Party money: this is where black money trail begins

Our periodic outbursts of anger over political corruption are illogical, stemming from inadequate understanding of how parties function. Think of what the bouts of outrage have delivered in terms of concrete result and you realise why. The fact is, there would be no end to such corruption until the country finds ways to streamline and monitor the finances of political parties and devise a system where funding to parties is transparent.

The fundamental flaw in the popular discourse on political corruption is the short shrift given to the reality that political parties need a great deal of money to function. They need to fight elections at regular intervals and keep the party apparatus in fine fettle during non-election times. Parties have bureaucracies which need money to run. There are routine expenses on heads such as leaders travelling to different places and mobilisation of people for events. These are genuine expenses for which parties need to generate money.

Parties need funds to fund political activities. Firstpost/Naresh Sharma

By conservative estimates, the bigger political parties such as the Congress and the BJP spend anywhere between Rs 10,000 crore and Rs 15,000 crore in five years. That makes the figures provided by the parties to the Income Tax department -- Rs 1,662 crore and Rs 852 crore respectively for the period between 2007-08 and 2011-12-- look ridiculous. It doesn't look convincing that the BSP and the SP, major parties in a state with 403 assembly and 80 parliamentary constituencies, would manage with an earning of a meagre Rs 424 crore and Rs 202 crore respectively. Obviously, the parties are not telling the whole truth to the tax authorities.

The roots of political corruption in India lies buried in the unexplained gap between the actual expenses of most parties and what they reveal. This is where black money comes into play in politics (parties get 90 percent of funds from unidentified donors, the Times of India report says), people with deep pockets get prominence in the party (ever wondered why leaders with strong links to the mining sector are so dominant in some parties?) and the nexus between corporate players and politicians takes shape. In short, whatever we fault the political system with begins in this space.

And let’s make it clear. This is not a one-party or two-party issue. It’s a malaise afflicting the entire political system for a long time. Parties generally expect their chief ministers and ministers at the Centre -- if they have some -- to mobilise funds and set a target for them. At the state level the task is distributed among ministers, who set targets for departments. None of it is official though. And no party would admit to it. The bigger the skills of a minister or a chief minister at mobilising funds, the more clout he has in party matters.

Money is also solicited from the corporate sector. Sometimes they insist on making cheque payments and make the donations officially but many times they don’t. There are secret quid pro quo arrangements between the donors and the parties. The party becomes obliged to dole out favours while it is in power or if it comes to power after the elections.

The origins of the politician-industry nexus is thus not difficult to trace. It is common knowledge that black money is pumped into election campaigns of parties by many donors. For the latter it is an investment for the future. This could be one of the reasons politicians are always reluctant to act on the issue of black money. It is the grease that makes the wheels of parties moving smoothly.

The first step to combating political corruption should be to acknowledge the core fact that parties need substantial amounts of money to function. And they cannot fight honest elections with a cap of Rs 40 lakh and Rs 16 lakh to spend per parliamentary and assembly constituency respectively. As a solution, a parliamentary committee headed by Indrajit Gupta had made a strong case for state funding of elections since parties performed a vital public function to sustain democracy. The proposal has been in cold storage since it was made. It’s time to revive it.

However, there’s no guarantee that black money and people with deep pockets and bad intent will stop playing an important role even after states start funding elections. But at least it is a positive step forward towards transparency in political parties on money matters.

Updated Date: Jul 11, 2012 20:00 PM

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