Campaign Finance Reforms in India: Issues and Challenges
Campaign Finance Reforms in India: Issues and Challenges
Campaign Finance Reforms in India: Issues and Challenges
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ORF SEMINAR SERIES<br />
VOLUME 1 ISSUE 8 APRIL 2012<br />
OBSERVER RESEARCH FOUNDATION<br />
<strong>Campaign</strong> <strong>F<strong>in</strong>ance</strong> <strong>Reforms</strong> <strong>in</strong> <strong>India</strong>:<br />
<strong>Issues</strong> <strong>and</strong> <strong>Challenges</strong><br />
Sem<strong>in</strong>ar proceed<strong>in</strong>gs compiled & edited by<br />
Samya Chatterjee<br />
Niranjan Sahoo<br />
OBSERVER RESEARCH FOUNDATION
<strong>Campaign</strong> <strong>F<strong>in</strong>ance</strong> <strong>Reforms</strong> <strong>in</strong> <strong>India</strong>:<br />
<strong>Issues</strong> <strong>and</strong> <strong>Challenges</strong><br />
Sem<strong>in</strong>ar proceed<strong>in</strong>gs compiled & edited by<br />
Samya Chatterjee<br />
Niranjan Sahoo<br />
OBSERVER RESEARCH FOUNDATION
2012 Observer Research Foundation. All rights reserved. No part of this publication may be<br />
reproduced or transmitted <strong>in</strong> any form or by any means without permission <strong>in</strong> writ<strong>in</strong>g from ORF.
<strong>Campaign</strong> <strong>F<strong>in</strong>ance</strong> <strong>Reforms</strong> <strong>in</strong> <strong>India</strong>:<br />
<strong>Issues</strong> <strong>and</strong> <strong>Challenges</strong><br />
Executive Summary<br />
<strong>India</strong> today st<strong>and</strong>s as a model for emerg<strong>in</strong>g democracies across the world.<br />
Hav<strong>in</strong>g held periodic elections s<strong>in</strong>ce 1951, with the exception of the two-year<br />
Emergency period, the efficacy of the electoral structures both at the national<br />
<strong>and</strong> State-levels has to a great extent def<strong>in</strong>ed <strong>India</strong>'s success as a modern<br />
democratic nation-State. Unfortunately, over the past two decades, the essence<br />
of democracy has been corroded by corruption <strong>in</strong> the electoral f<strong>in</strong>anc<strong>in</strong>g<br />
structure. However, corruption is not the sole reason. The other ma<strong>in</strong> reasons<br />
are crim<strong>in</strong>alisation of politics <strong>and</strong> lack of genu<strong>in</strong>e <strong>in</strong>ner-party democracy. To<br />
reform the process, the "pernicious <strong>and</strong> all-pervasive" <strong>in</strong>fluence of illegal<br />
sources of money on the prevalent political culture must be addressed.<br />
To highlight some of the key concerns with regard to campaign f<strong>in</strong>ance<br />
reforms, the Observer Research Foundation organised a round-table titled<br />
"<strong>Campaign</strong> <strong>F<strong>in</strong>ance</strong> <strong>Reforms</strong> <strong>in</strong> <strong>India</strong>: <strong>Issues</strong> <strong>and</strong> <strong>Challenges</strong>" on February 1, 2012. This<br />
was the beg<strong>in</strong>n<strong>in</strong>g of what will eventually be a series of conferences to address<br />
the issue of campaign-fund<strong>in</strong>g as well as reforms <strong>in</strong> political parties. Flagged off<br />
as an <strong>in</strong>troduction to underst<strong>and</strong><strong>in</strong>g the basic issues that face political parties<br />
<strong>and</strong> the Election Commission with respect to sources of fund<strong>in</strong>g, the roundtable<br />
comprised Mr. Manish Tewari (Member of Parliament, <strong>India</strong>n National<br />
Congress), Mr. Rajiv Pratap Rudy (Member of Parliament, Bharatiya Janata<br />
Party), Professor E. Sridharan (Academic Director, Centre for Advanced Study<br />
of <strong>India</strong>, University of Pennsylvania.), Mr. T. K. Arun (Editor, Op<strong>in</strong>ion,<br />
Economic Times), Mr. S. K. Mendiratta (Consultant-cum-Legal Advisor to the<br />
Election Commission of <strong>India</strong>) <strong>and</strong> Mr. Anil Bairwal (National Coord<strong>in</strong>ator,<br />
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Association for Democratic <strong>Reforms</strong>, New Delhi). Some of the key<br />
observations which emerged at the conference were:<br />
• Ris<strong>in</strong>g <strong>Campaign</strong> Expenditure: The key issue highlighted by the<br />
academics, political leaders <strong>and</strong> observers of election fund<strong>in</strong>g was the<br />
ris<strong>in</strong>g graph of campaign expenditure. It was stated that this was driven<br />
by a "bus<strong>in</strong>ess proposition" that the prevalent political system <strong>in</strong> the<br />
country offered. Incurr<strong>in</strong>g excess amounts of expenditure was seen as a<br />
desperate attempt by most c<strong>and</strong>idates to w<strong>in</strong> the elections at any cost as<br />
it not only offered a chance to recover the amount at a later date, but to<br />
also earn manifold <strong>in</strong>come if elected.<br />
• State Fund<strong>in</strong>g Counter-productive?: Senior representatives advis<strong>in</strong>g<br />
the Election Commission categorically held that though state fund<strong>in</strong>g<br />
was acceptable <strong>in</strong> pr<strong>in</strong>ciple, it could be counter-productive as it could<br />
become a source of more funds for the parties without accountability<br />
<strong>and</strong> transparency. It would alienate the c<strong>and</strong>idates from the people they<br />
claim to represent, which is already a major obstacle to genu<strong>in</strong>e<br />
representation. The Election Commission, dur<strong>in</strong>g a recent raid,<br />
recovered ` 12 crore <strong>in</strong> cash <strong>and</strong> ` 32 lakh litres of illicit liquor. Also,<br />
hashish, opium <strong>and</strong> other drugs, be<strong>in</strong>g offered as <strong>in</strong>ducements to voters,<br />
have been recovered dur<strong>in</strong>g raids—show<strong>in</strong>g how distant political<br />
parties have become from the actual issues on the ground.<br />
• Lack of Political Will: Political parties across the board are not<br />
<strong>in</strong>terested <strong>in</strong> genu<strong>in</strong>e reforms; such reforms would essentially be a<br />
threat to the prevalent political structure which suits their needs. The<br />
absence of a law on disclosure of expenditure by political parties has<br />
become a major reason for unaccounted funds. Furthermore, the<br />
provision that donations less than ` 20,000 need not be disclosed was<br />
be<strong>in</strong>g abused as a cover for illegal sourc<strong>in</strong>g of funds; while declar<strong>in</strong>g that<br />
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most of the fund<strong>in</strong>g was through subscriptions, <strong>in</strong> reality parties were<br />
receiv<strong>in</strong>g funds worth lakhs <strong>and</strong> crores <strong>and</strong> not mak<strong>in</strong>g disclosures.<br />
• Merit of no consequence: On the question of entry of meritorious<br />
politicians, it was lamented that merit was an <strong>in</strong>cidental factor <strong>in</strong> the<br />
present system. The four fundamental factors that determ<strong>in</strong>ed the<br />
success of <strong>in</strong>dividuals <strong>in</strong> electoral campaigns were caste, class, religion<br />
<strong>and</strong> geographical region. If an <strong>in</strong>dividual happened to have some merit,<br />
it was not considered important—not a quality that political parties<br />
would have searched for <strong>in</strong> the first place. Most political parties are<br />
driven by the "w<strong>in</strong>nability" factor—all other considerations have less<br />
value <strong>in</strong> comparison.<br />
• Party <strong>Reforms</strong>: On reforms <strong>in</strong> political parties, most panelists agreed<br />
that there was no legislation to govern <strong>in</strong>ner-party function<strong>in</strong>g.<br />
Accord<strong>in</strong>g to them, there were no transparent <strong>and</strong> cogent rules of<br />
function<strong>in</strong>g, like for example rules that govern co-operative societies<br />
<strong>and</strong> gurdwaras. All political parties functioned on the basis of a 'High<br />
Comm<strong>and</strong>' culture. Institut<strong>in</strong>g not only formal rules, but a culture of<br />
<strong>in</strong>ner-party democracy was crucial to the process of overhaul<strong>in</strong>g<br />
political parties.<br />
• Ineffective Legislation: With regard to tam<strong>in</strong>g unscrupulous<br />
politicians, legislations like the anti-defection law were found to be<br />
<strong>in</strong>effective <strong>and</strong> counter-productive. The panelists agreed that such laws,<br />
<strong>in</strong>stead of encourag<strong>in</strong>g genu<strong>in</strong>e debate, had stifled debate both with<strong>in</strong><br />
the political parties <strong>and</strong> <strong>in</strong> Parliament. Most <strong>in</strong>dependent c<strong>and</strong>idates<br />
often 'negotiate' with parties of all hues, discard<strong>in</strong>g all pr<strong>in</strong>ciples of<br />
political morality. Moreover, whatever reforms have been <strong>in</strong>troduced by<br />
political parties were due to public pressure.<br />
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• Insulate Executive from the Legislature: Some panelists, especially<br />
the political leaders, ma<strong>in</strong>ta<strong>in</strong>ed that one way forward was the separation<br />
of Legislature from the Executive. Accord<strong>in</strong>g to them, the policy<br />
paralysis, which has become a major concern <strong>in</strong> the delivery of adequate<br />
services to the people, could be avoided if the Executive's functions are<br />
separated effectively <strong>and</strong> <strong>in</strong> a decisive manner. But this was countered by<br />
some other panelists. To them, while the idea <strong>in</strong> pr<strong>in</strong>ciple could be<br />
accepted as an effective tool <strong>in</strong> the short-term, it was not go<strong>in</strong>g to solve<br />
the myriad problems with regard to political parties. A strik<strong>in</strong>g example<br />
of this is the US where the separation of the Executive <strong>and</strong> the<br />
Legislature has not solved the problem of campaign f<strong>in</strong>ance, which has<br />
been a recurrent theme <strong>in</strong> all presidential elections <strong>in</strong> that country. The<br />
debate there has been the pernicious <strong>in</strong>fluence of 'only' corporate<br />
fund<strong>in</strong>g as opposed to the 'judicious' mix of membership fees <strong>and</strong><br />
'limited' State fund<strong>in</strong>g. Hence, the separation of the Executive from the<br />
Legislature would not solve the manifold problems <strong>and</strong> could prove to<br />
dangerous <strong>in</strong> the long run.<br />
• Make Corporate Fund<strong>in</strong>g Transparent <strong>and</strong> Accountable: The<br />
panelists felt that corporate fund<strong>in</strong>g, which has <strong>in</strong>creased over the years<br />
<strong>and</strong> has been relatively transparent <strong>and</strong> accountable, was better than<br />
other dubious sources of fund<strong>in</strong>g. The electoral trust established by the<br />
Tatas was a model worth emulat<strong>in</strong>g, some po<strong>in</strong>ted out. The trust gives<br />
funds to all political parties, recognis<strong>in</strong>g their need for f<strong>in</strong>ances for<br />
function<strong>in</strong>g. A similar model could well be adopted by other bus<strong>in</strong>ess<br />
houses. Donat<strong>in</strong>g to all political parties on the basis of certa<strong>in</strong> m<strong>in</strong>imum<br />
vote-share or an ascerta<strong>in</strong>ment of the popular support derived on<br />
scientific grounds could well be the criterion for donations. Accord<strong>in</strong>g<br />
to the panelists, the need for corporate houses to participate through<br />
donations <strong>in</strong> the function<strong>in</strong>g of a representative democracy must be<br />
recognised <strong>and</strong> such a culture should be suitably nurtured.<br />
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• Learn<strong>in</strong>g from the US Experience: Accord<strong>in</strong>g to the experts, <strong>India</strong>,<br />
which is likely to see an upward trend <strong>in</strong> corporate donations to political<br />
parties <strong>and</strong> election campaigns, must learn from the experience of the<br />
US where corporate donations are subject to strict report<strong>in</strong>g <strong>and</strong><br />
disclosure laws. It should be noted that reliance on corporate donations<br />
has wrecked the election-fund<strong>in</strong>g architecture <strong>in</strong> the US–the primary<br />
reason for the major role of small donors <strong>in</strong> the 2008 presidential<br />
elections.<br />
• Lessons from the German Model: Scholars from Germany held that<br />
the German model, which was essentially a judicious mix of donations,<br />
membership fees <strong>and</strong> State-fund<strong>in</strong>g (account<strong>in</strong>g for 25-30 per cent of<br />
the funds), could be worth consider<strong>in</strong>g. Donations to political parties<br />
were based on the criterion of the votes they had polled <strong>in</strong> the previous<br />
elections. It was held that the media played a key role <strong>in</strong> ensur<strong>in</strong>g that all<br />
political parties <strong>and</strong> their sources of fund<strong>in</strong>g were regularly scrut<strong>in</strong>ised.<br />
• Need for Systemic <strong>Reforms</strong>: In conclusion, it was accepted by the<br />
panelists that reforms <strong>in</strong> election fund<strong>in</strong>g were essential to clean up the<br />
"rotten system". It was also recognised that "systemic reforms" were the<br />
key, not piecemeal, short-term solutions, to solv<strong>in</strong>g the monumental<br />
problems that faced campaign fund<strong>in</strong>g <strong>and</strong> political parties <strong>in</strong> <strong>India</strong>.<br />
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Open<strong>in</strong>g Remarks by the Chair:<br />
Dr. E. Sridharan, Academic Director, Centre for Advanced Study of <strong>India</strong>,<br />
University of Pennsylvania<br />
As you are all aware, campaign f<strong>in</strong>ance reforms <strong>in</strong> <strong>India</strong> is a vital issue <strong>and</strong><br />
actually we should not just be discuss<strong>in</strong>g campaign f<strong>in</strong>ance, which is specifically<br />
an American term, but also party f<strong>in</strong>ance. After all, it is not only about electionfund<strong>in</strong>g,<br />
but also about f<strong>in</strong>ance for susta<strong>in</strong><strong>in</strong>g parties even between elections. It<br />
is essentially about party-fund<strong>in</strong>g, <strong>and</strong> election-fund<strong>in</strong>g should be considered as<br />
a sub-text as it crops up whenever there are elections. There has been a wealth of<br />
experience on party <strong>and</strong> election fund<strong>in</strong>g reforms <strong>in</strong> long-st<strong>and</strong><strong>in</strong>g democracies<br />
