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Ajit Ranade: State funding of polls: Not a good idea

Unless electoral reforms are fully implemented, a piecemeal step can be both counterproductive and dangerous

Ajit Ranade 

In July 1993 the Government of India set up a committee under N N Vohra, the then home secretary, to take stock of the influence of criminals on government functionaries and politicians. Though the Vohra committee report submitted in October that year was never made public, some extracts can be found on the Internet. It is quite remarkable that a serving home secretary had this to say in his report: “The nexus between the criminal gangs, police, bureaucracy and politicians has come out clearly in various parts of the country... The cost of contesting elections has thrown the politician into the lap of these elements and led to a grave compromise by officials of the preventive/detective systems.” This report is 18 years old. The influence of money and muscle power on elections has only worsened since then. 

Winnability now trumps every other consideration in elections. In the present Lok Sabha, 162 members have criminal cases pending against them, according to their sworn affidavits. The average asset of each member of Parliament (MP), as declared by them, is Rs 5.3 crore. Moreover, the 157 MPs who were lucky to have been re-elected have almost tripled their declared assets in the past five years. On average, each candidate spends at least a couple of crores on Lok Sabha elections. The total estimated spending with over 8,000 candidates is more than Rs 20,000 crore. However, officially, according to the expenses statements filed with the in 2009, hardly anyone breached the expense limit of Rs 25 lakh. The expenses disclosed by most of the candidates did not even reach the halfway mark. Clearly, election expenses were largely unaccounted for and, therefore, illegal. If Mr Vohra were asked to write an updated version of his 1993 report, his conclusions would be even gloomier. It appears that as soon as elections are over, politicians have to go into fund-raising mode, to recoup the huge expenditure. In doing so, there is every possibility of politicians, elected or otherwise, being beholden to special interests and deep pockets, if not outright criminal elements. The cycle of electioneering, election spending and fund-raising is indeed vicious.

Subsequent to the Vohra committee’s observation that the compulsion of election expenses made politicians vulnerable, the government set up the committee in June 1998 to specifically examine the feasibility and desirability of state funding of elections. Mr Gupta, a former home minister, had members like Manmohan Singh and in his committee. The committee came out strongly in favour of total state funding of elections and political parties. State funding would put a cap on spending and also remove the asymmetry among contestants in terms of money power. The committee opined that state funding would eliminate the disadvantage suffered by political parties that represented socially and economically weaker sections and, thus, did not have access to big donors. The idea of state funding of expensive elections has found support from the Law Commission’s report of 1999 and from the National Committee to Review the Working of the Constitution (2000). It is because of such strong support that in 2005 the Cabinet approved a Bill to be introduced in Parliament for state funding of elections. That Bill never came up for a vote and died with the 14th Lok Sabha (such a fate has befallen many mighty Bills, so this demise need not detain us here).

The idea of state funding has reared its head again, against the background of the countrywide agitation demanding an anti-corruption ombudsman Bill. Comprehensive electoral reforms are key to reducing corruption, and state funding is counted as part of the reforms package. At the December 2010 plenary session of the Congress party, Congress President also endorsed this idea. In March this year, the law minister publicly called for passing a law for state funding of elections and political parties. This rising tide of support for state funding is riding on the Gupta committee’s endorsement of this idea. 

Implementing just one element of electoral reforms without touching other aspects can be more damaging to the country’s polity. A less harmful, though pertinent, example is of the recommendations of the Fifth Pay Commission (FPC). The government conveniently implemented the generous pay hikes but ignored the recommendations on downsizing, or performance-linked pay. The late Professor Suresh Tendulkar, who was a member of the FPC, rued it no end, since it cost the country almost 1.5 per cent of the gross domestic product.

It is pertinent to quote the relevant paragraph from the concluding chapter of the Gupta committee report: “Before concluding, the committee cannot help expressing its considered view that its recommendations being limited in nature and confined to only one of the aspects of the electoral reforms may bring about only some cosmetic changes in the electoral sphere. What is needed, however, is an immediate overhauling of the electoral process whereby elections are freed from the evil influence of all vitiating factors... Meaningful electoral reforms in other spheres of electoral activity are also urgently needed”.

Even the Law Commission report of 1999 cautioned that implementing state funding should follow the entire package of electoral reforms, which included barring criminals from contesting, transparency and regular audit of accounts, and internal democracy in the functioning of political parties. Or else  “. . . without such pre-conditions, state funding, even if partial, is resorted to, it would not serve the purpose underlying the idea of state funding... [it] would merely become another source of funds for the political parties and candidates at the cost of public exchequer”. In fact the chief election commissioner has called this idea dangerous, saying that parties would use illegal funds and state-provided funds as additional bonus.  There are more than 1,200 registered political parties today, and the list grows every week. They already enjoy state support through complete income tax exemption. Their accounts are not made public, nor are they subject to any statutory scrutiny or audit. In fact many parties also stonewall attempts to access their accounts through the Right to Information Act. The does not have the power to de-register or de-recognise a party, despite non-compliance with existing rules. 

Therefore, implementing state funding of parties, in the name of helping weaker sections and ignoring other electoral reforms, would be a rude slap in the face of the electorate and taxpayers. 

The author is chief economist, Aditya Birla Group.
Views expressed are personal

First Published: Tue, August 23 2011. 00:01 IST