Indian Express
Sunitha Natti

A princely Rs 1 lakh crore expenditure in just under two months translates to a cash burn rate faster than that of all Indian startups combined.

It's election season and India's 969 million-odd voters have assumed a near-royalty status for a brief period.

Political parties have been devoting significant energies and expense to make them feel special, even if it involves wheelbarrows full of cash worth some Rs 1 lakh crore, as per preliminary estimates.

The projected expenditure far outstrips the 2019 poll spending, which itself topped out at Rs 55,000-60,000 crore, according to the Centre for Media Studies (CMS), which tracks election expenses.

It almost equals the spending on the 2020 US elections that stood at $14.4 billion, or Rs 1.2 lakh crore, according to, which too tracks election spending. In other words, the world's biggest elections happening in India will also be the most expensive ever. What it also confirms is that, power often costs too much.

Cash burn that will put Indian startups to shame

A princely Rs 1 lakh crore expenditure in just under two months translates to a cash burn rate faster than that of all Indian startups combined. But political parties don't seem to be really intimidated by the price tag. And the upshot of this largesse, economists say, is an increase in consumption, particularly in rural areas, giving a 0.2-0.3% boost to GDP.

Hurrah! Rural consumption has been sulking, and since the proposed sum isn't being collared from the country's coffers, purely from an economic perspective, the spending blitz is somewhat welcome.

But that's where the seemingly good part ends.

The larger issue is about the nature of election spending, much of which is unaccounted for. Despite the Election Commision of India's (ECI) designated 'expenditure observers,' the under the table giveaways such as gifts, cash, gold, and even drugs to influence voter preferences has been rising with each election.

In fact, the ECI's adverts like 'My vote is not for sale,' reminding voters about how a note-for-vote amounts to a betrayal of democracy, while also being a punishable offence with imprisonment up to one year or fine or both, aren't helpful either.

A spending limit that started at Rs 25000

Officially, the ECI imposes enough spending checks and balances on election expenditure. While no such limits exist for parties' spending, it prescribes caps for candidates, as well as on other aspects of election campaigning down to such minute details as the cost of a cup of tea.

As for candidates' expenditure, each contestant cannot spend more than Rs 75-95 lakh (depending on the region) for Lok Sabha constituencies and Rs 28-40 lakh for Assembly seats. The expenditure limits refer to the amount each candidate can legally spend on campaigning, including public meetings, rallies, advertisements, posters and banners, vehicles and others.

These spending limits have gone up from about Rs 25,000 during the first general election in 1951-52 to the current Rs 75-95 lakh for each candidate. Yet, the share of formal spending to overall election expenditure, or expenditure that's disclosed with the ECI grew at a relatively low pace.

According to the CMS report, election expenditure itself shot up six times in the 20 years from 1998 and 2019 with spending increasing from Rs 9,000 crore to about Rs 55,000 crore in 2019. Yet, the percentage of spend allowed by the ECI over the past two decades barely moved. If in 1998, it account for 13% of the total expenditure of Rs 9,000 crore, by 2019, it remained at 15% including expenditure incurred on assembly elections.

On an average, an estimated Rs 700 was spent per vote, or nearly Rs 100 crore per Lok Sabha constituency during the 2019 elections. Elsewhere, it's considered spendthrift, instantly launching financial planners into action to devise the ultimate budget-friendly spending guide! But for political parties and contesting candidates, the stakes are too high and so the 2024 election expenditure will likely rise significantly.

Where does the money go?

Importantly, not all the expenditure lands in voters' wallets.

For instance, during the 2019 elections, just about 20-25% or Rs 12,000-15,000 crore went to voters directly, out of the total Rs 55,000-60,000 crore poll spending. The biggest chunk was towards campaign and publicity expense accounting for about 30-35% or Rs 20,000-25,000 crore.

Formal expenditure falling under the ECI disclosures stood at Rs 10,000-12,000 crore or at 15-20%. Another big head was logistics that cost about Rs 5,000-6,000 crore or 8-10% of the total expenditure. The rest comprised miscellaneous expenditure, according CMS calculations.

For candidates, the contests may not be entirely about winning to do social service. Rather, the pursuit of power, could be a pursuit of profits in disguise. How else can one explain the rise of the crorepati-club in both the houses of the parliament?

According to a report by the Association of Democratic Reforms, 29% of the candidates had assets worth Rs 1 crore or more during the 2009 elections and that number rose to 474 MPs, or nearly 88% of the House having assets worth Rs 1 crore or above by 2019.

The rising trend of the rich running for office, or the number of millionaire candidates and with business interests, only confirms that election expenditure is perhaps a carefully assessed investment that yields the best returns once in power. Put another way, such spending is a future earning.

What more, political parties too are increasingly spending on behalf of candidates. As per one estimate, in 2019, of the total Rs 2,994 crore officially spent by 32 national and state parties, Rs 529 crore went to candidates as a lumpsum.

And the recent scrapping of electoral bonds, the so-called clean financing for elections, isn't going to be a setback. For, donor's dollars often trickle in from different industry sources like real estate, mining, corporates, industry, chit fund, contractors, particularly civil, transporters, NRIs and others.

One commendable fact is that, voters have learnt to shop smart. To paraphrase poll strategist Prashant Kishor's observation during a recent The New Indian Express interaction, voters are taking the spoils, but are now both wise and brave enough to tell the candidates that they cannot have them all.

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