the Supreme Court because Parliament will never legislate to remove this insidious loophole. Collective vested interests would ensure its continuity. The identity of every donor to every political party irrespective of the amount donated must be in the public domain so that the Election Commission, Income Tax Department and other electoral oversight initiatives can verify their bona fides. These and a myriad other reforms are the way forward.

Conceptually, state funding of elections is based on the presumption that there would be then no private funding. The Election Commission simply does not have the wherewithal to ensure that. Moreover, elections are a democratic participatory process. If as an elector you are passionate about a candidate/ political party, isn’t it logical to put your money where your heart or mouth is? State funding of elections is therefore antithetical to democracy itself.

Manish Tewari is a lawyer, former Union Minister, and national spokesperson of the Indian National Congress. He is a Distinguished Senior Fellow with the Atlantic Council

CENTRE

It is easier to monitor the funding of political parties than seek state funding of elections

S.Y. Quraishi S.Y. Quraishi

To check corruption in elections, it is necessary to consider public funding of political parties — though certainly not of elections. It is important to understand the distinction between state funding of elections and state funding of political parties, and why I am a votary of the latter. It is impossible to keep tabs on money spent in elections. That’s why I have consistently opposed state funding of elections. The issue here is one of black money and not white money. We cannot monitor how black money is put to use in bribing voters, in paid news, and other forms of transgressions, though we have been able to have some measure of success.

Funding parties post-election

To give you an example, for Vidhan Sabha elections, there is a ceiling of ₹28 lakh but we all know how that is breached just as we are aware of how money is spent in contesting these elections. We also know that politics cannot be run without money. So, I suggest that it is easier to monitor the funding of political parties which is a far more realistic goal than seeking state funding of elections. Political parties can be funded post-election based on their actual performance. We could arrive at some calculations based on the performance. We could, for instance, agree that for every vote obtained, ₹100 be given. Since the number of votes polled cannot be fudged, reimbursement based on polled votes would be accurate. As we know, the number of votes polled for each candidate, the actual votes cast, cannot be contested at all. So, if a candidate gets one vote, I will say, you take ₹100 and you will have no cause for complaints as the amount is based on your performance. No serious candidate, regardless of the number of votes cast in his favour, will bear a grudge.

In the last general election, 55 crore votes were cast. So, at the rate of ₹100 per vote it comes to around ₹5,500 crore. Is this adequate? I’d say yes. This roughly corresponds to the amount raised by all political parties together in five years. This money can be distributed among the parties based on their poll performance and must be paid by cheque. No extortion. No bribes. No quid pro quo. Also, all private donations will be totally banned if we follow this system. And the party accounts will be subject to audit by the Comptroller and Auditor General.

As for the question, why should the public pay for political parties, one easy answer is if you want honesty and transparency in governance, this is a small price to pay. Hypothetically, a thousand crores of public money is peanuts compared to the end result of ensuring transparency in elections.

If that is not acceptable, we should create a national election fund to which corporates and others can be asked to donate. Business houses can make donations to the parties they are beholden to and the funds will be disbursed according to your performance. Don’t tax the public then and let only corporate houses make their payments to the national election fund.

A study, ‘Political Finance Regulations Around the World’, by the International Institute for Democracy and Electoral Assistance, Stockholm (2012), in 180 countries shows 71 nations have the facility of giving state funds based on votes obtained. This includes 86% countries in Europe, 71% Africa, 63% of the Americas and 58% of Asia. If it works well in so many countries, there is no reason why it cannot be implemented in India.

S.Y. Quraishi is a Former Election Commissioner, an IAS officer from the Haryana cadre, and the author of ‘An Undocumented Wonder: The Making of the Great Indian Election’.

All views as told to Anuradha Raman