In the coming election, you can choose your favorite millionaire.

Deepak R. February 25, 2011

... government of the people, by the people, for the people, shall not perish from the earth. Abraham Lincoln's Gettysburg Address. Image: ZAFF News


Arguably, the most famous of all exhortations for democracy ever made by man is Abraham Lincoln's Gettysburg Address of 1863: "... government of the people, by the people, for the people, shall not perish from the earth." Many take those three traits as the defining characteristics of representative democracy. I live in and follow news from India. Times are such that no matter how much ever I resist myself, I cannot stop short of redefining Indian government as a "government for the rich, of the rich, and now, by the rich."

The immediate trigger for writing this now is a news that I read today morning.

The Central government has raised the election expenditure limit for both Parliamentary and Assembly constituencies by around 60 per cent with immediate effect. The spending limit for a Parliamentary constituency in major States, now stands at Rs. 40 lakh as against Rs. 25 lakh earlier. The limit for Assembly constituencies in the major States moves from Rs. 10 lakh to Rs. 16 lakh.

And that can go a long way in making our governments which are already for and of the rich, also by the rich. But why should our billionaires, the pride of our nation, care? They already have a good number of the legislatures in their social network, if not in their pay roll. They can buy the service of talented "lobbyists" to woo even more. But then, it is much easier to get your interests race through, if you do not have any game-spoilers at all in the corridors of power.

Government for the rich?

Whom for our central government is, was evident by our prime minister's words in the recent televised press conference, when he remarked that the "loss" due to absence of auctioning in 2G-spectrum allocation was like the "loss" due to food, fertilizer and kerosene subsidies.

Thus spake the king:

... I am not in a position to say that there is a foolproof method in which one can determine the extent of the loss. It is very much a function of what is your starting point. And also depends upon our opinion. We have a budget which gives subsidy for food, 80,000 crores per annum, some people may say these foodgrains should be sold at market place. Will we say then because they are not sold at market prices, because you are giving them a subsidy, it is a loss of 80,000 crores.

The transcript of the entire press conference is available the Hindu. If you dismiss that as "economist's language", then check the two articles below.

Drought of justice, flood of funds, P. Sainath on subsidies - farm and corporate.

There's always money for the Big Guys. Take a look at the budget and the "Revenues foregone under the central tax system." The estimate of revenues foregone from corporate revenues in 2008-09 is Rs.68,914 crores. By contrast, the NREGS covering tens of millions of impoverished human beings gets Rs.39,100 crores in the 2009-10 budget.
...
Simply put, the corporate world has grabbed concessions in just two years that total more than seven times the 'fiscally imprudent' farm loan waiver. In fact, it means that on average we have been feeding the corporate world close to Rs. 700 crore every day in those two years. Imagine calculating what this figure would be, in total, since 1991. (Er.., what's the word for the bracket above 'trillion?') Ask for an expansion of the NREGS, seek universal access to the PDS, plead for more spending on public health and education - and there's no money. Yet, there's enough to give away nearly Rs. 30 crore an hour to the corporate world in concessions.

How to feed your billionaires, P. Sainath on concessions to Indian Premier League.

The Sports Minister pointed out a long time ago that there were dangerous conflicts of interests at the top levels of the BCCI-IPL. He also told Karan Thapar on television that he found the idea of "letting off tax" (waivers for IPL) quite unacceptable. "This is a poor country. I never forget that. There is a huge deficit in the budget even this year ..." And went on to say that: "when business is earning it in the shape of these teams and whatever the structure, I think the legitimate tax should be taken and should be used for the country maybe even for sports, other sports." Far from that happening, we are taking it from the public and handing it out to the billionaires.
...
Who stand to gain from the public wet-nursing of the IPL? Among others, four gentlemen who make the Forbes Billionaires List of 2010. Three of them are team owners and one is a title sponsor. All dollar billionaires and long-time residents on the Forbes List. Then there are the mere millionaires in the shape of Bollywood stars. For all these and other worthy people, governments bend over backwards to make concessions. Even as they slash food subsidies in a period of rising hunger.

Government of the rich?

Is it? Again you can judge for yourself.

