The ease of doing politics

The World Bank used to publish an annual Ease of Doing Business ranking. It has stopped this, citing “ethical matters” and “data irregularities”. Some nations fudged the data, and also bribed, threatened, and otherwise influenced researchers to game the rankings.

Between 2014 and 2019, India’s ranking jumped from 142 to 63. There are several possible reasons for this improvement. The business environment may have improved spectacularly. A steady reduction in gross domestic product  growth, tens of millions unemployed, and thousands of bankrupt micro, small and medium enterprises, however, suggest a counterfactual to this.  

Maybe the rankings rose via a statistical anomaly? The report used to rely on 10 narrow criteria, and it only looked at Delhi and Mumbai in the India context. Very localised improvements in, for example, getting a commercial power connection quickly in Delhi may have triggered a jump in rank. The third and, of course, the least likely possibility is, India featured among the nations generating “data irregularities”, and concocted “ethical matters” to influence researchers.

Whatever the ease of doing business, the ease of doing charity or social service has considerably worsened over the same period. Many non-governmental organisations (NGOs), working across a variety of different spaces, some of which are long-established with excellent reputations, have had registrations cancelled. Other NGOs have faced painful investigations about the source of funding and expenditure. With the already stringent controls being tightened some more on overseas funding, it is a nightmare getting permission to receive funds from abroad.

If you wish to start an NGO, and you don’t have political connections to smoothen the process, it is an onerous task. There are pages and pages of endlessly complex, niggling details for compliance, and a lot of discretionary authority is vested with the government if it wants to shut an NGO down. 

Given gigabytes of red tape, any NGO is bound to be guilty of some error or omission, if the government decides to target it.

While the ease of doing charity has gone south, the ease of doing politics has undeniably improved. It is pretty easy to set up a political party and register it with the Election Commission of India, which has a mere 21 pages worth of regulations for compliance. There are over 2,500 registered political parties. There are even organisations which help with the paperwork — it is way simpler to register a political party than to register an NGO.

Of course, becoming a national party (just eight at last count) or a recognised party (54 of them at the moment) is hard. This involves winning a percentage of the vote in elections. But just registering a party is easy — put together a “syndicate of office bearers”, dream up a name, and get 100 signatures, and it’s done.

It’s easy to raise money for a political party, on a no-questions-asked basis and political parties are tax-exempt. There used to be two key limits on funding. Funding from abroad was banned. The other limit pertained to corporate funding — only a profit-making company could make political donations, and it could only donate up to a limited percentage of its declared profits.

Both restrictions were removed by this government, and the innovative concept of electoral bonds, which are designed to prevent public knowledge of political donors, was introduced. So there are now multiple ways to donate money to a political party.

One is to split it into small tranches. Cash donations of up to Rs 2,000 are not subject to oversight. A second is to bring in cash from abroad — this can be done several ways. A third is to set up a company purely for the purpose of political donations since loss-making doesn’t matter anymore. Plus, there is of course the whole electoral bonds route, which merits an essay in itself. The only catch with electoral bonds is that the government will know the origin.
 

So in India circa 2022, the ease of doing business may be moot. The ease of doing charity is non-existent. But the ease of doing politics is as good as it could get and setting up a party is the smoothest route for money-laundering.