around the world; <strong>India</strong>, I th<strong>in</strong>k, can fruitfully study some of these experiences<br />
<strong>and</strong> selectively pick <strong>and</strong> choose. Ultimately, <strong>India</strong> has to frame its own system<br />
<strong>and</strong> design its own reforms <strong>in</strong> this regard.<br />
Traditionally, there are four major types of regulation on election-fund<strong>in</strong>g. One<br />
is on limits on expenditure; second is on limits on contributions, whether<br />
contributions from <strong>in</strong>dividuals, companies, trade unions or for political action<br />
committees like <strong>in</strong> the US; the third relates to various forms of State fund<strong>in</strong>g—it<br />
can be all-out State fund<strong>in</strong>g, or it can be partial State-fund<strong>in</strong>g or partial subsidy,<br />
sometimes on a reimbursement basis after elections—<strong>and</strong> the fourth on various<br />
systems of report<strong>in</strong>g <strong>and</strong> disclosure, which also <strong>in</strong>cludes, <strong>in</strong> some countries,<br />
legislation by which parties have to conduct their <strong>in</strong>ternal affairs. The parties<br />
have to be <strong>in</strong>ternally democratic <strong>and</strong> have accountability mechanisms. So, these<br />
are the four broad categories of regulation which usually cover the area of<br />
campaign <strong>and</strong> party f<strong>in</strong>ance.<br />
Mr. Manish Tewari (Member of Parliament, <strong>India</strong>n National Congress)<br />
Over the past three decades as a political activist I have fought, won <strong>and</strong> lost a<br />
couple of elections, <strong>and</strong> participated <strong>in</strong> various election campaigns across the<br />
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country. I am <strong>in</strong>creas<strong>in</strong>gly com<strong>in</strong>g to the conclusion that we will need to possibly<br />
do someth<strong>in</strong>g or th<strong>in</strong>k radically about campaign f<strong>in</strong>ance because conventional<br />
wisdom limits th<strong>in</strong>k<strong>in</strong>g, <strong>and</strong> try<strong>in</strong>g to gerry m<strong>and</strong>er with the laws just does not<br />
seem to work. Over the years, this has been my personal experience; I th<strong>in</strong>k we<br />
have to th<strong>in</strong>k out-of-the-box on the whole question of electoral f<strong>in</strong>ance<br />
because, as I have noticed that over the years, notwithst<strong>and</strong><strong>in</strong>g the vigil of the<br />
Election Commission, the amount of money which actually gets spent <strong>in</strong> the<br />
electoral process has spiralled out of control.<br />
I can give you the example of the Punjab election campaign, which just got over.<br />
Go<strong>in</strong>g by some of the reports, <strong>in</strong> one of the Assembly constituencies <strong>in</strong> my own<br />
parliamentary constituency, one of the Opposition c<strong>and</strong>idates apparently has<br />
spent between ` 18 <strong>and</strong> ` 20 crore. If that is the k<strong>in</strong>d of money that we are<br />
talk<strong>in</strong>g about, you have a very serious situation on the ground. So, if the official<br />
ceil<strong>in</strong>g is ` 16 lakhs, the Election Commision has not <strong>in</strong>itiated any<br />
disqualification proceed<strong>in</strong>gs. The mismatch is to the extent that the perception<br />
is ` 18 or ` 20 crore <strong>and</strong> the report<strong>in</strong>g would have been about ` 8 or ` 9 lakh<br />
because the Election Commission adds about ` 3 or ` 4 lakh on its own. So you<br />
try <strong>and</strong> keep the expense accounts with<strong>in</strong> that ceil<strong>in</strong>g, provid<strong>in</strong>g a further<br />
marg<strong>in</strong> of about ` 1 or ` 2 lakh. So, there is a serious problem.<br />
I have been wonder<strong>in</strong>g why somebody would spend so much of money <strong>in</strong> an<br />
election. One obvious reason could be that there is a certa<strong>in</strong> quid pro quo which<br />
a person feels that he would get out of this by mak<strong>in</strong>g the k<strong>in</strong>d of <strong>in</strong>vestment I<br />
have just talked about. If you are, at the end of the day, go<strong>in</strong>g to be a legislator,<br />
whether you are on the rul<strong>in</strong>g side or on the Opposition benches, I don't know<br />
how you are go<strong>in</strong>g to recoup between ` 18 or ` 20 crore. So, therefore, at the end<br />
of the day if we are go<strong>in</strong>g to have a serious look at the whole system of<br />
campaign f<strong>in</strong>ance we will possibly need to see as to how we should completely<br />
<strong>and</strong> absolutely divorce the Executive functions from the Legislative processes<br />
because as I said if <strong>in</strong>ducement could be a reason, then that divorce could be a<br />
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solution. But <strong>in</strong> most <strong>in</strong>stances, as my friend <strong>and</strong> colleague Rudy would bear me<br />
out, it is not really so much about <strong>in</strong>ducement; it is also about a certa<strong>in</strong> sense of<br />
prestige, a certa<strong>in</strong> sense of local <strong>in</strong>fluence which people have now started<br />
want<strong>in</strong>g after they have made money through legitimate means. They see it as<br />
the next step <strong>in</strong> the upward progression of not only their careers but themselves<br />
as a personality or the extended family which they have. So, the bottom-l<strong>in</strong>e is<br />
that the role of money <strong>in</strong> the electoral process, notwithst<strong>and</strong><strong>in</strong>g the vigilance of<br />
the Election Commission, is actually not decreas<strong>in</strong>g, it is <strong>in</strong>creas<strong>in</strong>g.<br />
What is also happen<strong>in</strong>g simultaneously is that the vigilance of the Election<br />
Commission is driv<strong>in</strong>g a lot of this money underground; with the ban on<br />
posters, banners, the use of or non-use of loudspeakers <strong>and</strong> other forms of<br />
propag<strong>and</strong>a or dissem<strong>in</strong>ation of your po<strong>in</strong>t of view, a chunk of the money is<br />
go<strong>in</strong>g <strong>in</strong>to nefarious ways of campaign<strong>in</strong>g. Eventually, whether this has an<br />
impact or not, on the f<strong>in</strong>al outcome, I th<strong>in</strong>k the jury is really out on it. I have<br />
heard <strong>and</strong> various people around this table also may have heard that a potential<br />
voter actually takes from everybody who has a freebie to offer <strong>and</strong> then<br />
ultimately votes <strong>in</strong> a way that he th<strong>in</strong>ks is judicious. I can relate an anecdote from<br />
my own campaign <strong>in</strong> the Lok Sabha poll campaign <strong>in</strong> May 2009.<br />
We were <strong>in</strong> the last phase of campaign<strong>in</strong>g <strong>and</strong> there were c<strong>and</strong>idates aga<strong>in</strong>st me.<br />
They actually put out what <strong>in</strong> Punjabi is called, the shabeel—shabeel is a k<strong>in</strong>d of an<br />
open <strong>in</strong>vitation to everybody to come <strong>and</strong> dr<strong>in</strong>k <strong>and</strong> party. How much impact it<br />
had at the end of the day, I really do not know. If somebody after avail<strong>in</strong>g a<br />
freebie can still be judicious, then I th<strong>in</strong>k we must compliment his very robust<br />
commonsense <strong>and</strong> not really try <strong>and</strong> denigrate it by say<strong>in</strong>g that he is sell<strong>in</strong>g<br />
himself short or he is be<strong>in</strong>g purchased. Possibly he is be<strong>in</strong>g more clever than<br />
everybody else put together. So, that is the other side of the co<strong>in</strong> <strong>in</strong> so far as<br />
<strong>in</strong>creased spend<strong>in</strong>g is concerned.<br />
The third issue of course is how political parties are f<strong>in</strong>anced. I th<strong>in</strong>k there is<br />
<strong>in</strong>creas<strong>in</strong>g transparency with regard to general corporate f<strong>in</strong>anc<strong>in</strong>g because<br />
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<strong>in</strong>creas<strong>in</strong>gly more <strong>and</strong> more corporates have been mov<strong>in</strong>g away from the<br />
traditional methods of non-tax compliance to possibly a more robust way of<br />
try<strong>in</strong>g to comply with whatever are the statutory tax limits, whether <strong>in</strong> terms of<br />
corporate <strong>in</strong>come-tax or <strong>in</strong> other taxation statutes. That def<strong>in</strong>itely is hav<strong>in</strong>g a<br />
blow-back effect on political-fund<strong>in</strong>g. Increas<strong>in</strong>gly, you would see that more <strong>and</strong><br />
more money does come <strong>in</strong> through the regular, accounted cheque process than<br />
<strong>in</strong> briefcases or boxes or sacks or whatever other means of transportation. So, I<br />
th<strong>in</strong>k, you are possibly see<strong>in</strong>g some sort of a positive development.<br />
On the issue of how we can make this entire process more robust <strong>in</strong> terms of it<br />
be<strong>in</strong>g accountable, be<strong>in</strong>g up <strong>in</strong> the public sphere for everybody to look at <strong>and</strong><br />
then be able to draw conclusions <strong>and</strong> comment about it—as I said earlier, I really<br />
don't have a solution. The more that I have tried to th<strong>in</strong>k through the process,<br />
the more I am com<strong>in</strong>g to the conclusion that possibly the only manner <strong>in</strong> which<br />
we would really be able to achieve a certa<strong>in</strong> amount of probity <strong>in</strong> terms of<br />
electoral f<strong>in</strong>ance or campaign f<strong>in</strong>ance or fund<strong>in</strong>g of political parties is by<br />
look<strong>in</strong>g at a programmatic paradigm shift <strong>in</strong> the way our polity is<br />
structured—which is by <strong>in</strong>sulat<strong>in</strong>g the Executive processes completely from the<br />
Legislative processes.<br />
Now, whether that is feasible or there would be a broad consensus on that, I do<br />
not know. These are my personal views <strong>and</strong> not the views of the Congress Party.<br />
I do not th<strong>in</strong>k by this superficial polic<strong>in</strong>g, even with the best of <strong>in</strong>tentions, we<br />
are really gett<strong>in</strong>g anywhere <strong>in</strong> mak<strong>in</strong>g people observe or adhere to (spend<strong>in</strong>g)<br />
limits.<br />
Mr. Rajiv Pratap Rudy (Member of Parliament, BJP)<br />
It just happened that this morn<strong>in</strong>g I had called Manish to discuss about Punjab<br />
politics. There are two of us sitt<strong>in</strong>g here, both spokespersons of our respected<br />
political parties <strong>and</strong> both have been <strong>in</strong> politics for the last 30 years. I was the<br />
president of my college (union), became an MLA <strong>in</strong> Bihar <strong>and</strong> have spent 25<br />
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years do<strong>in</strong>g exactly what a hardcore politician <strong>in</strong> <strong>India</strong> does. The same has been<br />
the case with Manish. For the last couple of months I have been th<strong>in</strong>k<strong>in</strong>g<br />
seriously about campaign f<strong>in</strong>ance; today, I am very happy that someone from<br />
across the political spectrum has spoken some keywords which are so<br />
important. I look at the mess which we have created <strong>in</strong> the last 64 years. Now I<br />
am 50, I became an MLA at 26. Look<strong>in</strong>g back I feel that (a) I have wasted my 25<br />
years <strong>and</strong> (b) I have to do someth<strong>in</strong>g.<br />
On the national canvas we see two th<strong>in</strong>gs happen<strong>in</strong>g <strong>in</strong> this country which<br />
possibly may not be associated. One is the Anna Hazare campaign talk<strong>in</strong>g about<br />
honesty <strong>and</strong> corruption, which is obvious. We all are associat<strong>in</strong>g with it directly<br />
<strong>and</strong> we are say<strong>in</strong>g that this great th<strong>in</strong>g is happen<strong>in</strong>g, that the country needs a<br />
debate <strong>and</strong> there should be honesty <strong>and</strong> we should have a legislation for the<br />
purpose. This is urban anger which is now gett<strong>in</strong>g reflected aga<strong>in</strong>st the political<br />
class. This anger is about many more th<strong>in</strong>gs; there is anger about<br />
unemployment, about new cars, about the capacity to grow <strong>in</strong> life, etc. All that<br />
has got clubbed together <strong>and</strong> people say that politicians have created havoc <strong>in</strong><br />
the system.<br />
There is another th<strong>in</strong>g happen<strong>in</strong>g <strong>in</strong> society which possibly we are not talk<strong>in</strong>g<br />
about today. This, I have analysed <strong>and</strong> will illustrate with an example. I had gone<br />
for a lecture to the National Police Academy (Hyderabad); some figures for<br />
2001 <strong>and</strong> 2011 prompt me to make this remark. In 2001 the number of people<br />
who were killed <strong>in</strong> terrorist attacks or by terror actions <strong>in</strong> this country, <strong>in</strong>clud<strong>in</strong>g<br />
civilians, paramilitary forces, army <strong>and</strong> the terrorists, was around 3,500-4,000.<br />
The number of people <strong>in</strong> 2001 who were killed <strong>in</strong> Naxalite violence was around<br />
400. In 2011, the number of people who were killed <strong>in</strong> Naxal violence was<br />
around 1000, <strong>and</strong> the number of people killed <strong>in</strong> terrorist activities was around<br />
400.<br />
The writ<strong>in</strong>g is absolutely clear on the wall. Today, out of 642 districts <strong>in</strong> this<br />
country, almost 225 districts are virtually not be<strong>in</strong>g controlled (by the<br />
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government) but are <strong>in</strong> the grip of severe Naxal violence. I position these two<br />
po<strong>in</strong>ts: The Constitution which we have adopted, which is sacrosanct., the<br />
Government has moved to amend it 115 times <strong>and</strong> got it amended 94 times.<br />
And, we have thrown up a democracy which is possibly, I believe, quite<br />
dysfunctional.<br />
When we talk about election fund<strong>in</strong>g, my basic question is, why does any<br />
<strong>in</strong>dividual who has to contest as an MLA/MP, why would he require so much of<br />
money? For example, <strong>in</strong> Goa, with four Lok Sabha seats, each c<strong>and</strong>idate,<br />
whether from the Congress or the BJP (or other political parties), would be<br />
spend<strong>in</strong>g ` 5-7 crore on one seat. I have been <strong>in</strong> charge of Goa (affairs <strong>in</strong> the<br />
BJP), <strong>and</strong> we have seen money be<strong>in</strong>g given there. The question arises, for that<br />
