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Funding Political Parties – fighting graft

October 28, 2012

There have been a spate of allegations of financial wrongdoing on the part of various political leaders of standing as also relatives of some. This oft repeated charges of graft, most of which have not been proved as yet, are substantial enough for the common Indian to feel concerned. In some cases it is a matter of pure greed and in others it is a matter of lack of better options to fund political careers. Public life is one where expenses are large but sources of income are non-existent. Political parties are no business entities. Yet they have their expenses. Running a political party is no joke. The question that most leaders face is – where does the money come from? One oft used source is party membership fee. But in a poor country like India such fees are so limited that it mounts to nothing. Besides most political parties are not organized enough to go for a membership drive. Politics in India has drifted over the years but now time has come that political parties become more organized and systematic in their approach. Invariably, it is the money that determines whether a political party is organized enough and its members have a sense of belonging.

In western democracies most political parties are funded by big corporations apart from individual donors who donate as little as $5 to the party coffers. President Obama has been particularly successful in garnering resources for his campaign from common Americans. It was these small amounts from the citizens of his country that helped him raise enough to fight election. And American elections are an expensive affair. Another way is the funding dinners where price per plate runs in thousands of dollars. But it is corporate funding that is the bulk of money raised for political campaigns.

For political parties to run smoothly they need money in a systematic way. Donations are the only way, whether from individuals or from corporates. It is not as if corporate donations are not made here in India. Public Limited Companies make contributions on a regular basis. The need of the hour is that such donations be made by cheque and out in the open. I understand that Section 80GGC of 1961 Income Tax Act does provide for tax exemptions for the company making donations to political parties. Many big corporate houses like the Tatas, Birlas and Bharti have their own Electoral Funds. I understand that they make political contributions based on the strength of the political party in the Lok Sabha. However, they do not reveal as to which parties they gave money to and how much. This needs to change. That responsible corporate houses have already started such Electoral Funds is in itself a firm step in the right direction. That they pay by cheque is another good omen. What some of these Corporates are doing needs to be emulated. Other Corporate Houses must also be encouraged to establish such Electoral Funds so that they can fund political parties out in the open and do not have to give money on the sly or in cash as is the most prevalent norm as of today. I have heard top business honchos complain that they are pestered no ends at the time of elections which is a never ending exercise in a country like India. If all contributions are accepted by cheque only a lot of the muck in the system will go away automatically. Finance Bill No.2, 2009 is also an attempt at establishing a system where such Electoral Funds must disburse 95% of their funds annually. This is to avoid accumulation of funds which can then be used for business purposes, which they were not meant for in the first place.

I have heard that the bigger political parties like the Congress and the BJP have started filing Income Tax Returns on a regular basis. This is a welcome step.  Other smaller parties should follow suit. If political parties accept funds only through the bank then a lot of things will fall in line. Political parties need to show some resolve to keep things in order, a system in place. Politicians will realize that by and large running a political party is more or less like running a business organization. And if they do that as they should they will further understand that running a political party systematically will give them rich dividends electorally.

Each political party aspires for a committed cadre. I must mention here that ironically the Communist Parties are the more systematic as far as organization goes. The mass based parties like the Congress and the BJP are beginning to realize the importance of a party cadre but they are still not quite as systematic  as they can be. I must mention Rahul Gandhis efforts to build a systematic organization across India. They may not have borne fruit till now but any organized political outfit will always have a better chance of doing well in the polls as compared to those that are personality based.

If the political parties have members across their area of influence then they should not shy away from giving them membership cards. That is the grass root politics. Then there will be office bearers in each district and taluka who have members of the party that they can garner for any issue that comes into public domain. These office bearers must be paid regularly and through cheque. This is where the organization of any party starts. They then report to their district heads who maybe Sarpanchs or MLA and MP. While the MLA’s are given a salary by the government that may not be enough for party work. So the public representatives must also be distributed funds from time to time for various political activities. All this, if the head of the party finds resources from legitimate sources like corporate funding will then find that he does not need to use means unethical and foul to fund his party expenses. As I said earlier, a party is like any other corporate organization with a wide base and a pyramid that tapers off at the top. Responsible politics must ensure that legitimate money is used for political activity.

There are critics of corporate funding who say that once the business houses have funded a party they will expect undue advantage in policy formulation and distribution of contracts. That may not necessarily be true. Because if the list of donors is made public and is on the website of every political party then it will be a fact out in the open. If a political party who happens to be in power gives undue advantage to a corporate house just because they had funded the party then that will come out in the open in no time.

Some idealists have conjured up a scenario where they expect the government to fund candidates in any election. I believe that this is a utopian at best and terribly idealistic and unrealistic at worse. If a few crores is given to every Lok Sabha candidate from all national parties recognized by the Election Commission then this could be a source of income for many candidates. Once they are sure they are loosing they will stop all political activity and make money from the public funds that they would have been allotted. Politics will become business. Political parties will invariably have to sell tickets at rates higher than the money that the government will give them as candidates. This will reduce the democratic process of elections into a circus. Besides why should the taxpayers money be used to fund candidates from various political outfits? This will be a travesty of the democratic process.

Political parties need to behave responsibly. Corporate India would love to have an above board system of funding and political activity. Today people are shy in telling their political leanings. Once political parties have a salaried cadre then they can indulge in political activity without any fear and with responsibility, because if they indulge in hooliganism they will be immediately identified with their political party. In today’s instant and social media it will mean bad press which no one wants. This will give a respectability to the party as well as their functionaries thereof. Politics is a means to societal change. Those with such onerous responsibilities cannot but remain overboard. Cleansing of politics will come about if the funds that they receive and use are out in the open. It should be mandatory for every political party to file Income Tax Returns as well as announce on their web site the name of the donors both big and small along with the amount that they received. Let it be mandatory that no political party shall accept funds in cash. Once the systems are in place the fountainhead of graft shall evaporate and politicians will not feel the need to indulge in crony-capitalism or indulge in activities that may ensure them uninterrupted income but with dubious means. Lets understand that politicians also need money to survive and they must receive salaries from their parties that are handsome enough so that they can lead a life of dignity. Political parties must be responsible enough to ensure that their party cadre is well looked after. Corporate India is ready to help out. They are fed up of demands for money any which way by political parties. This needs further debate and a more focused, well rounded discussion to formulate a system that is neither a burden on corporate houses nor is it vague such that political parties have to go around with a begging bowl from pillar to post. The system should be so well thought out and so clean and tidy that things happen as a matter of course. India is a responsible, respected democracy. Its time we thought out the details as to how the political system should work in a manner befitting a responsible nation such as India.

One Comment leave one →
  1. Deepak Bhanot permalink
    October 29, 2012 1:46 pm

    Dear Mr. Sharma, A very well thought of and intriguing proposal made by you.Yes it can be possible if properly organized and implemented. Well I see just two loopholes in this scheme of things assuming that every donation is through the bank and is on the website of the parties:1)Why at all the corporate will fund if they do not receive favours? 2) Will the leaders at the top be satisfied with the salary given by the state/ central govt along with the compensation given by the respective parties and do not look for more to fund their generations to come? But nevertheless in a democratic system this will be a good beginning, as you suggested, with an active media,watchdogs and independent auditors playing an active role and every thing in black and white.secondly people interested genuinely to do something for the society at grass root level will also get a moral boost if they are compensated enough. Good Idea!

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