Rs 18,000 cr will be spent in election 2014 - and much of it in black

The Election Commission today (5 March) announced the schedule for holding elections to the 16th Lok Sabha starting from 7 April. Given the hotly contested nature of the elections this time, with the BJP under Narendra Modi making a determined bid to dislodge the UPA, one can safely assume that thousands of crores will be expended by candidates and parties this time in the race for power.

Here's one number: Rs 18,000 crore. And it could be an underestimate.

To figure out how this writer arrived at this number, let us go back to the interim budget presented by P Chidambaram on 17 February. In the budget the total amount shown against expenses for elections and the Election Commission is just Rs 594.63 crore. This cost probably excludes the huge deployment costs of security and other administrative staff all over the country over the 40-50 days of the actual conduct of the elections, all the way till results are announced on 16 May. Together with that, let's say the costs of just conducting the elections may be around Rs 1,000 crore.

Representational Image. Reuters

Representational Image. Reuters

The real big expenses, however, relate not to the conduct of the elections, but the money spent by parties and candidates. Last year, BJP MP Gopinath Munde created a flutter when he claimed that he had spent Rs 8 crore on an election campaign, only to retract when the Election Commission sent him a notice. But the chances are he made a Freudian slip - and the actual amounts spent for candidates in hotly contested constituencies could be higher in some of the larger constituencies.

Taking Rs 5-8 crore are the average spent by each candidate, and assuming an average of three key contestants per constituency, candidates alone will be spending Rs 8,145-13,000 crore in the aggregate.

The BJP and Congress are planning to spend Rs 400-500 crore on an ad blitz, and the parties organisations could end up spending another Rs 500-1,000  crore for other forms of campaign-related expenses - banners, hoardings, organisation of public meetings, transport of key campaigners by helicopter or chartered flights, etc. Assuming the smaller regional parties together spend as much as the Congress and BJP put together, we are talking of total party spends in the region of Rs 2,000-4,000 crore.

Add the candidate spends,  and general election 2014 will cost anywhere from Rs 10,145 crore to Rs 17,000 crore for the parties. Add the Election Commission's own expenses and the cost of deploying forces to ensure a free and fair poll, we should be looking at a total democracy cost of anywhere from Rs 11,000-18,000. The wide range is because we can never really know how much a candidate or party has spent in reality. Even the top end could be an underestimate - especially in this critical election where so much is at stake.

On 28 February, the UPA cabinet, in one of its last sittings before the general elections are announced, decided to raise the limit on election spending by candidates from Rs 40 lakh to Rs 70 lakh per parliamentary constituency (in big states like UP, Bihar and Maharashtra) and from Rs 22 lakh to Rs 54 lakh for constituencies in smaller states (like Goa or the north-east).

Will this increased spending limit encourage candidates to depend less on black money? Most unlikely. In fact the gap between this legal limit and what Munde talked about is so huge, that we can safely assume that the balance is financed by black money. Election 2014 will thus be the biggest democratic exercise in the world financed by black money.

Let us examine why black money has become so important in elections. It is inherent to our competitive politics, where most candidates win less than 40 percent of the votes. In fact, in three- and four-member parliamentary races, the winning candidate often gets just about 30-35 percent of the vote.  When so little is required for winning, it encourages more people to try their luck in the hope that a 2-5 percent swing will get them elected. They hope that this 2-5 percent can be bought by bribing voters before an election with cash or alcoholic drinks or other freebies.

Even otherwise, the cost of electioneering has gone up due to inflation: consider the cost of taking out advertisements in local newspapers, putting up hoardings, paying campaign workers and for transport, printing handbills and voter slips. There is no way Rs 70 lakh is enough for fighting a parliamentary election.

When the real costs are so high, politicians will use their time as MPs or ministers to raise money through corruption. This money is illegally earned by giving businessmen and others favours.

If democratic elections are themselves a key reason for corruption and the generation of black money, the only way out is to enhance the spending limits to realistic levels and allow state-funding of elections. While this will not end corruption, it will at least eliminate one of the root causes.

So how can elections be state funded?

The best way is to pay candidates after an election, once it is known what percentage of votes they got. So, if the winner got 35 percent of the vote, the No 2 candidate 28 percent and the No 3 person 15 percent, the money allotted to each should be proportionate to their vote percentage – after excluding those candidates who got less than 10 percent of the votes. This will discourage frivolous candidates.

For example, if the Election Commission allocates, say, Rs 10 crore for a constituency, after the election is over it should reimburse the winning candidates in the proportion of their votes – after excluding those with less than 10 percent. This way the top three candidates would get around Rs 2-4 crore – which is more than adequate for fighting an election without black money. Since parties can spend separately on campaigns, the pressure for individual corruption will be less.

Can India afford it? The answer is yes.

Right now, the Union government spends Rs 5 crore each year on each MP (both Rajya Sabha and Lok Sabha) for the Member of Parliament Local Area Development Scheme (MPLADS) . This is the amount elected MPs are allowed to spend in their constituencies every year. For 795 MPs (RS plus LS), that works out to nearly Rs 20,000 crore over five years.

But only 543 constituencies of the Lok Sabha really need electioneering. This means the Election Commission will have nearly Rs 35-36 crore available for election expenditure per Lok Sabha constituency every five years. If MPLADS is abolished, we can have less corruption – at least due to high cost of electioneering.

Our estimate of the upper limit of this year's election-related expenditure - Rs 18,000 crore - is pretty close to the Rs 20,000 crore spent on the MPLADS. It is doable. But is anyone interested?

(A part of this article was earlier published in Dainik Bhaskar)