One of the interesting aspects of the current accusations and counter accusations around the alleged funding of BJP’s 2014 Lok Sabha campaign by corporate houses is the sheer hypocrisy of it.
Let’s see why.
According to third-party figures, an estimated Rs 23,000 cr was spent by candidates and political parties on the 2014 general election.
Assuming that about 40% of this was spent by the BJP and its candidates, the saffron party’s tally comes to around Rs 9,200. The Indian National Congress and its candidates are likely to have spent about Rs 7,500 cr.
But the official figures given by these parties for their election expenditure is not even 10% of the above numbers. According to these, the BJP spent Rs 714 cr on the general election and the four state assembly elections in 2014 and the Congress Rs 516 cr.
In fact, almost half of the expenditure was on media advertisements — something that cannot be hidden from the EC anyway as the ad rates are too well known. According to the numbers given to the Election Commission, the BJP spent Rs 305 cr on media buying, while the Congress Party spent Rs 183 cr.
As anyone who is familiar with the electoral process knows, the Rs 500-700 cr tallies are only the ‘on-the-record’ expenses. Only hard-to-hide expenses — such as ad spends — are included in the official tally because for every rupee spent officially, the parties have to find someone who donated the money.
The chunk of the expenses is met via the donation of ‘black money’ by companies — cash that is ‘donated’ to the parties through unofficial, and mostly illegal means.
The system evolved to this point due to two contributing factors — corporate corruption and tax evasion (in turn the result of unrealistically high tax rates) and the need for political parties to hide their true sponsors (or some would says masters.)
The first reason should be obvious. Faced with high tax rates, many companies resort to less than legal ways of keeping tax expenses down. They do not declare part of their income, and this cash becomes ‘black’. Once cash becomes black, it cannot be used for most purposes such as legitimate investment. In addition, there is also the risk of getting caught.
But there are at least two types of organizations that have no problems taking such ‘black money’ — Swiss banks, and political parties in India.
Moreover, ‘donating’ some of the black money to political parties has several advantages. Most importantly, such donations help prevent detection and disruption of the black money system. Since the income tax, sales tax and enforcement directorates are all controlled by political parties, keeping the latter in good humor is essential for keeping the black money operation going.
Secondly, it helps companies win contracts and deals from the government, and avoid uncomfortable scrutiny on environmental, labor, tax and other matters. In other words, black money is both a condition for, as well as a result of corruption and politico-corporate nexus.
The second, and equally important reason for resorting to donations in black is that like in all big democracies, political parties do not want to appear to be under the influence of big corporations.
If the donations are all “white”, and it turns out that five industrialists contributed 90% of a political party’s election funds, chances are that the voters won’t be so pleased. So, the next time a contract is awarded to any of these industrial groups, there would be more questions than usual.
These facts, of course, are known to anyone familiar with the election processes in India and most other democracies.
Both Congress and the BJP — like nearly every other party in India — operate on these models.
Without going into the truth value of the allegations made by Prashant Bhushan, Arvind Kejriwal and Rahul Gandhi, it should not come as a surprise even if it is proven that big industrial conglomerates in India willingly or unwillingly pay tens of crores of rupees to electoral campaigns of the two major political parties in the country.
For Rahul Gandhi to claim that this shows anyone’s ‘personal corruption’ is disingenuous. When the system is set for corruption, personal preferences have very less role. In fact, similar allegations have been made against Rahul Gandhi’s own party in the recent past by these very same people.
The need of the hour is not to score political points by selective leak of information, but to reform the current system of political funding.
Some of this reform can be achieved by two of the programs that Modi himself has suggested in the last two months — a crackdown on tax evasion and the resulting black money, and state funding of elections.
If the quantum of black money goes down, corruption too will go down.
Similarly, state funding of elections and tighter auditing and control of candidate and party expenditure will help bring down the need for parties to take cash — legally or illegally — from corporations in lieu of giving them mega contracts and deals.
In the all-party meeting held in the wake of the decision to demonetize 500- and 1000-rupee notes, Narendra Modi strongly suggested the idea of state-funded elections in India.
Without lending his support for the anti-black-money campaign or the move towards state-funded elections, any harping on corporate funding of election campaigns from Rahul Gandhi will only remain hypocritical and insincere.