matter even <strong>in</strong> Uttar Pradesh <strong>and</strong> Uttarakh<strong>and</strong>, why should an X amount of<br />
money be required to contest elections? What prompts a c<strong>and</strong>idate to spend so<br />
much of money? Why? My requirement for an election could be that I have to<br />
set up a stage, I have to hire a car, I have to visit the place, my transportation<br />
expense could be there, I could pa<strong>in</strong>t a poster, I can have an ad, I can have<br />
pamphlets, that would cost me an X amount of money—but why do I need this<br />
huge amount of money? I need that money because I have to position myself <strong>in</strong><br />
a manner that it becomes a bus<strong>in</strong>ess proposition. So, how can the government<br />
or any political fund<strong>in</strong>g process match the bus<strong>in</strong>ess aspiration of a politician?<br />
What Manish says is that <strong>in</strong> the system that we have, elected representatives<br />
cont<strong>in</strong>ue to occupy Executive positions—like an MLA who gets elected from<br />
the majority party would further position himself to become a M<strong>in</strong>ister or hold<br />
a position of power, have a red light, have an authority. So, his entire work<strong>in</strong>g<br />
ethos of gett<strong>in</strong>g elected is not on the basis of what you would call a legislator.<br />
Take Uttar Pradesh, where 403 MLAs have to be elected; maybe you can f<strong>in</strong>d 10<br />
good people, or even 20, 30, or 40. But what is the <strong>in</strong>centive that will attract only<br />
the right people to contest elections? Manish <strong>and</strong> I have chosen to be <strong>in</strong> politics.<br />
Most of us have not chosen to be <strong>in</strong> politics because it does not really pay you<br />
back. The Westm<strong>in</strong>ster model of government (that <strong>India</strong> has adopted)<br />
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prescribes that <strong>in</strong> order of preference, the first criterion is caste. So, the first<br />
fundamental to look for <strong>in</strong> a c<strong>and</strong>idate is caste. The second fundamental that<br />
political parties look for <strong>in</strong> a c<strong>and</strong>idate is class, whether he is an OBC, Forward,<br />
Backward, etc. Caste would be, "I am a Thakur, he is a Brahm<strong>in</strong>" etc. The third<br />
criterion by which political parties choose c<strong>and</strong>idates, which we have been do<strong>in</strong>g<br />
over the years, is religion; whether he is from the m<strong>in</strong>ority, whether he is a<br />
H<strong>in</strong>du, Muslim or Sikh, etc. The fourth criterion is geographical location,<br />
whether he comes from Bundelkh<strong>and</strong>, Uttarakh<strong>and</strong>, from the North, South etc.<br />
The last criterion, which is quite <strong>in</strong>cidental, is merit.<br />
I have many arguments to prove the po<strong>in</strong>t I am mak<strong>in</strong>g. I was look<strong>in</strong>g <strong>in</strong>to the<br />
figures of the cash recovered (by the Election Commission). In Punjab, the cash<br />
recovered was ` 12 crore <strong>and</strong> illicit liquor ` 32 lakh litres—7.18 lakh bottles of<br />
X, Y <strong>and</strong> Z. I want to underst<strong>and</strong>, how would you take care of this, how would<br />
the State take care of this, as well as the distribution of hashish <strong>and</strong> opium? Why<br />
should an election process require all this? Why? Because you have created a<br />
system which you say is the most functional system <strong>and</strong> that the last man is<br />
com<strong>in</strong>g to vote, etc. I th<strong>in</strong>k dur<strong>in</strong>g Partition, (then British Prime M<strong>in</strong>ister)<br />
Clement Atlee had said that <strong>India</strong> does not deserve this political (Westm<strong>in</strong>ster)<br />
system, but we politicians said, “No, no. s<strong>in</strong>ce they are say<strong>in</strong>g so, this is the best<br />
system.” Now, what has happened actually, where have we l<strong>and</strong>ed up? We are<br />
not pick<strong>in</strong>g up a debate on this subject because it suits the political class, it suits<br />
me, it suits Manish.<br />
An aspect which most of us are refus<strong>in</strong>g to acknowledge is that we have already<br />
come to a po<strong>in</strong>t where we are hav<strong>in</strong>g a referendum; it is no more a majoritarian<br />
form of government. You look at Tamil Nadu, the reference is between<br />
Jayalalitha <strong>and</strong> Karunanidhi, you look iat Bihar, the election is between Laloo<br />
Prasad <strong>and</strong> Nitish Kumar, you look at UP, the election is between Mayawati <strong>and</strong><br />
Mulayam S<strong>in</strong>gh, you look at Punjab, it is between Amr<strong>in</strong>der S<strong>in</strong>gh <strong>and</strong> Prakash<br />
S<strong>in</strong>gh Badal, you look at Gujarat, it is a platform of the BJP but the referendum<br />
is Narendra Modi versus others. We have already reached the po<strong>in</strong>t where we are<br />
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talk<strong>in</strong>g about referendum, we are talk<strong>in</strong>g about a k<strong>in</strong>d of 'presidential order'<br />
(form of government) but are refus<strong>in</strong>g to acknowledge it. The day you decide<br />
that MLAs <strong>and</strong> MPs will cont<strong>in</strong>ue to be only legislators; they will only be the topmost,<br />
strongest, most powerful legislators; that they have to get up <strong>in</strong> the<br />
Assembly (or Parliament), they have to make notes, they have to prepare<br />
themselves, they have to talk for the people, <strong>and</strong> they can't become M<strong>in</strong>isters, 99<br />
per cent of the people who are gett<strong>in</strong>g <strong>in</strong>to politics will leave politics—<strong>and</strong> then<br />
you don't have to look for fund<strong>in</strong>g—you will not require it because you are not<br />
go<strong>in</strong>g to make money or dispense favours.<br />
Today, s<strong>in</strong>ce one can become a m<strong>in</strong>ister after be<strong>in</strong>g elected by the people,<br />
everyone asks for their pound of flesh. If Manish becomes a M<strong>in</strong>ister<br />
tomorrow, I th<strong>in</strong>k he will be the worst sufferer because his is an urban<br />
constituency which is very dem<strong>and</strong><strong>in</strong>g. My only submission is that this debate<br />
would be very fruitful if we can discuss the f<strong>in</strong>ancial order. You cannot match<br />
present aspirations with reforms. You can match these only the day elected<br />
representatives are good people like you <strong>and</strong> me, s<strong>in</strong>cerely care about the future<br />
of the nation <strong>and</strong> don't have to th<strong>in</strong>k, "how can I get <strong>in</strong>to politics". It is my<br />
submission here that before we proceed further to discuss electoral reforms on<br />
f<strong>in</strong>anc<strong>in</strong>g, we have to discuss the political system which has been there for 64<br />
years. Both Manish <strong>and</strong> I know it may not happen, we may spend another 20<br />
years debat<strong>in</strong>g because regional parties <strong>and</strong> other organisations would not want<br />
change. But we have to build up a debate if we want right th<strong>in</strong>gs to happen <strong>in</strong><br />
politics, i.e., to segregate the legislative process from the Executive. This is the<br />
key <strong>and</strong> if we can't proceed with it, all our discussions will be <strong>in</strong> va<strong>in</strong>. So, this is<br />
my submission. I am sure we can open a debate on this.<br />
Chair: Let us open up the floor to an <strong>in</strong>terim discussion <strong>in</strong>stead of tak<strong>in</strong>g all the<br />
five speakers <strong>in</strong> a row so that we can get some questions <strong>and</strong> feedback. Please be<br />
very focussed <strong>in</strong> your questions.<br />
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Mr. Mohan Guruswamy, Dist<strong>in</strong>guished Fellow, ORF: I am absolutely<br />
delighted to hear two politicians speak this language today. For the first time <strong>in</strong><br />
my long <strong>in</strong>n<strong>in</strong>gs, I have heard this k<strong>in</strong>d of dispassionate talk. Rudy raised a very<br />
significant po<strong>in</strong>t on the role of parliamentarians. There is no reference to<br />
political parties <strong>in</strong> the <strong>India</strong>n Constitution, yet, when you talk about campaignf<strong>in</strong>anc<strong>in</strong>g,<br />
you go <strong>and</strong> give money to a group or an agency which is <strong>in</strong> a limbo.<br />
For a cooperative society you have rules of function<strong>in</strong>g, for a gurudwara there<br />
are rules, but there are no rules for political parties.<br />
So, I th<strong>in</strong>k you have to legislate for that because if the State is go<strong>in</strong>g to fund a<br />
political party, which I th<strong>in</strong>k is a good idea, then that political party must<br />
conform to certa<strong>in</strong> norms <strong>and</strong> behaviour. Most parties have this 'High<br />
Comm<strong>and</strong> decides' culture, which is why you are <strong>in</strong>creas<strong>in</strong>gly see<strong>in</strong>g children,<br />
nephews, gr<strong>and</strong>children, all becom<strong>in</strong>g political heirs <strong>and</strong> successors. I don't<br />
know if political parties can conduct <strong>in</strong>ner-party elections anymore, or whether<br />
the Election Commission should conduct these elections for them. After all,<br />
you have a Registrar conduct<strong>in</strong>g elections for cooperative societies. So, these are<br />
much larger issues. Just restrict<strong>in</strong>g it to campaign f<strong>in</strong>anc<strong>in</strong>g means you want<br />
sarkari paisa to do exactly what you are do<strong>in</strong>g now.<br />
Dr. Sridharan: The notion that separat<strong>in</strong>g Executive power from legislative<br />
power will actually help you <strong>in</strong>sulate from corruption is misplaced. The<br />
empirical evidence <strong>in</strong> the US does not support it. There are a number of<br />
Senators who take money, whose f<strong>in</strong>anc<strong>in</strong>g has been called <strong>in</strong>to question; one<br />
has had to resign, or he has been sacked. You can, through the legislative<br />
process, carry out many Executive functions like allocation of money, do<br />
favours, withhold favours, do anyth<strong>in</strong>g that currently elected representatives are<br />
do<strong>in</strong>g while hold<strong>in</strong>g Executive positions. So, that is not the solution. In the<br />
recent Assembly elections <strong>in</strong> Kerala, the Congress party could not deploy<br />
helicopters for ferry<strong>in</strong>g their Central leaders for campaign<strong>in</strong>g because there was<br />
a huge uproar from the people, the political opponents <strong>and</strong> the media; they had<br />
to ab<strong>and</strong>on the idea. So, there is a certa<strong>in</strong> consciousness of the polity which<br />
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militates aga<strong>in</strong>st the use of money power <strong>in</strong> a wanton display of the ability to<br />
spend money to <strong>in</strong>fluence vot<strong>in</strong>g. While you are completely right that there<br />
cannot be any isolated reform <strong>in</strong> fund<strong>in</strong>g of elections or politics <strong>in</strong> general <strong>and</strong> it<br />
is more a systemic th<strong>in</strong>g, the solutions that have been suggested, I don't th<strong>in</strong>k,<br />
are the ones that will help you change anyth<strong>in</strong>g.<br />
Mr. Anil Bairwal: As Mr. Tewari has said <strong>and</strong> Mr. Rudy has alluded to, people<br />
are already spend<strong>in</strong>g so much money on elections. Questions are be<strong>in</strong>g asked<br />
about too much power be<strong>in</strong>g given to the Election Commission, that while it is<br />
not allow<strong>in</strong>g any movement of money, underground money is be<strong>in</strong>g used for<br />
campaign<strong>in</strong>g. Even if the Government was to provide campaign-fund<strong>in</strong>g, when<br />
people are spend<strong>in</strong>g ` 18-20 crore <strong>and</strong> show<strong>in</strong>g ` 16 lakh as spent, is the legallysanctioned<br />
spend<strong>in</strong>g for an Assembly poll c<strong>and</strong>idate go<strong>in</strong>g to make any<br />
difference?<br />
Mr. Rudy spoke about try<strong>in</strong>g to br<strong>in</strong>g meritorious c<strong>and</strong>idates <strong>in</strong>to the system.<br />
How is this go<strong>in</strong>g to come about, when today there is a complete lack of<br />
transparency <strong>in</strong> how most parties select their c<strong>and</strong>idates? Workers of a political<br />
party have no powers whatsoever <strong>in</strong> decid<strong>in</strong>g what happens <strong>in</strong> the party;<br />
everyth<strong>in</strong>g is decided by the High Comm<strong>and</strong>. In fact <strong>in</strong> UP our analysis shows<br />
that the number of c<strong>and</strong>idates with a crim<strong>in</strong>al background who have been given<br />
party tickets has actually <strong>in</strong>creased compared to the last elections; from 28 per<br />
cent to 38 per cent. A word about the work<strong>in</strong>g of political parties: I completely<br />
agree that until we f<strong>in</strong>d a way to somehow regulate the function<strong>in</strong>g of political<br />
parties, br<strong>in</strong>g <strong>in</strong> more transparency <strong>in</strong> their function<strong>in</strong>g <strong>and</strong> everyth<strong>in</strong>g that they<br />
do, <strong>in</strong>clud<strong>in</strong>g <strong>in</strong>ner-party politics, we are try<strong>in</strong>g to just fix th<strong>in</strong>gs which will not<br />
solve the basic problems that we are aim<strong>in</strong>g at.<br />
Mr. Manish Tewari: As far as the issue of party-f<strong>in</strong>anc<strong>in</strong>g <strong>and</strong> electionf<strong>in</strong>anc<strong>in</strong>g<br />
is considered, it is important to consider the American model where<br />
the funds are given to <strong>in</strong>termediaries or citizen committees, which distribute<br />
the funds. But <strong>in</strong> the US they have a strong democratic tradition <strong>and</strong> citizens'<br />
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participation is there at every level, start<strong>in</strong>g from the primary-level to the<br />
national leadership convention. But <strong>in</strong> <strong>India</strong> it will be a complex situation<br />
because we do not have a very strong democratic tradition. In the present<br />
situation it would be <strong>in</strong>terest<strong>in</strong>g to adopt the model started by the Tata<br />
Foundation, <strong>in</strong> which parties are funded on the basis of their electoral<br />
performance. Other corporate houses <strong>and</strong> the Government can also consider<br />
this model.<br />
When we talk about electoral reforms, it is also important to talk about party<br />
