Addressing Unaccounted Political Funding Beyond Electoral Bonds

TK Arun

Recorded contributions, whether via electoral bonds or plain contributions for which parties issue receipts, form only a part, probably a tiny part, of the total spending by political parties. The bulk of their expenditure is carried out by unaccounted money. Then why have electoral bonds, with their state-sanctioned secrecy?

It is unequivocally welcome that the Supreme Court has struck down the validity of electoral bonds. It removes a dark patch of state-sanctioned secrecy over who funds whom, which is information crucial to the proper functioning of democracy. The Court goes up in public esteem by delivering a verdict that goes against the government’s position, and the Court has been in need of such a perception boost, thanks to a host of verdicts serially in the government’s favour on controversial subjects.

However, the directive to make public details of which company gave money to which party since the scheme came into being calls for a less robust welcome: These contributions were made on the assumption of confidentiality, and the retrospective removal of the veil of confidentiality could, in theory, put a bad precedent for corporate conduct – it sends out the signal that no assurance of the government can be taken at face value. In practice, however, this, too, is most welcome.

Charade Of Reforming Political Funding

Electoral bonds were a sham, to begin with. The notion that with their arrival, electoral funding turned wholesomely legitimate is laughable. Politics in India is dirty: Elected legislators are paid large amounts of money to switch sides, they are corralled into fancy resorts beyond the reach of would-be poachers, parties compete to ply voters with liquor and cash on poll-eve, cash handouts are disbursed to people who turn out for rallies. Not one of these activities can be financed with money received through accounted channels. This calls for unaccounted money.

Funds received through electoral bonds can only be spent on reasonably chaste activities, such as printing posters, paying for advertising on TV and in print, leaders’ travel, office administration and expenses such as hiring microphones, loudspeakers and motor vehicles.

Parties spend far in excess of the ceiling prescribed by the Election Commission, per candidate and per constituency. Such spending also cannot be financed through accounted receipts, such as via electoral bonds.

In other words, recorded contributions, whether via electoral bonds or plain contributions for which parties issue receipts, form only a part, probably a tiny part, of the total spending by political parties. And the bulk of their expenditure is carried out by unaccounted money.

Then why have electoral bonds? A magician who deigns to explain the secrets of his trade would call it misdirection. To focus public attention on the segment of political funding covered by the dark patch of electoral bonds serves to persuade people to ignore the larger universe of unaccounted funding.

The bonds were part of a charade of reforming political funding, to claim that the present ruling party, unlike past ones, has taken serious steps to clean up political funding. The Supreme Court’s verdict serves to put an end to that charade, but the task of cleaning up political funding remains.

The Court objected to unlimited corporate funding of political parties, removal of caps being an accompaniment to the introduction of electoral bonds. This feeds into the charade, unfortunately. It reinforces the notion that only the visible, accounted for part of corporate funding of politics matters, that the unseen, larger portion of funding does not exist. This is not helpful.

Get Serious About Unaccounted Funding

In reality, the bulk of the unaccounted funding of parties, used to finance activity that cannot be disclosed on an expense account, is also done by companies, probably the very same ones that are generous with their electoral bond contributions. Whether statutory limits on contributions are in place or removed makes little difference in practice. More diligent audit committees and general bodies could check some bit of excess spending on political parties.

Indian democracy carries on as if how to finance political activity is of little consequence. Most parties are used to funding themselves by extortion, sale of favours when in power, and cornering a portion of the budget outlays on assorted government projects, which, when executed, leak funds like a sieve. Voluntary contributions, given and taken honestly and transparently, form a tiny sliver of their total finances. When the bulk of the funding received by a party is unaccounted for, it is not just political activity that gets financed, so do the leaders’ personal fortunes.

To reform all this calls for two things: ridding politics of activity that cannot be put on an expense statement, and an independent estimate of how much a party and its candidates spend in a year, which the party should be able to account for.

Let ubiquitous mobile phones record all political activity anywhere in India, consolidate it at the booth level, estimate the cost of that activity, repeat such assessment at the panchayat, district, state and national levels, and aggregate it to arrive at the total expenditure. This would be a massive amount of data, no doubt. That is why we have computers and clever software.

Let all political contributions be electronic in form, with UPI being used for all small contributions. These leave an audit trail.

We have the technical means to clean up political funding. What is missing is the political will to deploy those means.

TK Arun is a senior journalist.

The article was first published in Money Control as Electoral bonds were a sham. Get real on unaccounted political funding on February 15, 2024.

Disclaimer: All views expressed in the article belong solely to the author and not necessarily to the organization.

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Acknowledgement: This article was posted by Aasthaba Jadeja, a research intern at IMPRI.