Democracies across the world frame rules, create instruments, specify processes for political funding.
Politics is not a productive activity. That is because it does not create goods or services valued by consumers or improve efficiency as the IT companies do. Politics is necessary to select who will rule a particular geography for a pre-specified duration following certain guidelines. This is a necessary activity in a modern state, be it India, the United States or even Russia. The issue that bothers everyone is how political parties, which do not add economic value, will fund its expenses to run the activities. Put simply, political funding, in any country, is a necessary leakage from productive sector to fund a necessary unproductive activity of a modern state.
Any leakage of fund from productive deployment needs to be very carefully regulated. Democracies across the world frame rules, create instruments, specify processes for political funding. India, curiously lacked any till former Finance Minister Arun Jaitley introduced the “Electoral Bond” scheme in the Union Budget 2017. The instrument was launched, without much parliamentary scrutiny, from 2018. What is more, even the Reserve Bank of India had then expressed its reservation over the new scheme. The central bank felt that the scheme would encourage flow of illicit money which the government wanted to check.
Finally, the Supreme Court adjudicated that the electoral bond scheme violated several provisions of the Constitution, right to information for a voter being the major one and struck it down. The critical point that one must remember is the Apex Court sat on judgement over the “electoral bond” scheme as enacted. The court did not compare the scheme with the “free for all” cash donation that had been the rule in Indian politics, nor was it asked to do so. If anonymity of the donor was the primary concern of the judges, the cash collection regime did not reveal identity of all donors to politics. The “electoral bond” scheme left a trail for all donors since it used the banking channel. Also it could be traced to the political parties which encashed the bonds. But arguments that the scheme was better than the cash collection system prevailing before it was introduced do not make it satisfy all necessary Constitutional check points.
A major criticism of the scrapped scheme is that the ruling BJP had been the major beneficiary. Looking at the data released by the Election Commission it could be seen that BJP received Rs 6,060 crore from bonds while eleven other political parties received Rs 6,551 crore. In a letter to the EC BJP said a total of Rs 6,985 crore received through bonds. In short, it was not the only political party that received money through electoral bonds, others in power or not in power, too did collect funds. The scheme, now scrapped, had in some way replaced the earlier system of carrying sackful of cash as political donation.
The question is what can be a relatively transparent mechanism for political donation. Collecting subscription from members could be one. But given the huge cost involved in political activities, let alone election campaign, such collections can never cover the expenses. Even political parties, Left parties mainly, which claim that they meet political expenses through mass donations only are offering a smoke screen. It can be clearly seen if one compares that pomp of large meetings of the Left when they were ruling West Bengal and now—either its membership has vastly depleted or they have turned substantially poor now that their party is not in power. Unavoidable conclusion is that those in power collect more donations from individuals or others. And such donations, whatever be the system, come because of quid pro quo.
What would be a good system of political funding? Should the exchequer pay from its coffer? Given the huge investment in healthcare, education, public amenities, infrastructure etc. such funding will be acrimonious, subject to litigation and hugely debatable on modus operandi of distribution of funds. In the US, there is a process of state funding, though many contestants do not opt for such money due to various disclosure norms. When money can be collected otherwise why make such disclosures?
Coming back to the key issue of how to fund politics, the system has to be transparent, must not give rise to arm twisting by politicians, should not promote nepotism and has to stand any critical scrutiny. Can there be such a system or to avoid such rigorous checks will the sacks come back to be filled with money? Since politics is about being in power, administering lives and businesses, favour seekers will certainly be eager to back one or other, where the chances of receiving favour is brighter.
The, business of politics which is unproductive, as we observed at the outset, will raise money to continue its activity and a part of the fund so raised will never be disclosed. This is the lesson one can draw from all countries having some system of sorts on political funding. India is at a nascent stage. One experiment in the form of electoral bond did not find approval of the judiciary, there has to be more such efforts. One cannot give a blank cheque to sack-load of cash kept aside for politics.
Sugato Hazra is an author.