reforms. One <strong>in</strong>terest<strong>in</strong>g reform, which I have been writ<strong>in</strong>g about <strong>in</strong> my articles,<br />
is that <strong>in</strong> <strong>India</strong> parties should elect their leaders at national leadership<br />
conventions, compris<strong>in</strong>g prov<strong>in</strong>cial party delegates vot<strong>in</strong>g as <strong>in</strong>dividuals rather<br />
than as State blocs as <strong>in</strong> the US, where they elect their presidential c<strong>and</strong>idate<br />
every four years. This will give wider support, national visibility <strong>and</strong> more<br />
democratic legitimacy to the leadership. It will also help <strong>in</strong> build<strong>in</strong>g the<br />
aggregation process <strong>in</strong> political parties.<br />
Participant: Irrespective of the political system, whether it is a parliamentary<br />
form of government or presidential form of government, we f<strong>in</strong>d a lot of<br />
<strong>in</strong>stances of corruption, of campaign funds be<strong>in</strong>g misused. What we really need<br />
is overall political party reforms <strong>and</strong> campaign fund<strong>in</strong>g reforms. Various steps<br />
have to be taken. <strong>Campaign</strong>-f<strong>in</strong>ance reforms alone will not help the situation.<br />
Mr. Rajiv Pratap Rudy: We are talk<strong>in</strong>g from experience… we are talk<strong>in</strong>g of a<br />
bottom-l<strong>in</strong>e. Before I contest elections, I have to collect all the affidavits: that I<br />
am not dishonest, I have this much of property, I am not a crim<strong>in</strong>al. Even the<br />
Prime M<strong>in</strong>ister has to submit 20 affidavits say<strong>in</strong>g that is he is the best man <strong>in</strong> the<br />
system! This is because we legislated to create a system where the Election<br />
Commission says that if you are fil<strong>in</strong>g your nom<strong>in</strong>ation, show me how much<br />
property you have, that you are not a crim<strong>in</strong>al... we have devised legal ways <strong>and</strong><br />
laws to say that this man is very nice because he has put it <strong>in</strong> affidavits. Now, a<br />
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person who is go<strong>in</strong>g to get elected has to give 100 undertak<strong>in</strong>gs that he is a very<br />
nice man. So, this is the system.<br />
You have a democracy where the late Rajiv G<strong>and</strong>hi came <strong>in</strong> with 401 seats <strong>in</strong><br />
Parliament; he brought <strong>in</strong> an anti-defection law which stated that only if onethird<br />
of the elected members of a party got together could they break that party.<br />
So, we were very scared that all these genu<strong>in</strong>e elected people would switch<br />
loyalties… Then <strong>in</strong> 2003 there was my Government, an NDA Government,<br />
which said that you needed two-thirds majority to jump sides. You are pass<strong>in</strong>g<br />
laws just to tame politicians, where the basic (premise) is that every <strong>in</strong>dividual is<br />
eye<strong>in</strong>g for a position.<br />
What we are suggest<strong>in</strong>g is that the present format of the electoral system is so<br />
messy that all the issues come back to the same po<strong>in</strong>t: How do you f<strong>in</strong>d the right<br />
people <strong>in</strong> politics? Why does the present system not allow the right people to<br />
come <strong>in</strong> politics? This is why we say we need to have a debate; we know noth<strong>in</strong>g<br />
is go<strong>in</strong>g to happen. We are a part of the system. Manish will take over further<br />
from here.<br />
Mr. Tewari: I just wanted to endorse what Rudy was say<strong>in</strong>g. In the political<br />
lexicon we have a term called 'w<strong>in</strong>nability', which is a veneer that <strong>in</strong>sulates a<br />
person from the most he<strong>in</strong>ous of crimes. I th<strong>in</strong>k what Rajiv is advocat<strong>in</strong>g is<br />
someth<strong>in</strong>g which needs to be looked at seriously. It may not be a perfect solution<br />
but it is a solution nonetheless. Till you do not have a complete hiatus, a<br />
complete divorce between Executive functions <strong>and</strong> legislative functions, your<br />
ability to be able to either clean up elections or police that clean-up is go<strong>in</strong>g to be<br />
<strong>in</strong>effective; there is no way <strong>in</strong> which you will be able to do it.<br />
The Election Commission has been very pro-active for the last 21 years. We<br />
have also gone on television <strong>and</strong> praised the Election Commission for the<br />
excellent work they do; to be very honest to them, their observers <strong>and</strong> the<br />
people they deploy actually try <strong>and</strong> do their job to the best of their ability; but,<br />
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then, you are send<strong>in</strong>g a person from a particular State, let us say Andhra Pradesh,<br />
to Punjab, <strong>and</strong> the poor fellow does not underst<strong>and</strong> the language, he does not<br />
know the lay of the l<strong>and</strong> <strong>and</strong> he has been there for only five or seven days. So, he<br />
tries to correct the situation based on whatever little <strong>in</strong>puts he gets. But, as I was<br />
po<strong>in</strong>t<strong>in</strong>g out earlier, when you juxtapose a limit of ` 16 lakh aga<strong>in</strong>st an expense<br />
of ` 20 crore, how are you go<strong>in</strong>g to h<strong>and</strong>le the matter?<br />
The only way that you can possibly make a beg<strong>in</strong>n<strong>in</strong>g is by look<strong>in</strong>g at larger<br />
systemic reforms; you have an election for an Executive process, put that<br />
Executive under a Lok Pal or or whatever 'pal' you want <strong>and</strong> have the most<br />
robust anti-corruption laws <strong>in</strong> place. This way you may be able to get a h<strong>and</strong>le on<br />
Executive corruption. As far as the legislative process is concerned, if you<br />
<strong>in</strong>sulate it <strong>in</strong> this manner, you may not have a 100 per cent success rate but I<br />
entirely agree with Rudy that you may have to beg<strong>in</strong> with a 30 per cent, 40 per<br />
cent or even 50 per cent success rate <strong>and</strong> you can keep on improv<strong>in</strong>g upon it. But<br />
if you cont<strong>in</strong>ue this way, the way that we are go<strong>in</strong>g…it is not go<strong>in</strong>g to help.<br />
You talked about helicopters, about people's pressure <strong>in</strong> Kerala. Honestly, that is<br />
a m<strong>in</strong>iscule expense. I th<strong>in</strong>k the public uproar was completely uncalled for<br />
because if somebody has to criss-cross a State <strong>and</strong> uses a helicopter, probably it<br />
is hardly any expense at all, ` 2 lakh a day or someth<strong>in</strong>g of that sort. This is<br />
hardly anyth<strong>in</strong>g compared to the amount of money which actually gets spent. If<br />
you take the case of Punjab, it is not alcohol any longer, not even opium; it is<br />
coca<strong>in</strong>e, Ecstasy <strong>and</strong> designer drugs. So, therefore, if at all we want to do<br />
someth<strong>in</strong>g seriously about this, let us th<strong>in</strong>k very seriously about what Rudy has<br />
said, let us try <strong>and</strong> develop on it, maybe we will get somewhere. This artificial<br />
polic<strong>in</strong>g or this k<strong>in</strong>d of a gloss which we are try<strong>in</strong>g to put on, is not go<strong>in</strong>g to<br />
work.<br />
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Chair: Mr. T. K. Arun will now make his presentation<br />
Mr. T. K. Arun, Editor, Op<strong>in</strong>ion, Economic Times<br />
I completely agree with Mr. Guruswamy that political parties are rather very<br />
lightly regulated. The Representation of the People Act is the only piece of law<br />
which talks about political parties <strong>and</strong> puts <strong>in</strong> some conditions on how they<br />
should behave. In 2008-09, the year <strong>in</strong> which parties were mobilis<strong>in</strong>g funds for<br />
the big battle <strong>in</strong> 2009, the BJP filed audited accounts for ` 220 crore as <strong>in</strong>come<br />
for the year.<br />
The Congress filed an <strong>in</strong>come of ` 393 crore or someth<strong>in</strong>g like that, whereas the<br />
actual <strong>in</strong>come <strong>and</strong> expenditure of these parties would have been much more.<br />
The crux of the problem is the complete lack of transparency <strong>in</strong> the fund<strong>in</strong>g of<br />
political parties. Now, can such transparency be <strong>in</strong>stituted, can we br<strong>in</strong>g <strong>in</strong> this<br />
transparency?<br />
To say that we should follow the 'Tata Trust model' does not really solve the<br />
problem because you can set up a trust <strong>and</strong> they can give you money <strong>and</strong> that<br />
money will be recorded—but what if someone is will<strong>in</strong>g to give money <strong>and</strong> it is<br />
not recorded? Let us take this issue <strong>in</strong> its entire seriousness. If a company gives<br />
money to a political party or to multiple political parties "off the books" of that<br />
company, you are mak<strong>in</strong>g nonsense of the practice of audit<strong>in</strong>g accounts of the<br />
company, you are mak<strong>in</strong>g nonsense of corporate governance, you are mak<strong>in</strong>g<br />
nonsense of the function of hav<strong>in</strong>g <strong>in</strong>dependent auditors, audit committees<br />
<strong>and</strong> their reports. Everyth<strong>in</strong>g is be<strong>in</strong>g underm<strong>in</strong>ed by the way you fund politics<br />
<strong>in</strong> this country.<br />
The question is, how can we realistically change this? If you have the political<br />
will, the start<strong>in</strong>g po<strong>in</strong>t must be the monitor<strong>in</strong>g of expenditure. If you make it<br />
m<strong>and</strong>atory for every political party to file a monthly expenditure statement <strong>in</strong><br />
the first week of the follow<strong>in</strong>g month, start<strong>in</strong>g from the village <strong>and</strong> panchayat<br />
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levels, <strong>and</strong> make it open to challenge by watchdog bodies <strong>and</strong> by other political<br />
parties, <strong>and</strong> <strong>in</strong>stitute an exp<strong>and</strong>ed body of the Election Commission as the<br />
moderator who will actually validate the expenditure, th<strong>in</strong>gs can change. Sure,<br />
some money that is spent on buy<strong>in</strong>g drugs that are illegal might not be reflected<br />
but a large part of the expenditure of political parties would be reflected<br />
because other parties <strong>and</strong> watchdog bodies could contest the low claim of any<br />
party. This expenditure should be expla<strong>in</strong>ed <strong>in</strong> terms of source. There is no<br />
reason why this cannot be done.<br />
You might say Mayawati claims that the vast majority of the money she collected<br />
came through small contributions from people <strong>and</strong> could not be recorded. This<br />
might have been a possible excuse 20 years ago. Today, it is possible to have<br />
small, h<strong>and</strong>-held mach<strong>in</strong>es that can be connected to some computer server that<br />
can record every s<strong>in</strong>gle contribution by any donor, even <strong>in</strong> smaller<br />
denom<strong>in</strong>ations of ` 5 <strong>and</strong> ` 10, <strong>and</strong> generate a receipt for it. The question is: do<br />
we have the political will to do this? We have already reformed the economy to a<br />
large extent. State discretion now exists only <strong>in</strong> some sectors, primarily l<strong>and</strong> <strong>and</strong><br />
m<strong>in</strong><strong>in</strong>g lease, or wherever natural assets are <strong>in</strong>volved. The more you br<strong>in</strong>g <strong>in</strong><br />
rules of transparency <strong>in</strong> conduct<strong>in</strong>g Government bus<strong>in</strong>ess <strong>and</strong> reduce the role<br />
of arbitrary discretion, more transparency will prevail <strong>in</strong> political fund<strong>in</strong>g. The<br />
reason why there is so much of support for Anna Hazare <strong>and</strong> his reformers is<br />
because now those sections of society have emerged which are prosper<strong>in</strong>g<br />
without any Government patronage. They are victims of extortion; they pay<br />
money to politicians <strong>and</strong> to civil servants. They are do<strong>in</strong>g it not because they<br />
have got patronage but because they are victims, they just have to pay. They are<br />
actually gett<strong>in</strong>g noth<strong>in</strong>g from the system but they are made to pay, <strong>and</strong> this is<br />
gett<strong>in</strong>g articulated as support for the dem<strong>and</strong> for a Lok Pal.<br />
It is completely with<strong>in</strong> our ability to clean up the system, start<strong>in</strong>g from<br />
monitor<strong>in</strong>g expenditure to forc<strong>in</strong>g parties to disclose their sources of f<strong>in</strong>ance.<br />
We should regulate political parties, have a separate law to govern the conduct<br />
of political parties, make <strong>in</strong>ner-party democracy m<strong>and</strong>atory, make selection of<br />
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c<strong>and</strong>idates on the basis of primaries as is done <strong>in</strong> the US, i.e. the c<strong>and</strong>idates<br />
actually have to w<strong>in</strong> the support of registered party members. Radical reforms<br />
will require possibly the right to recall, the right to reject a c<strong>and</strong>idate; you would<br />
have proportional representation; you can have various changes <strong>in</strong> the polity but<br />
even without such thorough reforms, it is possible to greatly reduce corruption<br />
<strong>in</strong> politics.<br />
Mr. S. K. Mendiratta, Legal Advisor, The Election Commission of <strong>India</strong><br />
As has been rightly said, the law relat<strong>in</strong>g to disclosures by political parties is<br />
absolutely absent today. Under the law there is a ceil<strong>in</strong>g fixed for the expenditure<br />
of a c<strong>and</strong>idate but there is no ceil<strong>in</strong>g on the expenditure of any political party.<br />
Some question was raised about ` 16 lakh be<strong>in</strong>g the spend<strong>in</strong>g-limit <strong>and</strong> ` 20<br />
crore be<strong>in</strong>g spent; if you see our record, <strong>in</strong> 95 per cent of the cases <strong>in</strong> the last<br />
elections, the returns from the c<strong>and</strong>idates show that most of them have spent<br />
only ` 8 or ` 9 lakh. Beyond that nobody has spent. So, we should ask the<br />
question, why should we not reduce the limit if you are able to contest elections<br />
with ` 8-9 lakh?<br />
On transparency <strong>in</strong> fund<strong>in</strong>g, for the last 15-20 years we have been ask<strong>in</strong>g for a<br />
