How money lubricates politics in the world’s largest democracy

Noted controversy.
Noted controversy.
Image: REUTERS/Altaf Hussain
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Most political parties, including the Congress and the Bharatiya Janata Party (BJP), are united in opposing the demand for greater transparency in political funding. Nobody with any clout in politics seems to want to regulate the deluge of money into politics. Simultaneously, data shows that MLAs and MPs become richer with every stint in power.

On the matter of creating coalitions, all those who cover politics know there is a “rate” to get the support of independent MPs or a small party required to form a government in the event of a hung parliament or assembly. Very pragmatic arrangements are often made by independent MPs and regional parties to support a particular legislation as well. There has traditionally been a lot of quid pro quo in coalition politics, although the BJP, as alleged by the opposition, has been attempting to break the financial back of parties that do not support it.

On Nov. 08, 2016, PM Modi made a dramatic address to the nation, announcing the demonetisation of the Rs500 and Rs1,000 banknotes. The controversial step, he said, was designed to flush out black money and clog financial pipelines to terrorist organisations. However, since all the currency was returned to banks, critics say that the move did not help flush out black money. As for terrorism, in the Kashmir Valley, alienation has increased partly due to certain policies of the Modi regime. Demonetisation has, therefore, not had any impact on the deteriorating situation in the valley.

What demonetisation did, however, was seriously inconvenience political parties that were in the habit of taking donations in cash, often in exchange for tickets. There are no clear figures, as such transactions operate in the black economy, but it is said that the cash entering the coffers of certain political parties was briefly hard to come by in the months following the demonetisation announcement. There were particularly compelling reports of parties such as the BSP losing a lot of currency as they headed to an assembly poll in UP just a few months after demonetisation.

Simultaneously, opposition parties have alleged that some BJP leaders and their friends had been alerted about demonetisation and managed to change their notes before the announcement. At the point of writing this book, the BJP was the richest party in India’s history. This astounding increase in the party’s wealth and the impoverishment of other parties really accelerated in the year after demonetisation was announced, so it does trigger interesting speculation along intriguing lines of enquiry. But since the agencies are under government control, or on the mat in the supreme court, it is impossible to investigate the mystery of this soaring wealth. Unless there is a government change, this will remain one of the riddles of contemporary democracy.

Let’s just look at the figures that are available.

In 2016–17, the ruling BJP’s income soared to Rs1,034 crore from Rs570 crore in 2015-16, according to annual audit reports filed with the Election Commission of India on Feb. 08, 2018. According to the audit report, the BJP’s receipt for 2016-17 matched the receipts for all seven parties (including the BJP) listed as national parties in the previous year when the money came to Rs1,034 crore. This report was carried as the lead story in the Delhi edition of The Times of India on April 11, 2018.

This is an astounding figure, which means that in the year after demonetisation, the BJP got two-third of the entire income of all national parties in India. Still, it’s not as if money alone determines outcomes. But in situations where mandates are not clear, financial heft can help a party come to power. All the same, while individual MPs can switch sides with abandon, larger regional parties have to be more cautious and also act in ways that do not annoy or alienate their voter blocs.

For all the money in the world, therefore, the RJD, the SP, and the TMC, for instance, cannot back the BJP today. The BJP’s wealth is way more than the Congress’s share during the UPA rule, in 2004-05 and 2013-14. When the UPA came to power in 2004, the Congress share touched 58% of receipts given to national parties. But by 2013-14, the last year of the UPA-2, the Congress share was down to 39%, while the BJP’s jumped to 44%. The point this reinforces is that money moves in the direction of political power—and by 2013, big corporates were shifting donations from the Congress to the BJP.

The irony was that after a decade in power, the Congress, mid-campaign, stopped sending funds to candidates in some parts of India who were expected to lose. Having ruled over the country for most of its history and presided over the opening up of the economy, the only explanation for the Congress being broke is that fund collection was carried out in such a haphazard and ad hoc manner that there was no real accountability.

The BJP today, in the age of Modi and Shah, has a more centralised fund collection than during the Vajpayee era. The conquest of new territories by the Modi-led BJP was well funded and expensively mounted on a grand scale. It is worth repeating that although the BJP did not win any election in Goa or some smaller states in the Northeast, it had enough clout, political and financial, to manage government formation with the help of smaller parties. Recent elections in the US show that 91% of the candidates who spent more won.

In the last Lok Sabha elections in India, the richest candidate won 84% of the time, with the poorest of all candidates losing their deposit on every seat. In both the world’s largest and the world’s most powerful democracy, therefore, money is a big factor marking the difference between victory and defeat. US president Donald Trump is a billionaire who threw his money into a campaign, which he pulled off. The BJP has steadily become the richest party in India’s history under the leadership of Modi and Shah. Yet, in December 2018, the party lost states where it ruled.

One of the reasons the Congress could fight the astounding wealth, cadre strength, and manpower of the BJP in Madhya Pradesh and Chhattisgarh was that it posited wealthy individuals as leaders. And since the party per se was broke, its state leaders raised the money or put their own into the campaign. There was also some amount of “round-tripping” in the process, whereby the state leaders and candidates actually raised the money and it headed back to Delhi and was returned to the state. The process is complicated and difficult to comprehend—and stories about political finance are difficult to prove.

Excerpted from the book Politics of Jugaad with permission from Rupa.