The Age of the aam crorepati, P. Sainath reports based on statistics after 2009 Lokhsabha elections, based on data from National Election Watch.

  • 543 MPs of 15th Lok Sabha together are worth close to Rs. 28 billion.
  • 23 of 64 Union Cabinet ministers whose asset worth is in the public domain fall into this Rs. 50 million-plus category.
  • If you are worth over Rs. 50 million, you are 75 times more likely to win an election to the Lok Sabha than if you are worth under Rs. 1 million.

Government by the rich?

But how could a government elected by universal adult suffrage ever be "by" the rich. Especially in a country like ours where the majority is below the poverty line? Even the poorest man in India has a right to choose whom to vote for.

... yes he can choose his favourite millionaire.

This may sound like rhetoric, but there is substantial research done on how big funding agencies can influence not just the actions of political parties, but also the signals that they send to the voters. This is elaborated by University of Massachusetts professor Thomas Ferguson, in his 1995 book Golden Rule: The Investment Theory of Party Competition and the Logic of Money-Driven Politics.

The real market for political parties is defined by major investors, who generally have good and clear reason for investing to control the state.... Blocs of major investors define the core of political parties and are responsible for most of the signals the party sends to the electorate. ~ Thomas Ferguson

There is also an 80 minute documentary by the same name by Jonathan Shockley featuring Thomas Ferguson, Noam Chomsky and other thinkers.

Case for public funding of campaign expenditure.

But then, some will always raise a TINA (There Is No Alternative) argument for hiking campaign expenditure. In fact the news article that reported the hike does the same thing.

The upward revisions are understood to have been made on the recommendation of the Election Commission of India taking into consideration the demands of the political parties and inflation of costs since 2007 when the last changes were made.

The alternative of course, is considerable public financing of election campaigns. Some libertarians find this absurd and they argue that government should not fund political speeches. India too has witnessed (genuine) uproars against government paying campaign bills. But that is more because of the mis- and exclusive use by those in power. Public financing of election campaign is about giving the same opportunities to every candidate. Any debate on public financing of election campaigns should keep in mind that an election has to be open, fair, informed and vigorously competed, and that it is possible only if every candidate has equal opportunity to reach out to his voters1. Public financing is not always about giving money. It can be by mandating a specified amount of air-time in radio and television for every candidate, providing stages and auditoriums for every candidate etc. It may be interesting to note that some states in the United States have opted for public financing of elections (what they term as clean elections) after holding public referendums. Studies on their effectiveness are also available 2.

The Indian story of Campaign Financing.

Though India hasn't made an attempt at public funding of campaigns, there had been many attempts to ban or limit corporate fundings. Rajinder Sachar's article in Mainstream chronicles the Indian romance with corporate funding. In 1960, not heading to the many warnings against it, Indian parliament added Section 293A to the Companies Act permitting them to contribute to political parties five per cent of their net profits. In 1969, following Santhanam Committee Report of 1962, and persistent effort by Madhu Limaye, the Socialist MP, the parliament imposed a total ban on contributions by companies to political parties. The statement of the objectives of this ban is also worth quoting3.

A view has been expressed that such contributions have a tendency to corrupt political life and to adversely affect healthy growth of democracy in the country, and it has been gaining ground with the passage of time. It is, therefore, proposed to ban such contributions.

There were attempts to lift the ban in 1976 and 1978, but none of them succeeded due to the negative opinion of the constituted review committees. In spite of all that, Section 293A was amended in 1985 and the Board of Directors of companies was authorised to make donations to political parties. That law still continues.

Not withstanding the law, some of the mainstream political parties from the left have turned down donations from corporates and demanded electoral reforms to ban corporate fundings. CPI(M) turning down voluntary donations from the Tatas in 1998 elections is a case in point.

But on the other hand, we also see a nice correlation between electoral success and amount of corporate funding. In 2003-04, the BJP got Rs 90 crores as against the Congress’ Rs 65 crores. The peak of the BJP was Rs 155 crores in 2004-05 and it went down to Rs 137 crores in 2007-08. The rise in the share of the Congress party during this period was phenomenal, starting from 2002-03 at Rs 53 crores, to Rs 265 crores in 2007-08. More significant, the corporate-political nexus is illustrated by corporate donation to the BSP of Mayawati rising in 2002-03 from Rs 10.9 crores to Rs 55.6 crores in 2007-084.