beg<strong>in</strong>n<strong>in</strong>g with an annual audit of political parties' accounts by a panel cleared<br />
by the Comptroller <strong>and</strong> Auditor-General (CAG) or the Election Commission,<br />
which would be made public. In 1998, the Government set up the Indrajit<br />
Gupta Committee on State fund<strong>in</strong>g. I happened to be the Secretary of that<br />
Committee. One of the issues related to the audit <strong>and</strong> publication of political<br />
party funds by <strong>in</strong>dependent auditors. There were n<strong>in</strong>e political parties; all major<br />
political parties were represented on that committee; our present Prime<br />
M<strong>in</strong>ister Dr. Manmohan S<strong>in</strong>gh was a member; so were Mr. Somnath Chatterjee<br />
<strong>and</strong> Mr. Vijay Kumar Malhotra. Every political party said the present system was<br />
okay: they had very competent chartered accountants, they got their accounts<br />
audited, so what was the need for <strong>in</strong>dependent auditors <strong>and</strong> why should the<br />
political parties publish the audited accounts? This was a very m<strong>in</strong>or th<strong>in</strong>g for<br />
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them. The present law says that parties that collect more than ` 20,000 <strong>in</strong><br />
donations have to send an annual list to the Election Commission before fil<strong>in</strong>g<br />
returns with the <strong>in</strong>come-tax authorities. Most political parties are not submitt<strong>in</strong>g<br />
the list; they say all their <strong>in</strong>dividual collections are of less than ` 20,000. Parties<br />
that have filed, even if they have collected crores of rupees, hardly show a few<br />
donations above ` 20 lakh. This is the situation.<br />
The Election Commission can go only by the law which is given to us by<br />
Parliament; we can't do anyth<strong>in</strong>g on our own, though sometimes we have done<br />
someth<strong>in</strong>g that is not provided for <strong>in</strong> the law. Sometimes we get the flak for that,<br />
<strong>and</strong> sometimes we get appreciation also. This particular exercise which we are<br />
now undertak<strong>in</strong>g regard<strong>in</strong>g the seizure of money <strong>and</strong> keep<strong>in</strong>g a check on the<br />
flow of cash <strong>and</strong> other th<strong>in</strong>gs dur<strong>in</strong>g the current round of elections, even for<br />
that at least 10 or 12 petitions were filed before the Madras High Court. They<br />
were say<strong>in</strong>g, "even while walk<strong>in</strong>g on the road or travell<strong>in</strong>g, we are be<strong>in</strong>g<br />
subjected to harassment". We had to expla<strong>in</strong> it all to the court, <strong>and</strong> fortunately<br />
for us the court was very sympathetic to us. It observed: “If you have to bear a<br />
little <strong>in</strong>convenience <strong>and</strong> if more public good is served, you please bear with it.”<br />
That is why the Election Commission was able to collect about ` 70 crore. Even<br />
<strong>in</strong> the last elections <strong>in</strong> Punjab, at least 37 kilos of hero<strong>in</strong> was seized, <strong>and</strong> so were<br />
bottles of liquor <strong>and</strong> other th<strong>in</strong>gs. Punjab used to be known as the l<strong>and</strong> of five<br />
rivers. Now they say sharaab has become the sixth river .<br />
'W<strong>in</strong>nability' has been raised as one of the issues. If you say that the other party<br />
has put up a dacoit, so I will also put up a dacoit, then noth<strong>in</strong>g can be achieved.<br />
S<strong>in</strong>ce 1998, we have been suggest<strong>in</strong>g that those c<strong>and</strong>idates who are fac<strong>in</strong>g<br />
serious charges of murder, dacoity, rape, etc., where the punishment is more<br />
than five years <strong>and</strong> the court has framed the charges, they should be temporarily<br />
barred from contest<strong>in</strong>g elections. We took care <strong>and</strong> further suggested that the<br />
charges should have been framed at least one year before the election so that if<br />
somebody is aggrieved he can go to a higher court <strong>and</strong> have the charges set aside<br />
or stayed.<br />
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This matter was considered by a committee of Parliament. They said our<br />
jurisprudence is that a person is presumed to be <strong>in</strong>nocent unless convicted. If<br />
you go by that logic <strong>and</strong> jurisprudence, then why is it that lakhs of people are put<br />
<strong>in</strong> jail <strong>and</strong> are not even be<strong>in</strong>g given bail? They are not convicted so they are still<br />
<strong>in</strong>nocent. Why do you put people beh<strong>in</strong>d bars under preventive detention law?<br />
They are not yet convicted, they are all <strong>in</strong>nocent as per jurisprudence. They<br />
cannot live with their families, they cannot meet their children, they cannot earn<br />
for them; their family members may be starv<strong>in</strong>g. If you can deprive them of all<br />
those fundamental rights, what is so great about the right to contest an election?<br />
We have also been dem<strong>and</strong><strong>in</strong>g a law, a separate law, on regulat<strong>in</strong>g the function<strong>in</strong>g<br />
of political parties: How they should work, how there should be <strong>in</strong>ternal<br />
democracy <strong>and</strong> periodic elections <strong>and</strong> publication of accounts <strong>and</strong> other th<strong>in</strong>gs<br />
so that there is transparency. All this we have been dem<strong>and</strong><strong>in</strong>g but unfortunately<br />
we are not <strong>in</strong> a position to do anyth<strong>in</strong>g on our own. I will give you another<br />
example. Somebody was say<strong>in</strong>g that the c<strong>and</strong>idates are be<strong>in</strong>g asked by the<br />
Election Commission to disclose their assets, liabilities, etc. That was actually<br />
not our order.<br />
That was an order given by the Supreme Court. Some concerned citizens went<br />
to the Supreme Court <strong>and</strong> said that, "at least you ask them to disclose assets".<br />
The Supreme Court took the view that every voter has a 'fundamental right' of<br />
expression, the vote is an expression of that right. For mak<strong>in</strong>g that right<br />
effective, he should be able to make an <strong>in</strong>formed choice, <strong>and</strong> for that <strong>in</strong>formed<br />
choice he should be provided at least the basic <strong>in</strong>formation about the<br />
c<strong>and</strong>idates. Voters should know what type of crim<strong>in</strong>al antecedents the<br />
c<strong>and</strong>idate has, how many assets, liabilities, what educational qualifications he<br />
has, etc. The Supreme Court gave a direction to the Election Commission to get<br />
this <strong>in</strong>formation <strong>and</strong> dissem<strong>in</strong>ate to the people at large.<br />
We thought that if the law is amended <strong>in</strong> manner that this <strong>in</strong>formation comes <strong>in</strong><br />
the nom<strong>in</strong>ation paper, it would be better. We wrote to the Government, ask<strong>in</strong>g<br />
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them to provide these th<strong>in</strong>gs <strong>in</strong> the nom<strong>in</strong>ation paper. The Government<br />
convened an all-party meet<strong>in</strong>g <strong>and</strong> there was a unanimous view that noth<strong>in</strong>g<br />
should be made known to the people except convictions. Parliament amended<br />
Section 33(V) of the Representation of the People Act 1951 overrul<strong>in</strong>g the<br />
earlier judicial order on crim<strong>in</strong>al antecedent disclosure. So, c<strong>and</strong>idates will file an<br />
affidavit giv<strong>in</strong>g only the <strong>in</strong>formation with regard to convictions <strong>and</strong> more than<br />
one-year prison-term. They said this would be the case, notwithst<strong>and</strong><strong>in</strong>g<br />
anyth<strong>in</strong>g conta<strong>in</strong>ed <strong>in</strong> any judgment of the Supreme Court, High Court, etc.<br />
The second round then followed before the Supreme Court. The Association<br />
of Democratic <strong>Reforms</strong> (ADR) <strong>and</strong> others went to the Supreme Court, which<br />
struck down the particular provision. This is how now the Commission's order,<br />
or whatever you may call it, <strong>in</strong>structs that c<strong>and</strong>idates must file an affidavit giv<strong>in</strong>g<br />
relevant <strong>in</strong>formation. You will be surprised, Sir, that when this matter was be<strong>in</strong>g<br />
discussed <strong>in</strong> Parliament, there was a lot of opposition from some parties, some<br />
very important parties, who asked why should a c<strong>and</strong>idate state how educated he<br />
is.<br />
We po<strong>in</strong>ted out to them that if you see the Constituent Assembly debates on this<br />
issue, Dr. Rajendra Prasad (as the Chairman) closed the arguments by say<strong>in</strong>g<br />
that at that juncture 84 per cent of the people were illiterate, very few c<strong>and</strong>idates<br />
were literate <strong>and</strong> most of them might not be hav<strong>in</strong>g any formal degree. “If you<br />
provide any educational qualification as a condition we may be out, but the time<br />
will come when the Parliament can do that”, he had said. In 2001, the move was<br />
be<strong>in</strong>g opposed.<br />
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<strong>Campaign</strong> <strong>F<strong>in</strong>ance</strong> <strong>Reforms</strong> <strong>in</strong> <strong>India</strong>: <strong>Issues</strong> <strong>and</strong> <strong>Challenges</strong><br />
Mr. Anil Bairwal, National Coord<strong>in</strong>ator,<br />
(ADR)<br />
Association for Democratic <strong>Reforms</strong><br />
A lot of th<strong>in</strong>gs have already been said about crim<strong>in</strong>alisation, about political<br />
parties, the need to br<strong>in</strong>g more transparency <strong>and</strong> <strong>in</strong>ner-party democracy. I would<br />
like to touch upon a couple of other po<strong>in</strong>ts. One th<strong>in</strong>g is about ticketdistribution.<br />
This goes to the core of this money-power issue. The tickets are<br />
given by political parties to people know<strong>in</strong>g that these are the people who can<br />
spend more money than others. At least this time a lot of c<strong>and</strong>idates were<br />
named well <strong>in</strong> advance. But there are times when till the last moment, you do not<br />
know to which political party a particular gentleman belongs because he is<br />
negotiat<strong>in</strong>g with every party; he is probably try<strong>in</strong>g to jo<strong>in</strong> the party from which<br />
he can get the ticket with the least money. It aga<strong>in</strong> goes down to the need to<br />
regulate the function<strong>in</strong>g of political parties. Mr. Mendiratta said a lot of<br />
proposals have been sent to the Government over the years; several<br />
commissions have been set up. But I th<strong>in</strong>k political parties have not done their<br />
due; what people were hop<strong>in</strong>g them to do. I am also not sure what they would do<br />
if some recommendations were to go from here.<br />
Mr. Arun gave the example of Kerala where helicopters were not used. The only<br />
th<strong>in</strong>g that works with the political parties is public pressure. I th<strong>in</strong>k State fund<strong>in</strong>g<br />
would isolate political parties from voters. To some extent, I th<strong>in</strong>k they are<br />
already detached from the masses. State fund<strong>in</strong>g would detach them even more<br />
because they would not have to look for fund<strong>in</strong>g. Some political parties now say<br />
that they don't take funds from big bus<strong>in</strong>ess, they concede that they are tak<strong>in</strong>g<br />
money from common people. So, if we say, “You get this percentage of votes,<br />
we will give you this amount of money”, they will sit back <strong>and</strong> relax.<br />
The third issue is that political parties need money. That is for sure. They cannot<br />
carry out the functions that they are supposed to carry out without money. Now<br />
the question is whether the State should fund them, or whether we should make<br />
other provisions to br<strong>in</strong>g <strong>in</strong> white money. I agree that we need to tighten the<br />
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system <strong>in</strong>stead of br<strong>in</strong>g<strong>in</strong>g <strong>in</strong> State money; nobody is go<strong>in</strong>g to control the<br />
current happen<strong>in</strong>gs. They will cont<strong>in</strong>ue to happen. But maybe we could f<strong>in</strong>d a<br />
way to <strong>in</strong>crease the component of white money <strong>in</strong> the electoral process so that it<br />
just does not thrive on black money alone.<br />
The Election Commission is a body with constitutional status but it does not<br />
even have the right to make election rules. Every time they have to make a m<strong>in</strong>or<br />
change they have to send their request to the Law M<strong>in</strong>istry. Even the report<br />
about political parties from the Institute of Chartered Accountants of <strong>India</strong> has<br />
been sent to the m<strong>in</strong>istry. The m<strong>in</strong>istry has been sitt<strong>in</strong>g on it <strong>and</strong> it does not<br />
matter that it is a Congress M<strong>in</strong>ister right now; the BJP has done similar th<strong>in</strong>gs<br />
while <strong>in</strong> power <strong>in</strong> the past. I th<strong>in</strong>k most parties play the same game.<br />
F<strong>in</strong>ally, I would just like to comment on disclosures. A lot of political leaders<br />
don't like disclosures. But there is a need to br<strong>in</strong>g <strong>in</strong> more disclosures. One of<br />
the disclosures is of register of <strong>in</strong>terest which is currently <strong>in</strong> the Rajya Sabha.<br />
The Political Ethics Committee decided not to make it public <strong>and</strong> CEC had to<br />
issue a compliance notice. When we are talk<strong>in</strong>g about probity <strong>and</strong> how to br<strong>in</strong>g<br />
<strong>in</strong> better c<strong>and</strong>idates <strong>and</strong> better people <strong>in</strong>to the system, the Lok Sabha still does<br />
not have anyth<strong>in</strong>g related to register of <strong>in</strong>terest. Mr. Rudy was talk<strong>in</strong>g about<br />
separat<strong>in</strong>g Legislative <strong>and</strong> Executive functions, <strong>and</strong> how to make it less<br />
attractive for people to come <strong>in</strong> <strong>in</strong>to the political system. One way may be<br />
disclosures, particularly for elected representatives, like <strong>in</strong> some other countries.<br />
In the US, every Senator's <strong>in</strong>come-tax returns are on his website. From ADR, we<br />
