Financial Express,%202010.pdf



■ Only four out of 6,753 candidates in the 2009 Lok

Sabha elections declared that they had spent more

than the limit of Rs 25 lakh on their election. The declared expenses of another 30 were between Rs 22.5-25

lakh (90-100%). The remaining, 6,719 said they had

spent between Rs 12 and 14 lakh (48-56%). Given the


by political parties, and the general public perception

about how much is spent on elections, something

seems amiss, or to paraphrase Justice Markandey

Katju of the Supreme Court, and William Shakespeare, something seems to be wrong with the state of



■ Acivil society organisationfiledanapplicationunder the Right to Information(RTI) Act,seeking copies

of income tax of political parties. The disclosure was

opposed tooth and nail by 17 political parties with seniorlawyers being brought into argue before the Central Information Commission (CIC), giving myriad

reasons such as the “competitive commercial interests” of the political parties concerned will be jeopardised if the income tax returns are disclosed to the

public.Thisiswhenpolitical partiesareallowed,and

claim, income tax exemption under the Income Tax

Act.That theCICdecidedtomakethereturnspublicis



Between 20%and 30%of all MPs and MLAs in the

countryhavecriminal casespendingagainst them,in

which charges have been framed by the court of law.

W HATDOthe above have to do

with corruption? The answer may lie in the fact that

one simple explanation can

explain all the three: all political parties use unaccounted money. It may

become clear if we reframe the three examples

aboveintheformof questions.


Why should 99.4965% of the candidates contesting elections lie under oath while declaring their

election expenditure? Why should political parties

tryandhidetheirincomewhentheelectedrepresentatives, all of whombelong to the political establishment,havepassedalawthat political partieswillget

100%exemptionfromincometax?Whyshouldpolitical parties give their nominations to contest elections on their behalf, popularly called “tickets”, to

people who have criminal cases pending against

them, for cases which attract an imprisonment of

two years or more, and in which charges have been

framedbythecourt of law,whichisthethirdstagein

the criminal justice system—registration of an FIR

(theFirstInformationReport)beingthefirst,andfiling of the chargesheet in the court after investigationbythepolicebeingthesecond?


Thenthe questionarises, whydo political parties

use unaccounted money? This could even be generalisedto, whydoesanyone use unaccountedmoney?

An obvious answer is: when one is doing something

that one isnot supposedtodo. Political parties claim


The reasongivenbypoliticiansandpolitical parties



low. This reason does not square with the fact that

99.5% of the candidates declare on oath that

they spend around 50% of the limit. How can this



For this we need to go to some fundamental questions such as: what is the purpose of elections, and

why do people want to win elections?The ostensible

reason given by an overwhelming majority of all aspirantsto a political “career” isthat they want to get

into politicsto do public service (samaj seva).Taken

at its face value, this would mean that people, who

want to contest elections, and want to win elections,

do that because they want to do “public service”.

This seems in conflict with widespread reports of

prospective candidates trying all kinds of stratagems to get nominated by the party of their choice,

including paying hefty sums of money to the party

coffers—most of it unaccounted. A news report a

couple of years ago that a substantial sum of cash

was stolen from the Delhi head office of one of the

leading parties and the party did not even lodge a reporttothepoliceseemsevidenceof this.

Recent experience of the last decade or so shows

that political partieshave ceased to be public service

organisations but have become election-winning

machines, the purpose of winning electionsbeing to

acquire power, and remain in power by any means

whatsoever.Thatexplainsgivingpartyticketstopeoplewithcriminalandotherdubiousbackgrounds, s o

long as they are rated high on “winnability”— the

twomainsourcesof winnabilitybeingmoneypower

andmusclepower.Agraphicexampleof moneypower came to light in a recent election in Tamil Nadu

where the Election Commission (EC) seized an ambulance full of currency notes doing the rounds in a

constituency the night before polling. It seems the

wordhadgonearoundthattheECwill seizeanyvehicle distributing money to voters and the candidate


If we look at all the instances that have come to

light in the recent months starting with the Commonwealth Games, the Adarsh episode, the telecom

scam,thechangesinlanduseandallotmentsof land

from the euphemistically called discretionary quota, all of them end up with the political establishment. Even earlier, the mining issue in Karnataka

and Andhra Pradesh and the spectacle of the Karnataka Lok Ayukta, Justice Santosh Hegde, resigning, taking back his resignation, and regretting it

later, shows that the basic cause of almost all

wrong-doing is the rapacious appetite for money in

thepolitical establishment.

The unholy nexus between

business and bureaucracy

would not have been

possible without the active

blessing, tacit approval and

willing involvement of the

political establishment

 spiritual attainment, which, of course, is changing now. Since the


major, if not the sole, objective of 

fundingbeingthefountainheadof corruptioninthe

country. Historically, business has not had a very

good reputation in traditional Indian thought because of the social disdain for making money, given

our earlier preoccupation with

business was considered to make money, it was generally felt that

businesswould,andcould,useanymeanswhatsoever to achieve that objective. In the so-called licence

and permit raj, it was felt that the bureaucracy was

exploitingthecontrolstomakemoneyforitself. This

entire phenomenon was referred to as the unholy

nexusbetweenbusinessandbureaucracy.What was

often missed was that none of this would have been

possible without the active blessing, tacit approval,

ment. This phenomenon has been explained by the

and willing involvement of the political establish

Law Commission of India in their 170th report in


“In the very scheme of things and as pointed out

by the Supreme Court in its various decisions, the

bulk of the funds contributed to political parties

would come only from business houses, corporate

groups and companies. Such a situation sends a

clear message from the political parties to big business houses and to powerful corporations that their

future financial well-being will depend upon the extent towhichtheyextendfinancial support tothepolitical party. Indeed most business houses already

know where their interest lies and they make their

contributions accordingly to that political party

which is likely to advance their interest more. Indeed not sure of knowing which party will come to

power, they very oftencontribute to all the major political parties. Very often these payments are made


The above should make it clear where it all

begins. The solution lies in making financial transparency in the working of political parties compulsory by law, for which internal democracy

in political parties is a necessary concomitant.

The LawCommissionof India has also recommendedthisin1995but,expectedly,thereportisgathering


Thewriterisformerprofessor, dean,anddirector

in-chargeof IIM-A,andfoundingmemberof the


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