Endnotes

Recently we read that the one of the "major" electoral reforms suggested by our Chief Election Commissioner to the Union Government is the inclusion of "none of the above" choice in ballot papers and voting machines5. Surely, it should be welcomed by all those well meaning citizens who wanted to compete, but could not harness the funds!

When I started writing this article, I never thought that all my references for the Indian case would be from Sainath. I accept that one reason is my reading bias. But it also hints (if not proves) something about our main stream media and journalists too. Something which again Sainath has written about6.

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Its very disturbing to read

Its very disturbing to read about the insensitivity of our rulers and the arrogance of the filthy rich.

I hope atleast the 'none of the above' option would be implemented in ballot papers.

Not withstanding the law,

Not withstanding the law, some of the mainstream political parties from the left have turned down donations from corporates and demanded electoral reforms to ban corporate fundings. CPI(M) turning down voluntary donations from the Tatas in 1998 elections is a case in point.

Was this "we-are-good-they-are-bad" kind of mention necessary in this otherwise good article? CPI(M) are no saints, their party newspaper has collected money from a infamous lottery king and held onto the money until a leading newspaper run a story on it. That money is more than 10 times the money offered by Tata. And TC also politely declined to accept money from the Tatas.

I am in no way questioning the freedom of the article's author, but I think that a bias-free article would have been better.

About the "bias"

Thanks Abhilash (chettan?) for the comment. It has helped in two ways.

It is an intensional effort of mine, not to bracket every mainstream political party into one group, no matter how unbiased (fashionable?) it looks. This is because, if I do that and I'm right, I just add to the already strong (mainstream media promoted) view that all political parties are there to make their loot. On the other hand, if I do the bracketing and I'm wrong, I will be committing a grave mistake on those who valiantly keep their integrity in spite of the of lure.

When it comes to the question of "integrity" of a group (especially a large one like a mainstream political party), the presence of a few tainted guys and/or few incidents of malpractices will not make me label an entire party as bad. In fact, anyone who has been part of a group would have realised that it will be impossible to make no mistakes and that the key is in being able to realise, admit and rectify the mistakes. The alternative, which is either to do nothing, or to do things single handedly when possible, is not something that I will subscribe to. So when judging political parties, I would (or at least I would like to) judge them based on their stated policies and aggregate performance.

So firstly, your comment has given me a chance to express this view of mine in more detail and thus subject it to a wider scrutiny.

Secondly, your comment also made me do an online fact check on the corporate funding of parties in India as far as possible.

An August 2008 BBC news reports that according to a 2003 amendment to the election rules, all parties should provide their financial information. But, as the rule is not enforceable, parties ignore it and the commission is unable to take any action. It also goes on to list some prominent parties (RJD, BSP) which have consistently failed to provide their financial information, but doesn't mention about corporate funding in particular. In fact, in the form provided by the election commission to the political parties for furnishing their financial information, Question 7 is in regard to corporate funding. The copy of these forms furnished by the parties are available online at the election commission website (Scroll down to the penultimate section - Contribution Reports).

Since it is a scanned copy, checking for various parties is bit of a tough ask. But I couldn't find TMC's file in 2008-09 or 2009-10. But I could find news pieces on TMC's rejection of funds from Tata.

CPI and CPI(M), have answered "no companies' for Question 7 (list of companies who have contributed more than Rs. 20,000/-). I was surprised to see many names in the list of individual contributors (above Rs 20,000/-) in the CPI(M) donor list which looked like companies, but I'm not legally informed enough to comment on that seeming anomaly.

It may also be noted that CPI(M) has consistently asked for banning corporate funding to political parties in all their election manifestos starting from 1998.

Hence, in summary, I wish to emphasize that not all parties are the same when it comes to their stand (stated and exercised) on the issue of corporate funding. In fact, I believe that this is the case when it comes to most other things too - like liberalisation, the view about development etc. And, it is also important to emphasize the difference for the reasons I mentioned in the beginning of this comment.

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