Demonetisation: 'State funding’ only a distraction in the black money crusade

Just about six days after the announcement of the demonetisation of Rs 1000 and Rs 500 notes, the Prime Minister once again raised the issues of state funding of elections and simultaneous elections to the Lok Sabha and State Assemblies. Are these issues real, particularly in the current context?

Let’s take state funding first. To relate demonetisation to state funding of elections, after it has been related to the elimination of black money, corruption, terrorism, counterfeit currency, is really disingenuous. The first thing to clarify is that the expression ‘state’ funding is misleading. What this really means is ‘public’ funding because what is proposed to be given to political parties and candidates is the money that the public has provided to the state by way of taxes.

State funding of elections has been part of the national discourse as far back as 1990, with a committee headed by a prominent Member of Parliament, Dinesh Goswami. However, the most prominent committee that is quoted often is the one headed by another prominent MP, Indrajit Gupta. This report was submitted in 1998.

Demonetisation: State funding’ only a distraction in the black money crusade

Representational image. AP

While mentions of the Indrajit Gupta Committee are always accompanied by its recommendation of partial state funding in kind, what is always, and not ‘almost’ always, overlooked is the following which is contained in the opening paragraph of the “conclusion” of the same report. It says, “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 evil influence of all vitiating factors, particularly, criminalisation of politics. It goes without saying that money power and muscle power go together to vitiate the electoral process and it is their combined effect which is sullying the purity of electoral contests and effecting free and fair elections. Meaningful electoral reforms in other spheres of electoral activity are also urgently needed” (italics added).

Despite the above observations of the Indrajit Gupta Committee focussing specifically on criminalisation of politics, all political parties continue to give tickets to people with criminal cases pending against them resulting in a situation that the number of MPs with criminal cases pending against them has increased from 125 in 2004, to 162 in 2009, and to 186 in 2014.

The other issue with so-called state funding of elections is the quantum of funding required. If public money is to be provided to political parties and candidates for contesting elections, it is obviously necessary to know what amount of money to budget for this purpose. Getting even a reliable estimate of this amount seems to be completely impossible. The reasons for this impossibility are given below.

It is now widely believed and accepted, even by politicians who have contested elections, that almost all candidates contesting elections to Parliament and State Assemblies lie about the expenditure they incur on their elections. And there is hard data on this aspect. All candidates contesting elections are required to submit a sworn affidavit detailing the expenditure they have incurred on their election. An analysis of the election expenditure affidavits of 6753 candidates in the 2009 Lok Sabha election revealed that only 4 candidates said that they had spent more than the limit for their election expenditure limit. Thirty candidates said that they had spent about 90-95 percent of the limit. 6719 out of 6753, 99.99 percent, of the candidates said that they had spent only 45-55 percent of the limit.

Despite the above hard data, there is a constant clamour to increase the election expenditure limit.

It should be clear from the above lack of clarity that it would be impossible to assess how much to budget for state funding of elections.

Another source of confusion is the fact that while there is a limit specified for the expenditure that a candidate can incur on her/his election, there is no such limit on the amount that political parties can spend on elections. This adds to the uncertainty on how much to budget for.

So much for state funding of elections! Now to simultaneous elections.

First, elections to Parliament and State Assemblies do not happen simultaneously not because someone has so decreed or because the Election Commission enjoys spending public money. Elections happen in a staggered way because the Election Commission follows the Constitution of India. Articles 83(2) and 172(1) lay down the duration of the Lok Sabha and the State Assemblies to be “five years from the date appointed for its first meeting and no longer.” It is true that in the initial years of the republic, elections to Parliament and State Assemblies happened at the same time but over time, as the national polity evolved with changing conditions, and the Constitution was implemented in earnest by the Election Commission. The elections got out of phase, and that continues.

Another cardinal principle of the Indian polity is that the Constitution gives the States a separate constitutional position. The States therefore have the right to have their elections as and when they fall due. The separate constitutional status is the hallmark of the federal character of the Indian Republic. Forcing States to have their elections whenever elections to the Lok Sabha are held is akin to surreptitiously altering the federal character into a unitary character.

The last and the most disturbing factor involved in simultaneous elections is the fact that one of the major reasons for holding simultaneous elections is that it will reduce costs. What is disturbing about this is that this amounts to putting a price-tag on democracy. Elections are the primary technique of operationalising our representative democracy. Should we try to hold our elections in a way that it gives us the best and most representative people in the Parliament and State Assemblies or should we try to reduce the cost of elections to the minimum possible, thereby reducing elections to be a five-year ritual?

If elimination of black money from the economy and society is the aim, then the only way to achieve it is to make the working of political parties democratic in their internal functioning and to make their financial affairs transparent. This is because it is the extensive use of black money in elections that abets and facilitates creation of black money in the country. Of course, demonetisation will, possibly, remove black money from Indian economy and society for once, but it will not stop the generation of black money. Generation of black money will not stop unless we change our methods of working in the government and business, which is not likely to happen despite all that is being said and done about the GST.

Ironically, this is something that all political parties have been resisting with all their might. The latest episode that proves this is the blatant defiance of a decision of a full bench of the Central Information Commission (CIC) in June 2013 that six national parties (BJP, Congress, BSP, NCP, CPI, and CPI-M) are ‘public authorities’ under the Right to Information Act. When the CIC was approached to get their own decision implemented, it failed to do so in March 2015. This matter has now been taken up with the Supreme Court. The first response that the Supreme Court received was from the Government of India, and ironically, once again, it said in its affidavit that political parties should not be under the RTI Act.

It, therefore, seems clear that the current government, just like governments over the last 20 or so years, is not only not serious, but also seems to be very clear on the fact that political parties should continue to be completely non-transparent. It is therefore very difficult to believe that the government is serious about eliminating or even reducing black money in the country.

The author is a former Professor, Dean, and Director In-charge of IIM Ahmedabad. 

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Updated Date: Nov 23, 2016 08:30:48 IST

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