Funding elections is part of biz Deccan Herald

Deccan Herald - Funding elections is part of biz

The forthcoming general elections is very important since it comes in the wake of progress and positive developments on one hand and recent problems in the stock market and real estate, lower corporate profits, layoffs and scams, terrorism and extremism, on the other hand.

The forthcoming general elections is very important since it comes in the wake of progress and positive developments and on the other hand, recent problems in stock markets and real estate, lower corporate profits, layoffs and scams, terrorism and extremism. New regional political parties have come up, existing coalition partners are reconsidering their alignments, and the only certainty is that we will get another coalition government. Pre-election posturing by various political parties has started, raking up issues of caste, religion, Indian culture, language, terrorism, reservations, and subsidies for farmers, the poor, for the corporate sector and so on. These are the issues that are in the public domain, and dominate media coverage.

But there are deeper currents that one needs to take stock of. A silent realignment of tectonic plates takes place six miles below the ocean surface, and manifests as a tsunami thousands of miles away. Such ocean floor events go unnoticed, but the consequences of not taking corrective action are usually disastrous. In the political arena, such movements take years and even decades to come to a head. When there is a big crisis, there is usually a longer history behind it of silent forces realigning themselves, before everything spills out into the public domain.

Game of money power

Is there such a realignment going on today? The first signs surface during various elections. The amount of money spent on elections is increasing every year, handsomely beating inflation. This is particularly true since the 1990s. The Chief Election Commissioner of India has gone on record saying “If a candidate is willing to spend ten times more than the prescribed ceiling, it is not out of philanthropy, but in the secure knowledge that he can earn ten times what he spends once he gets to the seat of power.” This spending is not in the form of legitimate campaign expenses alone, but direct money and gifts given to voters.

This is illegal and not allowed by existing legislation. However, it is very difficult for the Election Commission to curb it. There are reports that campaign workers slip Rs 1000 notes under the door of voters at night. Coupons are distributed to voters who can go and cash them or buy goods from designated shops and stores. In a recent by poll in Tamil Nadu, voters surrounded a vehicle seized by the police saying “the money in this vehicle belongs to us, how can you take it away?” Candidates want to buy votes, and voters want money. In the 2008 Karnataka Assembly elections, about Rs 45 crores were seized. But the estimate is that more than 10 times that amount went into voters’ pockets.
Is this really a problem? One argument says that voters take money and gifts from everyone, and then vote for whom they like. This is perhaps true. However, as the CEC points out, whoever wins focuses on recouping his investments. This directly leads to bad governance. The quality of roads, electricity and water supply, government schools, and health facilities suffers. Government projects are badly implemented as political oversight is weak or even intrusive in a negative way. There is a strong tendency to recoup election expenses from public funds.
One of the current Chief Ministers of a major State told a Citizen Election Watch team “if you want to improve governance, then do something about election expenses.” Data from recent elections shows that between 2004 and 2008 in Karnataka, the total declared assets of MLAs grew from Rs 228 crores to Rs 1271 crores, or by nearly 460 per cent. The question arises, where does this sudden increase in wealth come from? Not all of it can be explained by the then existing real estate boom.

Backing from business

Who are the people funding such elections? There is a shift, perhaps a tectonic shift taking place. Earlier it was local mafia with interests in mining, liquor, forest produce, land grabbing and so on. Today, the scale of this has gone up significantly, but more mainstream business houses are also getting involved, including multinational corporations (recall Enron spending crores on public education). The real estate lobby is another powerful new entrant to elections. The recent scams in Satyam Computers in Andhra Pradesh show that the Rs 7,000 crores that disappeared from one company was perhaps the tip of the iceberg. Contracts worth about Rs 38,000 crores were given to this company’s affiliates in a short period of four years.

The recent cash for votes scam during the trust vote for the nuclear deal showed possible links between politics and business — where was the cash coming from otherwise? At a recent conference in Mumbai on Electoral and Political Reforms, many speakers, including one of the Election Commissioners said that the influence of big money on politics was perhaps the single biggest danger to democracy. This is in spite of the fact that the current Parliament has 125 MPs facing criminal charges in a court of law. Money can buy muscle men.

There is also a strong move towards public private partnerships (PPP) in several domains. The most significant are large infrastructure projects — highways, airports, ports, bridges, flyovers, metro rail systems, privatization of water and electricity supply, and so on.

The total investments in all these projects put together are in hundreds of thousands of crores. This is perhaps the most silent but most important tectonic shift taking place. It does not hit the headlines, the citizens do not know the terms and conditions under which these projects take off, and all sorts of rumours are constantly flying around. While there will be ideological debates about whether such large projects under PPP are desirable or not, the fact remains that we do not have adequate regulations, laws and safeguards in place.
How does this affect elections, governance and ordinary citizens? The flow of big money is very likely to go up significantly in the coming general elections. That takes both forms - people with big money directly contesting elections, and also by indirectly funding parties and candidates. In return, they will look for favours for their business interests after the elections.

New dynamics

More and more celebrities from films and sports are joining politics. There is nothing wrong in business having good relations with the Government, but there are clear cut boundaries and we need to ensure that they are not crossed. A Member of the Planning Commission says “Earlier big money was chasing those in power. Now power is chasing big money.”

The issue goes beyond elections. There have been a slew of favours given out to big business interests in recent years — tax rebates, special economic zones, big contracts, changes in laws governing urban land ceiling, lesser regulation, large tracts of rural land for setting up factories, and so on.
Some of this is justified, but not everything that is given away. Other countries including the US have faced these problems and have come up with a string of new legislations to regulate campaign funding, conflict of interest between a politician’s business interests and legislative or other work, transparency requirements in Government contracts, and of course harsher penalties for wrong doing . Severely compromised politics and politicians leads to corruption in the bureaucracy, police and judiciary, deteriorating law and order, and inability to handle extremism and terrorist attacks. In short, it leads to bad governance.

Disclose all donations

Where and when do we start changing things? The coming elections are a good a time. Corporate houses need to make their donations to political parties public. Voters need to think about the link between big election spending and bad governance. The Election Commission, citizen groups and the media all need to pitch in and carry out voter awareness campaigns.

Why focus on elections? It is perhaps the root of the problem of bad governance as the Chief Minister said to the citizen election watch group. Big money buys candidates and political parties, who in turn buy votes. This keeps many who want to do public service away from politics. They cannot raise the funds required for winning elections in an honest way. Without good politicians, we get bad governance. We also need a whole set of new laws, but that will take time.

The advance warnings of silent tectonic shifts are there. If we act now we can avoid a lot of trouble in the years to come and avoid repeating the mistakes that other so called developed countries made.

The writer is Professor and Dean, IIM Bangalore, and Founder Member, Association for Democratic Reforms (ADR). Email: trilochans@IIMB.ERNET.IN