Thriving on black money

FUNDING OF POLITICAL PARTIES : Police verification is a must for obtaining a passport, but no such procedure is required for registering a political p

Samuel Johnson’s immortal words, “Politics is the last refuge of scoundrels,” are being vindicated in India. After demonetisation of big currency notes, many interesting revelations have come to the fore. One of them is that there are many political parties which exist on papers only.

The Election Commission of India (ECI) has struck off 255 such political outfits. They do not contest elections and even the addresses of some of these parties are fake. One such address is 17, Akbar Road, New Delhi, which is the current residence of Union Home Minister Rajnath Singh. This shows not only the extent of their audacity but also speaks volumes about the way political parties are set up.

In a country where one has to produce so many documents for opening a simple bank account, it is so easy to get a political party registered. Police verification is a must for getting a passport, but nothing is required for registering a political party. No wonder, political parties have a mushroom growth, and there is all likelihood that these parties are fronts for money laundering as they are exempted from income tax. There are seven national parties, 48 regional parties and nearly 1,800 registered unrecognised parties.

The leviathan of black money cannot be exterminated without reforms in electoral and party system. Even parties which are active in politics and win considerable number of seats and even form governments at the central and state levels survive on black money.

According to their own returns filed before the IT and the ECI, about 80% of their total donations comes in cash from individual donors who pay less than Rs 20,000 each. So, it is unaccounted as donations below Rs 20,000 can be accepted in cash and there is no legal obligation to reveal the source.

The ECI has made a very sensible suggestion to reduce the amount of cash donation from Rs 20,000 to Rs 2,000. Black money rules the roost during the elections and the ceiling imposed on the expenses of individual candidates becomes something of a joke when the glory of mammon is visible all around. It is legally possible to do it as there is no cap on the expenses by the political parties which spend unlimited money on the campaign of their candidates. Most of the candidates lie on oath that they spent money within the permissible limit. 

In the Lok Sabha elections of 2009, only four out of 6,753 candidates admitted that they breached the ceiling, 34 candidates said that they spent between 90% and 95% of the permissible limit while the rest 6,719 candidates claimed to have spent only between 45% and 50% of the limit prescribed. Despite such claims, everyone bemoans that the ceiling imposed by the Representation of People Act is impractical and it is not possible to contest elections with such a meagre amount.

As of now, the permissible limit in the Lok Sabha elections is Rs 70 lakh for the big constituency while it is Rs 54 lakh for the small constituency. But some candidates spend several hundred crores of rupees. It is borne out by US diplomatic cables, leaked by WikiLeaks. One of the cables quoted a confidante of a Union minister from Tamil Nadu distributing up to Rs 5,000 per voter.

A big Lok Sabha constituency has 15 lakh voters. If he distributed this amount even to two lakh voters, the total amount comes to Rs 100 crore. Obviously, the candidate must have spent on general campaign also. One can only imagine how much did he spend.

The ECI set up the expenditure monitoring division in 2010 to counter the menace of money power in elections. It has been successful and led to not only seizure of hundreds of crores of rupees but also disqualified sitting MLA Umesh Yadav in Uttar Pradesh for improper declaration of election expenses and paid news. The ECI also countermanded two elections to Rajya Sabha in Jharkhand when it got credible reports of horse trading.

Cancelling elections

Recently, the ECI took the unprecedented step to cancel the elections in two Assembly constituencies, namely Aravakuruchi and Thanjavur in Tamil Nadu, for the profligate use of money.

It is heartening that the government as well as some other political parties have hailed the ECI’s move to stem the rot. The Supreme Court had correctly diagnosed in Kanwar lal Gupta vs Amarnath Chawla (1975) that the people financing the candidates with big money are rewarded post-election by the victorious ones and this plays havoc for the democracy which gives an equal chance to those not privileged enough to have such affluent friends and supporters.

So, the court ruled that the expenses incurred by the political party and friends of the candidate would count for their expenses. However, Parliament nullified it by amending the RP Act.

India can learn from the laudable work done in this regard by the Royal Commission on Electoral Reform and Party Financing, appointed by the government of Canada in November 1989. It recommended detailed legal requirements for registration of parties, their constituency associations, and party foundations.

Each of these outfits is to be registered under Section 24 of the model Act on the condition that they must have a constitution that shall promote democratic values and practices consistent with the spirit and intent of the Canadian Charter of Rights and Freedoms; provide clear and consistent rules on the selection of candidates, leaders, delegates, if any, and officers; and provide that members of the party who select the party’s candidates, select delegates to a leadership convention or select a party leader must be voters.

This is the best time to overhaul the party system and make elections free from the canker of black money.