have asked for the <strong>in</strong>come-tax returns of 20 MPs whose assets have <strong>in</strong>creased<br />
the most between 2004 <strong>and</strong> 2009. All the 20 MPs have said they will not disclose<br />
<strong>and</strong> the appeal is currently pend<strong>in</strong>g with the CEC. Th<strong>in</strong>gs happen here only if<br />
the CEC comes <strong>in</strong>, or a court comes <strong>in</strong>. I th<strong>in</strong>k all of us are look<strong>in</strong>g forward to a<br />
time when political parties will pro-actively take some steps to reduce the<br />
<strong>in</strong>cidence of some of these problems.<br />
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Chair: Before open<strong>in</strong>g up the floor to questions <strong>and</strong> comments, I would like to<br />
give the issue some historical perspective. The orig<strong>in</strong> of the malaise, of the<br />
dependence, enormous dependence on unaccounted money <strong>and</strong> of extremely<br />
high levels of election expenditure, unaccounted election expenditure, may<br />
have been <strong>in</strong> 1969, when corporate donations to political parties were banned. It<br />
was made legal aga<strong>in</strong>, under Section 293 of the Companies Act, only <strong>in</strong> 1985. In<br />
1969, <strong>in</strong> the context of a highly regulated import-substitut<strong>in</strong>g economy,<br />
corporate donations were banned; the question arose as to where an adequate<br />
legal source of funds would be available for political parties.<br />
State-fund<strong>in</strong>g was <strong>in</strong>troduced <strong>in</strong> a range of countries through the 1960s, 1970s<br />
<strong>and</strong> 1980s; you can have a range of designs for State-fund<strong>in</strong>g; it can be full Statefund<strong>in</strong>g,<br />
on a vote-share basis, on a per-vote basis, on a reimbursement basis; it<br />
can be partial, on a match<strong>in</strong>g-grant basis or aga<strong>in</strong>st private funds raised. In 1969,<br />
when you banned legal corporate fund<strong>in</strong>g of political parties without<br />
substitut<strong>in</strong>g it with State-fund<strong>in</strong>g, you created a huge vacuum, which meant that<br />
parties were willy-nilly forced to go under the table, to the black money<br />
economy, <strong>and</strong> were dependent progressively on unaccounted funds.<br />
Then you have another development <strong>in</strong> 1975, when <strong>in</strong> the 'Kanwarlal Gupta vs<br />
Amarnath Chawla, case, the Supreme Court said that party expenditure should<br />
also be counted <strong>in</strong>to a c<strong>and</strong>idate's expenditure-limit. The Government<br />
amended the law <strong>and</strong> appended explanation (i) to Section 77(1) of the<br />
Representation of the People Act, to say that party spend<strong>in</strong>g will not be counted<br />
for the purposes of the c<strong>and</strong>idate's expenses limit <strong>and</strong>, therefore, parties can<br />
spend any amount. The c<strong>and</strong>idate has a fixed limit which has been revised<br />
progressively, which for a Lok Sabha seat is now ` 40 lakh, which is a very small<br />
amount compared to the actual amount that gets spent. Effectively, you<br />
removed all expenditure limits because parties could spend as much as they<br />
liked; even after the 2003 amendment brought <strong>in</strong> by the NDA Government,<br />
where c<strong>and</strong>idates had to declare what their party spent on them, if a party claims<br />
that it does not mention the name of the c<strong>and</strong>idate, does not associate its<br />
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fund<strong>in</strong>g with the c<strong>and</strong>idate, it says it is just propagat<strong>in</strong>g the party programmes,<br />
then it falls outside the spend<strong>in</strong>g limit for a c<strong>and</strong>idate.<br />
The comb<strong>in</strong>ation of what happened <strong>in</strong> 1969 <strong>and</strong> then <strong>in</strong> 1975 was that you had<br />
no adequate legal source of spend<strong>in</strong>g till corporate-fund<strong>in</strong>g was re<strong>in</strong>troduced as<br />
legal <strong>in</strong> 1985; you had a highly regulated economy where the licence raj was very<br />
much <strong>in</strong> place; you also had unlimited party-spend<strong>in</strong>g, which meant that you had<br />
an arms race between parties at the time of elections. Even the re-<strong>in</strong>troduction<br />
of corporate-fund<strong>in</strong>g <strong>in</strong> 1985 really made no difference because by that time the<br />
dependence on unaccounted money had become deeply entrenched <strong>in</strong> the<br />
system; also, until 2003, there was no tax <strong>in</strong>centive. There was the fear of lack of<br />
anonymity, <strong>and</strong> of be<strong>in</strong>g penalised by the party which you did not fund, if it<br />
came to power some time <strong>in</strong> the future. So, the entrenchment of political parties<br />
<strong>in</strong> the unaccounted economy became very deep. Although, as Mr. Manish<br />
Tewari said, the 2003 amendments have <strong>in</strong>troduced a degree of transparency,<br />
<strong>and</strong> more <strong>and</strong> more companies are now contribut<strong>in</strong>g by cheque <strong>and</strong> claim<strong>in</strong>g<br />
tax-deduction, it is still a small percentage of the actuals.<br />
Now, what do we do about this? As I said at the beg<strong>in</strong>n<strong>in</strong>g, there are four types<br />
of regulation of elections <strong>and</strong> parties: limits on expenditures, limits on<br />
contributions like <strong>in</strong> the US <strong>and</strong> public-fund<strong>in</strong>g of some k<strong>in</strong>d or the other. It<br />
can be designed <strong>in</strong> various ways <strong>and</strong> forms with different types of report<strong>in</strong>g <strong>and</strong><br />
disclosure requirements. So, <strong>in</strong> pr<strong>in</strong>ciple, one way is to tightly monitor<br />
expenditure <strong>and</strong> also l<strong>in</strong>k it to a tight monitor<strong>in</strong>g of contributions, like what Mr<br />
Arun suggested. But you have other systems also. In the US, there is no limit on<br />
expenditure, but it is relatively clean. You don't have this k<strong>in</strong>d of corruption<br />
because there are very strict report<strong>in</strong>g <strong>and</strong> disclosure requirements.<br />
Remove what is basically a farcical cap on expenditure. Why have c<strong>and</strong>idate-<br />
limits of ` 40 lakh when you exempt parties, <strong>and</strong> effectively make it a<br />
mean<strong>in</strong>gless limit. Why have it all then? Do away with it <strong>and</strong> focus on hav<strong>in</strong>g<br />
strict disclosure. There are cash <strong>and</strong> unaccounted contributions; even if you<br />
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contribute by cheques of ` 19,999, you don't have to disclose it to the Election<br />
Commission as it is less than ` 20,000. So, this is also farcical. If you have a strict<br />
system, every contributor has to be identified <strong>and</strong> the contribution recorded. So,<br />
even if you don't have expenditure limits, <strong>and</strong> you have a very strict system of<br />
report<strong>in</strong>g <strong>and</strong> disclosure, you can clean up the system to a considerable extent.<br />
The other way is to <strong>in</strong>troduce public-fund<strong>in</strong>g of some k<strong>in</strong>d. This can be<br />
designed <strong>in</strong> various ways. I would encourage our guests from Germany to say<br />
someth<strong>in</strong>g about this. We could learn from the systems that exist <strong>in</strong> Germany<br />
<strong>and</strong> other countries <strong>in</strong> Europe. It could be on a match<strong>in</strong>g grant basis, which is<br />
not totally divorced from the people as you said. If it is just dependent on voteshare,<br />
you don't have to go out to the people to raise money but you can say that<br />
if you raise X amount of money we will match it, 1:1 or 1:2. Give them some<br />
<strong>in</strong>centive to show their credibility <strong>in</strong> terms of rais<strong>in</strong>g money, <strong>in</strong> terms of masssupport,<br />
<strong>in</strong> terms of gett<strong>in</strong>g contributions <strong>and</strong> match it with State funds to some<br />
extent. Along with this, as others have said here, <strong>in</strong>troduc<strong>in</strong>g strict<br />
accountability measures <strong>and</strong> <strong>in</strong>ternal democracy with<strong>in</strong> political parties has to<br />
be m<strong>and</strong>atory because you cannot give a State fund to, say, a leader who is totally<br />
unaccountable to his party. You can have different packages designed. The<br />
totality of the package <strong>and</strong> the <strong>in</strong>centives is what really matters.<br />
Participant: What about separat<strong>in</strong>g legislative functions from the Executive?<br />
Chair: I don't th<strong>in</strong>k <strong>in</strong> a parliamentary system that can be done. In a presidential<br />
system there is separation of powers. If you are a member of Congress <strong>in</strong> the<br />
US, you cannot become a member of the Executive. Here <strong>in</strong> <strong>India</strong> the m<strong>in</strong>isters<br />
are drawn from the Legislature, from Parliament or the State assemblies.<br />
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Question & Answer Session<br />
Mr. Mohan Guruswamy: In the early part of the Republic, after elections the<br />
defeated c<strong>and</strong>idates could file petitions challeng<strong>in</strong>g the election on excessivespend<strong>in</strong>g.<br />
There have been plenty of cases, like the celebrated case of Dr.<br />
Channa Reddy, the then Union M<strong>in</strong>ister of Steel. With<strong>in</strong> six months of<br />
becom<strong>in</strong>g M<strong>in</strong>ister, his election was thrown out for corrupt practices. So, there<br />
was an <strong>in</strong>centive for c<strong>and</strong>idates to collect <strong>in</strong>formation about one another <strong>and</strong> be<br />
ready for court cases.<br />
Now the judicial process is so long <strong>and</strong> extended that these th<strong>in</strong>gs are never<br />
resolved. I have the case of a friend of m<strong>in</strong>e, Ram Bahadur S<strong>in</strong>gh, who<br />
contested the parliamentary elections from Bihar <strong>in</strong> 1984. He led <strong>in</strong> all Assembly<br />
segments, but was declared lost ow<strong>in</strong>g to political pressure on the Return<strong>in</strong>g<br />
Officer. He fought for five years, he won the case after the term of Parliament<br />
was over. You need to comb<strong>in</strong>e all what has been said here with quick judicial<br />
processes. Maybe you need separate fast-track courts; with<strong>in</strong> 3-4 months you<br />
should have a verdict. Otherwise, people are denied their right to<br />
representation.<br />
Dr. Lukas, Political Counsellor, German Embassy: I am from the German<br />
Embassy <strong>and</strong> I would like to take up your <strong>in</strong>vitation to say a few words on how<br />
we deal with the system or with the parties <strong>in</strong> general. We don't have campaignf<strong>in</strong>anc<strong>in</strong>g,<br />
we have party-f<strong>in</strong>anc<strong>in</strong>g. We have a mix of ways <strong>in</strong> which we have<br />
party-f<strong>in</strong>anc<strong>in</strong>g; we have public-f<strong>in</strong>anc<strong>in</strong>g by the State, f<strong>in</strong>anc<strong>in</strong>g by membership<br />
fees, f<strong>in</strong>anc<strong>in</strong>g through donors, donations by private persons as well as<br />
corporate donations. The public f<strong>in</strong>ance depends on the party but if you look<br />
up the website of the German Parliament, public-f<strong>in</strong>anc<strong>in</strong>g is limited to<br />
somewhere between 25 <strong>and</strong> 30 per cent for each party. That is a major part of<br />
f<strong>in</strong>anc<strong>in</strong>g but it is not the bulk. The bulk actually is made up either by<br />
membership fees or by donations. Some parties, I have to add, also have some<br />
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economic activities. There are parties who have publish<strong>in</strong>g houses, etc. This is<br />
regard<strong>in</strong>g the f<strong>in</strong>anc<strong>in</strong>g.<br />
Maybe a l<strong>in</strong>e on the way public f<strong>in</strong>anc<strong>in</strong>g is be<strong>in</strong>g done. It is strictly <strong>in</strong> correlation<br />
to the success or the votes the party ga<strong>in</strong>ed <strong>in</strong> the previous elections. For<br />
example, for every vote a party gets it gets a certa<strong>in</strong> amount of money, <strong>and</strong> it also<br />
is <strong>in</strong> correlation to the membership fees. For every euro a party gets as<br />
membership fees they get a certa<strong>in</strong> amount of cents <strong>in</strong> public-f<strong>in</strong>anc<strong>in</strong>g. So, all<br />
<strong>in</strong> all, there is a complex system.<br />
Hav<strong>in</strong>g said that, we also have a very strict system of accountability <strong>and</strong> of<br />
disclosure. In fact, every party has to disclose its <strong>in</strong>come <strong>and</strong> its expenditure,<br />
annually, <strong>and</strong> these disclosures are be<strong>in</strong>g supervised or checked by the<br />
adm<strong>in</strong>istration of Parliament. It is obviously bad to be under the scrut<strong>in</strong>y of an<br />
adm<strong>in</strong>istration but it is even worse to be under the scrut<strong>in</strong>y of the media. Yet, no<br />
system is perfect. In Germany, we have had several cases of black money<br />
pour<strong>in</strong>g <strong>in</strong>to political parties. The good news is that those cases have been made<br />
public <strong>in</strong> the media <strong>and</strong> they led to big changes <strong>in</strong> domestic politics, which led to<br />
the resignation of politicians. So, I would agree with what some people said here<br />
that the key is accountability <strong>and</strong> disclosure, <strong>and</strong> German history has shown that<br />
the media plays a key role <strong>in</strong> po<strong>in</strong>t<strong>in</strong>g f<strong>in</strong>gers at th<strong>in</strong>gs that go wrong. I will f<strong>in</strong>ish<br />
by say<strong>in</strong>g that <strong>in</strong> my personal op<strong>in</strong>ion, the question whether you have a<br />
parliamentary system or a presidential system must be de-l<strong>in</strong>ked from the<br />
question how you f<strong>in</strong>ance parties because <strong>in</strong> any system you would have parties<br />
<strong>and</strong> <strong>in</strong> any system you would have parties that gather money <strong>and</strong> that want to<br />
spend the money <strong>in</strong> their favour.<br />
Participant: You have heard a political science perspective; I would like to give<br />
an economist's perspective. <strong>India</strong> is a very complex democracy, at different<br />
stages of build<strong>in</strong>g but the crux of the matter is that you have to reform vested<br />
