Aspects of Election Financing in India: Legal and Illegal Talk at Session I of REGIONAL CONFERENCE ON THE USE OF MONEY IN POLITICS AND ITS EFFECTS ON PEOPLE’S REPRESENTATION By Arun Kumar Retired Professor of Economics, JNU Organized by India International Institute for Democracy and Electoral Management (IIIDEM) and International IDEA December 15, 2015.

Purpose of Elections Elections - a means to get to power for a purpose Ideally to represent people; However, that seems to be secondary to catering to vested interests/ hidden agenda In a highly divided society that is getting polarized, easy to sideline majority interest Thus, in India, representation has become largely formalistic Largely a lack of accountability to those who elect representatives Promises made at elections largely not kept – like, `Garibi Hatao’. PM Morarji in 1977 said, `programme is party’s, I have to run the government’ – source of non-accountability

Manifestos have Lost much of their Meaning Manifestos have lost much of their meaning – tall promises, lack of delivery Parties in power choose to serve interest of powerful business interest There is aggrandizement of members of ruling party. Declared wealth increases by leaps. Consequently, public has become alienated from political process of representation Thus elections becoming expensive in India and the world Volunteers do not work for free. Need paid workers in large numbers

Democracy is a Process Vested interests want to capture power to serve their interests They penetrate parties and put up their favourite candidates Their programme is often subterranean and not open or transparent. Parties that opposed WTO provisions or espoused `Swadeshi’ on coming to power did the opposite Such vested interests are interested in weak democracies Democracy is a process and not an end product There are policies and actions to strengthen or weaken it. Institutions that strengthen it are weakened – like, judiciary, bureaucracy and police – become hand maidens of vested interests.

Black Economy A vast amount of illegality is fostered to help vested interests – progressively it has increased. They fuel black economy - from 4-5% of GDP in 1955 to present 62% It is `systematic and systemic’, so entrenched. Possible only if there is a `Triad’ underlying it. Consisting of corrupt businessmen, politicians and executive. Criminal entered the nexus in 1983 – growing criminalization of business and politics

Public has no Choice Illegality has made representation formalistic. Unknown people without having served public stand and get elected. Triad does not want honest people to get elected – who will undermine them. VP Singh used to say that diversions are created deliberately Public has no choice – Tweedledee and Tweedledum The fight is for high stakes among competing vested interests - hence expensive.

Election Expenditure Election expenditure for a national election 0.5% of GDP – not high Many illegal expenditures – vote banks, buying votes, bribes, alternate candidates, paying media, hiring bullies, etc. Election expenditure limits are made meaningless. Funds are needed in non-election times also So, state funding will not work; cannot cover illegal expenses In present milieu, it will be an additionality to illegal funding

Law in letter and spirit To reduce Election expenditure strengthen democracy make representation real Causation from black economy to elections and not other way round So, basic institutional change needed – good intentions not enough A law is a law in letter and spirit Where intention is not clean, any rule can be subverted Many things tried by government and election commission – but laws can be circumvented Audit, transparency, …. can be circumvented as in case of black economy Loopholes can be created since no law is perfect – implementation crucial

Movements and People’s Vigil Need electoral reform and political party reform Democratic elections not expensive but undemocratic ones will remain so Principle’s and laws need movements and people’s vigil Public has to ask for accountability – no short cut possible. Representation at the previous level before at the next level Parties should not become fiefdoms to be passed to next generation Inner party democracy essential

Conclusion Election expenditure should be counted for the party and not separate for candidate and party Disqualification of party/candidate for violations of expenditure limit, etc. Candidates linked to media and bias of media houses should be checked Election watchdog bodies of independent people in each constituency Public should be encouraged to report anonymously on malpractices. Once public becomes conscious, less regulation would be required. Based on my book, `Indian Economy since Independence: ….’.