Sanjaya Baru | Political & electoral funding: Transparency in corruption

There is no statement more apt to describe the state of affairs when it comes to election financing in India than the saying: “iss hamaam mein sab nangey hain”. Prime Minister Narendra Modi recently described the coming together of several political parties opposed to the Bharatiya Janata Party as a gathering of the “corrupt on one stage”. There is no reason to believe that BJP governments, including that of Mr Modi, have been free of the taint of corruption. Indeed, the raising of funds from companies, individuals and households and by siphoning off a percentage of government funds allocated for public spending, using political and administrative power at the disposal of a ruling party, is common to almost all governments and political parties.

The truly anti-corruption movement and moment in contemporary political history was the India Against Corruption campaign of 2012-14. But once that popular movement morphed into a political party, the unpardoning logic of campaign finance took hold. It is in the nature of a democratic system, with periodic elections, that aspiring candidates seeking public office seek election campaign finance. This happens in all democracies around the world.

The question is not whether one or another political party does or does not seek and spend money during a campaign. The question is whether this is done transparently and whether funds are sought using the power of public office or not.

The fact is that there is little transparency in the way in which political funding is mobilised and, worse, more often than not such funds are procured through the dispensation of either favours or threats.

In 2003, the Atal Behari Vajpayee government amended election and tax laws to bring in an element of transparency and fair play into political party funding. Introducing the Election and Other Related Laws (Amendment Bill) 2003, the then minister for law and justice, Arun Jaitley, gracefully acknowledged the contribution of both Indrajit Gupta, a Communist Party member of Parliament, and Dr Manmohan Singh, then leader of the Congress Party in the Rajya Sabha, in making the case for transparent funding of political parties. Jaitley was perhaps the last consensual, gentleman politician of the BJP and so was able to secure wide political support for this initiative.

Jaitley told the Lok Sabha: “The need for this amendment bill which seeks to amend the Representation of the People Act, the Income-Tax Act as also some provisions of the Companies Act, has arisen on account of the fact that there has been a larger consensus both in the democratic polity of India as also amongst the various political parties that 56 years after Independence, we have still not been able to establish a transparent mechanism by which politics, political activities and political parties in the country are to be funded. The committee headed by late Shri Indrajit Gupta had submitted a report in 1999 where it had given some very valuable suggestions in relation to the State funding of elections… I do recollect that about a year and a half ago the Congress Party also had set up an internal committee headed by Dr Manmohan Singh. The committee had made several suggestions in regard to the streamlining of this entire process. Therefore, this (Amendment) Bill is really intended to develop this transparent system.” Just as he gave Opposition political parties their due credit for the legislation of the Goods and Services Tax, on this occasion too Jaitley cared to credit both Gupta and Dr Singh for this initiative.

As with so many high-minded laws, this one too was good in theory and, as so often, badly implemented in practice. The real flaw in the system, as it has proved to be two decades later, is that a political party in power is still able to mobilise all the governmental power at its command to ensure that it gets an overwhelming share of funds “transparently” donated. The pattern is clear. Financial contributions to political parties are overwhelmingly in favour of the party in power -- in the Union government and in the states.

Since most of such contributions come from the wealthy and the big firms, especially in rent-generating sectors like real estate, most of it goes to parties that are seen as favouring the rich and powerful. The Communist parties, for example, rarely get any funding and the political parties of the under-privileged and marginalised sections of society managed to get some funding if and when they find themselves in public office. Once they are out, the funds dry up.

Not surprisingly, therefore, Dr Manmohan Singh reminded the country on the occasion of Indrajit Gupta’s birth centenary in 2019 that as much as 90 per cent of electoral funding had found its way into the coffers of the BJP. It was also reported that of the Rs 9,208 crores mobilised by all political parties in 2018-22 through electoral bonds, a whopping 57 per cent had gone to the BJP. Political parties in power in state governments were able to mop up the rest of the amount, with the Trinamul Congress in West Bengal topping the list.

The corporate sector has accounted for a bulk of the electoral bonds and if anyone imagines that all these funds were voluntarily contributed by it, then they need a reality check. Many companies get a phone call from party functionaries, even Union ministers, exerting political pressure to ensure that they pay up. The person making the call has been adequately briefed by party functionaries on the concerned company’s balance sheet and has an idea of what can be reasonably demanded. An amount is often specified and the company has to cough up.

No dictionary or law defines this as corruption since there is no transparent rent-seeking. The donations are voluntary, through a legal window. The phone calls, the fear of a tax “enquiry”, an invitation to meet some government agency or another or just a rude phone call from a loudmouth minister can do the trick. Nothing illegal about it. It is, however, corruption by other means. Everyone wears a raincoat in the shower or a fig leaf in the hamaam.