<strong>in</strong>terests by vested <strong>in</strong>terests. Each political party th<strong>in</strong>ks tomorrow it will come to<br />
power. So, all the loopholes should be reta<strong>in</strong>ed so that when a party comes to<br />
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power, it can make money. It is very important to note that politics has become<br />
bus<strong>in</strong>ess. Economists never thought that public expenditure would be treated<br />
as a milch cow. We thought there would be benign governments, Welfare States,<br />
people full of character <strong>and</strong> people who would not extract money. In foreign<br />
countries there is the State, but here we have made common people the ma<strong>in</strong><br />
donor. Even if you collect ` 10 per person imag<strong>in</strong>e how much it comes to.<br />
We are not debat<strong>in</strong>g merits <strong>and</strong> demerits; there are so many other concerns <strong>and</strong><br />
<strong>in</strong> a holistic fashion you have to count them. From an economist's angle, we<br />
assume that the system is fair, assume that there are enough checks <strong>and</strong> balances<br />
<strong>and</strong> accountability <strong>and</strong> transparencies which are the pre-requisites of any moral,<br />
political, ethical system of governance, <strong>in</strong>clud<strong>in</strong>g elections. The idea of<br />
economists was that if parties start collect<strong>in</strong>g money, particularly from bus<strong>in</strong>ess,<br />
bus<strong>in</strong>essmen also treat it as an <strong>in</strong>vestment. If a bus<strong>in</strong>essman gives ` 1 lakh, he<br />
will expect ` 10 lakh <strong>in</strong> return, sooner the better. The pay-back periods are<br />
gett<strong>in</strong>g reduced. Mr. Rudy said the black money component <strong>in</strong> campaignspend<strong>in</strong>g<br />
is go<strong>in</strong>g up. We are already see<strong>in</strong>g <strong>in</strong> every transaction that the black<br />
money portion is go<strong>in</strong>g up. So, the idea is not to <strong>in</strong>fluence public policy through<br />
money power, it is particularly for <strong>in</strong>fluenc<strong>in</strong>g bus<strong>in</strong>ess policies, economic<br />
policies to the advantage of a particular corporate house. This is the ma<strong>in</strong> idea.<br />
If you isolate it, <strong>and</strong> if elections are genu<strong>in</strong>ely funded outside of vested <strong>in</strong>terests<br />
who turn public policy for their personal <strong>and</strong> corporate benefit, the logic of the<br />
economists still rema<strong>in</strong>s valid.<br />
But this has now manifested itself <strong>in</strong> so many other ways that we are simply<br />
overtaken by corruption, we are overtaken by black money; economic reforms<br />
have not helped simply because political reforms, which we all economists now<br />
recognise, are a pre-requisite for good governance. Economic reforms are not<br />
enough by themselves. It has been well said that just focuss<strong>in</strong>g on election<br />
campaign fund<strong>in</strong>g will not be enough. It will be a brick, an important<br />
component. Don't reduce it to noth<strong>in</strong>g, but for heaven's sake, as Mr. Mendiratta<br />
<strong>and</strong> others have said, you have to first make sure that there is political will <strong>and</strong><br />
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m<strong>in</strong>imum agreement among all political parties for not violat<strong>in</strong>g this code of<br />
national responsibility towards clean<strong>in</strong>g up the system. As of now, no party is<br />
<strong>in</strong>terested. Each party wants to play the same game, “Ab tumari baari, aglee baar<br />
hamaari baari aayegi”. A corporate would say, “reform others, not me, tax others”.<br />
Vested <strong>in</strong>terests are tied up together <strong>and</strong> no one is seriously <strong>in</strong>terested <strong>in</strong><br />
reforms, everyone is <strong>in</strong>terested <strong>in</strong> putt<strong>in</strong>g obstacles or leav<strong>in</strong>g enough loopholes<br />
to reap the benefits from non-regulation.<br />
Certa<strong>in</strong>ly we need a regulator. If we have learnt anyth<strong>in</strong>g from reforms, leav<strong>in</strong>g<br />
it to markets would not help, leav<strong>in</strong>g it to Government will not help. Each has a<br />
vested <strong>in</strong>terest, each has fundamental weaknesses of its own—market failures,<br />
State failures, <strong>and</strong> people's failures. People too would like not to pay taxes. No<br />
one is honest to the core. So, under such circumstances the first pre-requisite<br />
will be political reforms of the parties <strong>and</strong> c<strong>and</strong>idates. Good c<strong>and</strong>idates have to<br />
be certified by various parameters, <strong>and</strong> people at the grass-root should decide<br />
who should be fielded or not, not the political parties.<br />
Participant: As has been rightly said, apart from public pressure, noth<strong>in</strong>g<br />
works on political parties. I have been <strong>in</strong> touch with the political system for over<br />
three decades; every time there was a question on whether crim<strong>in</strong>als could be<br />
fielded or not, every political party would f<strong>in</strong>d one logic or the other to evade it.<br />
Political parties th<strong>in</strong>k that they are above all. That is the most unfortunate th<strong>in</strong>g.<br />
Unfortunately, the entire political class is be<strong>in</strong>g seen as a villa<strong>in</strong>, which is not true<br />
because political parties, after all, don't descend from heaven. They also come<br />
from the society. So, society at large has also to be viewed <strong>in</strong> context. But<br />
political reforms, as has rightly been mentioned, is one vehicle through which<br />
we can achieve many th<strong>in</strong>gs.<br />
What do we mean by a political party? They, like all other organisations, need to<br />
be audited, need to be regulated. Then comes the question of what k<strong>in</strong>d of<br />
c<strong>and</strong>idates? I am really appalled when political party leaders say that if a<br />
c<strong>and</strong>idate has not been convicted, how can he be debarred from contest<strong>in</strong>g?<br />
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This is absolutely ridiculous <strong>and</strong> every political party, every political leader<br />
speaks the same language. We have seen the recent issue on the Lok Pal, with all<br />
k<strong>in</strong>ds of arguments to derail the whole process. Somebody talks of federalism;<br />
suddenly federalism becomes such an important issue. Even those parties that<br />
are highly supportive of a strong Centre, they are also talk<strong>in</strong>g of federalism. We<br />
have to all agree that unless public pressure is built, political parties are not go<strong>in</strong>g<br />
to agree to anyth<strong>in</strong>g.<br />
Dr. Niranjan Sahoo, Senior Fellow, ORF: Just two issues which caught my<br />
imag<strong>in</strong>ation, based on what Mr. T. K. Arun said about disclosures. We can<br />
actually beg<strong>in</strong> with the panchayati raj <strong>in</strong>stitutions, egg<strong>in</strong>g on others to disclose<br />
more <strong>and</strong> more <strong>in</strong>formation. But here I s<strong>in</strong>cerely feel that the media is actually<br />
miss<strong>in</strong>g <strong>in</strong> action <strong>in</strong> terms of report<strong>in</strong>g, <strong>in</strong> terms of play<strong>in</strong>g the activist role<br />
which it is play<strong>in</strong>g on many other policy issues, be it on the Lok Pal, be it on many<br />
of the other issues relat<strong>in</strong>g to environment <strong>and</strong> other concerns. Some process<br />
has already been started on disclosure, crim<strong>in</strong>al antecedents <strong>and</strong> many other<br />
th<strong>in</strong>gs. Now, rout<strong>in</strong>ely, a lot of th<strong>in</strong>gs are com<strong>in</strong>g to public knowledge, like<br />
corporate donations to different political parties. But why are we not gett<strong>in</strong>g<br />
actually deeper <strong>and</strong> look<strong>in</strong>g at it <strong>in</strong> terms of who donates <strong>and</strong> whether it has any<br />
l<strong>in</strong>kages to <strong>in</strong>fluenc<strong>in</strong>g policies adversely or <strong>in</strong> any one's favour. I am talk<strong>in</strong>g<br />
about the crony capitalism aspects, which have come out vividly <strong>in</strong> the 2-G case.<br />
So, this needs a thorough prob<strong>in</strong>g.<br />
Of course, a research organisation like ours <strong>and</strong> many others also have to play a<br />
role because we don't have much empirical work on this issue, like how much<br />
money is <strong>in</strong>volved, what k<strong>in</strong>d of role it plays <strong>in</strong> <strong>in</strong>fluenc<strong>in</strong>g elections or<br />
determ<strong>in</strong><strong>in</strong>g the outcome. We don't know much about it <strong>in</strong> <strong>India</strong> unlike <strong>in</strong><br />
Europe <strong>and</strong> the US. They have reams of empirical work to validate many such<br />
arguments. The time has come to actually take this issue very seriously on our<br />
part, apart from expect<strong>in</strong>g the political class <strong>and</strong> the civil society to take the lead.<br />
Here I s<strong>in</strong>cerely request the media to play an active role because if they don't<br />
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raise this issue, we will get to hear about it only dur<strong>in</strong>g election time <strong>and</strong> that too<br />
would pass.<br />
Mr. T.K. Arun: But media has other priorities now.<br />
Dr. Niranjan Sahoo: I know, but this is the mother of all the corruption. It is<br />
not just the Lok Pal. You need systemic reforms on campaign-fund<strong>in</strong>g <strong>and</strong><br />
restructur<strong>in</strong>g or redesign<strong>in</strong>g of the system so that good c<strong>and</strong>idates are chosen.<br />
This would attract better talent <strong>in</strong>to the system <strong>and</strong> <strong>in</strong>fuse new blood through<br />
<strong>in</strong>ner-party democracy. This is not happen<strong>in</strong>g. There is a typical feudalism that it<br />
is be<strong>in</strong>g practiced <strong>in</strong> the political system. How to break it? Mak<strong>in</strong>g a beg<strong>in</strong>n<strong>in</strong>g is<br />
very important.<br />
Dr. Klaus Julian Voll: I have a question for Mr. Rudy. In the late 1980s, your<br />
party showed a great <strong>in</strong>terest <strong>in</strong> the German model of party-f<strong>in</strong>anc<strong>in</strong>g <strong>and</strong> also<br />
the mixed electoral system. At that time the BJP was a smaller party. You have<br />
obviously lost <strong>in</strong>terest now. If you are so s<strong>in</strong>cere about reduc<strong>in</strong>g these<br />
anomalies, wouldn't it be better to start by talk<strong>in</strong>g about f<strong>in</strong>ancial reforms with<br />
regard to political parties? Wouldn't you have to go <strong>and</strong> see such models which<br />
have been, let us say, practiced <strong>in</strong> democracies like <strong>in</strong> Germany?<br />
We have a famous German political philosopher who developed the law of<br />
'eternal oligarchy'. It is there <strong>in</strong> each power system, <strong>and</strong> perhaps what you<br />
discussed here about unanimity among political parties is like what a German<br />
theoretician calls 'post-colonial State class' with various symptoms that you all<br />
have mentioned. The question really is how to transform this. I remember<br />
Vajpayee <strong>in</strong> the 1990s spoke for a presidential system, exactly along your l<strong>in</strong>es,<br />
but suddenly the whole debate was completely closed.<br />
Mr. Rudy: Whatever you all are say<strong>in</strong>g is perfect. If the product that you are<br />
talk<strong>in</strong>g about <strong>in</strong> the system is an MLA or an MP or a councillor, no political party<br />
<strong>in</strong> the present system would agree to reforms because the numbers have to be<br />
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achieved. All this would prevent that <strong>in</strong>dividual, the electability of that<br />
<strong>in</strong>dividual, the position<strong>in</strong>g of that <strong>in</strong>dividual.<br />
I am a part of it, I am see<strong>in</strong>g the disease all around me Yes. We will fail this<br />
country if the elite who are here <strong>and</strong> many more who I am talk<strong>in</strong>g to, if we do<br />
not start. I don't expect this change to happen <strong>in</strong> my lifetime, I am sure about it,<br />
because the regional political aspirations, <strong>in</strong>dividuals, all have come together to<br />
protect (the system). Today <strong>in</strong> the Punjab elections there was 80 per cent vot<strong>in</strong>g,<br />
but the average poll percentage <strong>in</strong> this country, if you take <strong>in</strong> last 50 years, has<br />
not crossed 50 per cent. Out of the 50 per cent, the person who gets elected gets<br />
30 per cent. So, a person who gets 1,75,000 votes out of a total of 10 lakh votes<br />
(<strong>in</strong> a Lok Sabha constituency, for <strong>in</strong>stance) is the elected representative while<br />
those of the 7.5 lakh people who have not voted have no role to play. In urban<br />
constituencies, the literate people, people who can participate <strong>in</strong> elections,<br />
amidst us, they don't vote. Why don't they vote? In rural areas, those people who<br />
are not so privileged, they vote because of the aspirations, because "this man<br />
(the c<strong>and</strong>idate) is my lifel<strong>in</strong>e. He is go<strong>in</strong>g to decide my future, he is go<strong>in</strong>g to get<br />
me a job, he is go<strong>in</strong>g to get me money".<br />
In Goa, you can check out, on the day of the election the newspaper vendor has<br />
` 2000 <strong>in</strong> currency notes rolled which he throws <strong>in</strong>to houses. Even as we are<br />
talk<strong>in</strong>g about it, we are <strong>in</strong>dulg<strong>in</strong>g <strong>in</strong> it. We need a debate. A political party that<br />
does not have the pressure to have such people elected will def<strong>in</strong>itely subscribe<br />
to all what you are say<strong>in</strong>g. They will put the changes <strong>in</strong>to the system.<br />
We are all talk<strong>in</strong>g about transparency. But the end product which you are<br />
dem<strong>and</strong><strong>in</strong>g is so complicated <strong>and</strong> is so litigated. The basic assumption of an<br />
<strong>in</strong>dividual is so low that we cannot make it, because my electability, my<br />
'w<strong>in</strong>nability' would be completely lost when I put all those formulae that you are<br />
suggest<strong>in</strong>g, <strong>in</strong>to practice.<br />
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Dr. Rekha Saxena, Delhi University: I just want to speak about the Lok Pal<br />
episode <strong>and</strong> how centralised parties are talk<strong>in</strong>g about federalism. The situation<br />
has changed now. <strong>India</strong> started off as a centralised federation where<br />
parliamentary features overshadowed the federal features of the Constitution.<br />
But s<strong>in</strong>ce 1989, with the transformation of party system, judicial <strong>in</strong>terpretations<br />
favour<strong>in</strong>g the cause of State autonomy, privatisation, globalisation of the<br />
economy, creat<strong>in</strong>g pressure for the <strong>in</strong>tegration of national economy with the<br />
global economy, <strong>and</strong> pressure for decentralisation of power to the grassrootslevel,<br />
a new dynamic has emerged <strong>in</strong> the manner politics is run. Now <strong>India</strong> is<br />
mov<strong>in</strong>g towards greater federalism <strong>and</strong> the Lok Ayukt has had a direct impact<br />
on the federal structure. I work on federalism, I have written extensively on this.<br />
I th<strong>in</strong>k the Government should have brought it (Lok Pal) like <strong>in</strong> the case of<br />
panchayat, <strong>in</strong> the form of an enabl<strong>in</strong>g Act <strong>and</strong> asked the States to pass a<br />
conform<strong>in</strong>g act.<br />
Dr. Iqbal Husa<strong>in</strong>, Jamia Millia Islamia: I am an academician <strong>and</strong> teach law at<br />
the Jamia Law Faculty. I am see<strong>in</strong>g from the academic po<strong>in</strong>t of view the election<br />
system <strong>and</strong> when I go back 65 years, when our country had great leaders, they<br />
were very honest <strong>and</strong> all of them wanted prosperity <strong>and</strong> freedom of the country.<br />
After the British left we started govern<strong>in</strong>g ourselves; the quality of the leaders<br />
that we got went down. Two months back I attended a sem<strong>in</strong>ar of corporates <strong>in</strong><br />
<strong>in</strong>-house councils. They admitted that they were mak<strong>in</strong>g contributions to<br />
political parties, but when asked where were they tak<strong>in</strong>g this money from, they<br />
said they were rais<strong>in</strong>g the donations from the people by over-pric<strong>in</strong>g. I fail to<br />
underst<strong>and</strong> then why we have legalised ` 40 lakh as expense-limit for c<strong>and</strong>idates<br />
contest<strong>in</strong>g Lok Sabha elections. Especially when parties are spend<strong>in</strong>g beyond<br />
the expenditure limit <strong>and</strong> the Election Commission unable to take action.<br />
Secondly—this is the most disturb<strong>in</strong>g po<strong>in</strong>t—where is the reservoir of<br />
c<strong>and</strong>idates for parties to choose from? I am an academician. I cannot contest<br />
elections because I do not fulfil the criteria, the k<strong>in</strong>d of compulsions, <strong>and</strong> do not<br />
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have the k<strong>in</strong>d of th<strong>in</strong>gs which are required to w<strong>in</strong> an election. In the past, every<br />
university, every college used to have a students' union. At least with<strong>in</strong> the<br />
academic culture, student leadership used to be created. At the time, we had<br />
most of our leaders com<strong>in</strong>g from the student leadership <strong>and</strong> they had a little bit<br />
of etiquette—had some consciousness, <strong>and</strong> would not go beyond a limit. What<br />
is happen<strong>in</strong>g today? The leadership is com<strong>in</strong>g from the gonda elements of the<br />
locality <strong>and</strong> the good people are be<strong>in</strong>g excluded.<br />
That is why every serious talk must address this issue. It is not as if we are not<br />
mov<strong>in</strong>g <strong>in</strong> the right direction. We are encounter<strong>in</strong>g problems <strong>and</strong> most of the<br />
problems are the contribution of all the parties. As we all have agreed, the<br />
parties themselves do not want change. One of the leaders here asked what<br />
k<strong>in</strong>d of political adm<strong>in</strong>istration can be expected if 75 per cent of the people<br />
were not vot<strong>in</strong>g. Yes, it is true that happens, but what is the repercussion? The<br />
c<strong>and</strong>idate who has paid ` 5 crore, to get the ticket, he is gett<strong>in</strong>g elected through<br />
corruption. Is it not? At the time of election the people are silent. But when they<br />
are subjected to corruption they come along with Anna Hazare. That is the<br />
reason. So, if politicians keep on mak<strong>in</strong>g excuses about different political<br />
systems, different political theories, <strong>and</strong> try to rema<strong>in</strong> <strong>in</strong> the power by whatever<br />
the means, if they are not honest, certa<strong>in</strong>ly a day will come when we will have a<br />
revolution <strong>in</strong> this country.<br />
Mr. Samya Chatterjee, Research Assistant, ORF: I will just focus on the US<br />
campaign f<strong>in</strong>ance system because two remarks were made about how there has<br />
been more transparency or accountability there. That is not true. They face<br />
almost similar problems that we face. Of course, not on the same scale but the<br />
problem of unaccounted money rema<strong>in</strong>s. In 2009, there was a US Supreme<br />
Court decision which legalised corporate contributions without limits.<br />
Previously, there were limits to those contributions. In fact, if you followed the<br />
last presidential elections <strong>in</strong> 2008, the rise of small donors was a direct result of<br />
the disproportionate amount of <strong>in</strong>fluence that corporate contributions had.<br />
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To exp<strong>and</strong> on this, <strong>in</strong> the US the problem essentially is that when a corporate<br />
makes contributions, it does so through lobby groups <strong>and</strong> they have the concept<br />
of soft money; they have fund-rais<strong>in</strong>g d<strong>in</strong>ners <strong>and</strong> that is how they <strong>in</strong>fluence <strong>and</strong><br />
change the policies. It is a very different <strong>and</strong> far more sophisticated form of<br />
corruption that takes place there. It has the same effect that we are talk<strong>in</strong>g about,<br />
the disconnect between the people <strong>and</strong> the elected representatives. That, I th<strong>in</strong>k,<br />
was identified as the fundamental problem affect<strong>in</strong>g all polities. In fact, it is there<br />
<strong>in</strong> the United States. So, when we look to the US, it is not a rosy picture. The<br />
same problem exists <strong>in</strong> the UK. But one of the biggest differences is that the<br />
media there plays a very pro-active <strong>and</strong> reformist role.<br />
If it is a general election, the total amount of money spent will be on the front<br />
pages. There, they dissect the amount of money be<strong>in</strong>g spent, from whom it is<br />
com<strong>in</strong>g, <strong>and</strong> it is discussed throughout the election period. You can f<strong>in</strong>d out the<br />
details <strong>in</strong> every local <strong>and</strong> national newspaper as to who are the corporates who<br />
are fund<strong>in</strong>g <strong>and</strong> how much money is be<strong>in</strong>g donated. That way, the electorate is<br />
more <strong>in</strong>formed, compared to the lack of <strong>in</strong>formation as <strong>in</strong> this country.<br />
Thirdly, <strong>in</strong> the US, the disclosure laws are very strong <strong>and</strong> the courts are very<br />
str<strong>in</strong>gent about it, <strong>and</strong> therefore you have a far better system. But com<strong>in</strong>g back<br />
to corporate fund<strong>in</strong>g—<strong>and</strong> this is a warn<strong>in</strong>g because now corporate fund<strong>in</strong>g is<br />
be<strong>in</strong>g seen as the panacea for all the ills—<strong>in</strong> our <strong>India</strong>n context, if we compare it<br />
to all other sources of fund<strong>in</strong>g, it is relatively clean. You need a judicious mix of<br />
State-fund<strong>in</strong>g, corporate fund<strong>in</strong>g <strong>and</strong> you lay down limits, membership fees, etc.<br />
It is a cont<strong>in</strong>uous process, so there is no one-size-fits-all approach.<br />
Dr Niranjan Sahoo: We need someth<strong>in</strong>g like the Clean Money Act <strong>in</strong> the US.<br />
Be it, $5 or $2 or $3, it is all recorded. But unfortunately we are not mak<strong>in</strong>g a<br />
beg<strong>in</strong>n<strong>in</strong>g. At least, a beg<strong>in</strong>n<strong>in</strong>g can be made at the panchayat-level, where most<br />
of the political parties would probably f<strong>in</strong>d an ideal sett<strong>in</strong>g because most of the<br />
experiments are happen<strong>in</strong>g there—<strong>in</strong>clud<strong>in</strong>g 50 per cent reservation for<br />
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women. That was actually acceptable at the panchayat-level, not at the Assembly<br />
or parliamentary level.<br />
Mr. Samya Chatterjee: Just to give you another example. The US has been<br />
pass<strong>in</strong>g laws. I am tak<strong>in</strong>g this example because it is seen as the democracy which<br />
functions well. It does <strong>in</strong> so many other respects, but the po<strong>in</strong>t is that it is a 100-<br />
year process. Every 15 years they have to come up <strong>and</strong> change the laws because<br />
no matter how many laws they make, people will f<strong>in</strong>d ways to break them. The<br />
latest example was <strong>in</strong> 2001. There was a law called the Bipartisan <strong>Campaign</strong><br />
<strong>Reforms</strong> Act. It was passed by members from both the political parties, <strong>and</strong> it<br />
was a very difficult Act to pass as it tried to ban essentially soft money <strong>and</strong> fundrais<strong>in</strong>g<br />
d<strong>in</strong>ners, etc. In <strong>India</strong>, the biggest problem today is that we just talk about<br />
limits on contributions <strong>and</strong> limits on expenditure, <strong>in</strong>ner-party reforms, etc. You<br />
have to put a cap on political party spend<strong>in</strong>g at some level because as long as you<br />
keep even one channel open, everyth<strong>in</strong>g is go<strong>in</strong>g to be funded from there. The<br />
caps have to exist at all levels.<br />
Chair: We will have the speakers respond or make whatever observations they<br />
want to make.<br />
Mr. T. K. Arun: About the media report<strong>in</strong>g <strong>and</strong> analys<strong>in</strong>g of corporatefund<strong>in</strong>g,<br />
there is no data whatsoever. A prerequisite for it is that parties should<br />
report how much money they receive <strong>and</strong> that money should be received on<br />
record from companies. Then media can analyse which company has donated<br />
how much, <strong>and</strong> how far have policies changed <strong>in</strong> favour of which company or<br />
<strong>in</strong>dustry. We recently ran a couple of stories where we listed corporate-fund<strong>in</strong>g<br />
to political parties. This could be misused. So, first of all, you need str<strong>in</strong>gent laws<br />
on report<strong>in</strong>g <strong>and</strong> disclosure. Only then you can analyse what effect this has. Let<br />
me tell you that the situation is far from hopeless.<br />
Thankfully <strong>in</strong> politics, apart from political parties <strong>and</strong> <strong>in</strong>stitutions <strong>and</strong> research<br />
funds <strong>and</strong> media, there are the people. Ultimately, only when the people mature<br />
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politically do th<strong>in</strong>gs change. If the DMK lost the elections <strong>in</strong> Tamil Nadu, it was<br />
not that it did not have access to money. Here also newspaper vendors threw<br />
money to the tune of ` 5000/- with the morn<strong>in</strong>g paper. But DMK c<strong>and</strong>idates<br />
lost. Ultimately, when people beg<strong>in</strong> to have respect for themselves <strong>and</strong> resent<br />
the idea they can be bought, they react differently. This is exactly what happened<br />
<strong>in</strong> Tamil Nadu.<br />
There was a time when people could be bought with money. But beyond a po<strong>in</strong>t<br />
people say they have had enough, <strong>and</strong> that is happen<strong>in</strong>g all across the country<br />
right now. It is an overall process of matur<strong>in</strong>g of politics; people's own sense of<br />
self-worth <strong>and</strong> awareness of their rights have ultimately changed th<strong>in</strong>gs. I th<strong>in</strong>k<br />
that is actually happen<strong>in</strong>g <strong>and</strong> these are all various ways of crystallis<strong>in</strong>g <strong>and</strong><br />
<strong>in</strong>stitutionalis<strong>in</strong>g the urge for basic self-empowerment of the people. Without<br />
that you can do noth<strong>in</strong>g. Hopefully, there are signs that this is actually<br />
crystalliz<strong>in</strong>g.<br />
Mr. Mendiratta: What is needed now? The need is for str<strong>in</strong>gent laws. But who<br />
will make the laws? Why should parliamentarians make a law that would go<br />
aga<strong>in</strong>st them? Why should they do it? That is the difficulty. Unless there is some<br />
public pressure for them to do some th<strong>in</strong>g, they won't do anyth<strong>in</strong>g.<br />
Participant: Lack of political will.<br />
Mr. Mendiratta: No, I won't say political will. There is unanimity of political<br />
will because they don't want to do anyth<strong>in</strong>g.<br />
Participant: I totally agree with that. In fact, State-fund<strong>in</strong>g is actually the only<br />
clause <strong>in</strong> the entire electoral reforms on which there is political will among<br />
political parties. You have every political party say<strong>in</strong>g this is someth<strong>in</strong>g which if<br />
done would be very good. For everyth<strong>in</strong>g else, they are just say<strong>in</strong>g this has that<br />
problem, that has this problem, etc. At least Mr. Rudy was very honest <strong>in</strong> say<strong>in</strong>g<br />
that noth<strong>in</strong>g is go<strong>in</strong>g to happen <strong>and</strong> if there is some public pressure where<br />
people raise a hue <strong>and</strong> cry, maybe th<strong>in</strong>gs will happen. But otherwise we are go<strong>in</strong>g<br />
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to cont<strong>in</strong>ue as <strong>in</strong> the past. We can debate <strong>and</strong> do a whole lot of th<strong>in</strong>gs, Sir, but<br />
until they agree <strong>and</strong> do someth<strong>in</strong>g about it, noth<strong>in</strong>g is go<strong>in</strong>g to happen.<br />
Chair: I th<strong>in</strong>k we will br<strong>in</strong>g the sem<strong>in</strong>ar to a close.<br />
*********************<br />
Samya Chatterjee is a Research Assistant <strong>and</strong> Niranjan Sahoo a<br />
Senior Fellow at Observer Research Foundation, New Delhi.<br />
42<br />
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