Source: Times of India

In your research into political funding, what are some of the interesting findings?

First, we have seen the dramatic rise of self-financing candidates. It is virtually impossible to win elections today unless you have deep pockets or connections to lucrative networks. Second, although sources of finance may be undisclosed, much of the spending is on routine activities such as fees for attendance, salaries, and meals. Of course, significant funds are reserved for election eve handouts. But we find that these handouts are better described as ‘gift giving’ rather than ‘vote buying’; there is no quid pro quo between voters and politicians. Rather, politicians provide handouts either to signal their viability or fear of loss if they do not.

Election Commission’s expenditure limits for elections are periodically raised but are these realistic?

I have personally never met a politician who believes he or she can win by strictly adhering to the limits. The whole regime of expenditure limits is somewhat farcical. Netas complain the limits are too low, yet in their own expenditure statements MPs elected in 2014 claimed only to have spent half of the ceiling. In my view, it makes more sense to eliminate the limits but insist on 100% transparency for every political contribution and expenditure. If politicians violate this bargain, EC should be able to slap severe sanctions.

What are the heads on which candidates spend most money?

There is a lot of variation on expenditure. Simon Chauchard’s analysis of an urban Maharashtra assembly constituency finds huge differences between parties: whereas Shiv Sena candidate spent between Rs 1-2 crore, NCP candidate spent between Rs 9-16 crore. Anywhere between 20-65% of funds are reserved for gift giving, depending on party. This means, while ‘black money’ is an issue, a great deal of spending is so-called ‘work money’ – wages and remuneration for workers, supporters, and ‘influentials’. Sources of finance depend on level of politics. For instance, using survey data from Bihar, Jharkhand and UP, Jennifer Bussel finds that MPs and MLAs are substantially more likely to report receiving party funds compared to lower levels. Panchayat leaders are substantially more dependent on their own resources.

How can EC be reformed so that it can better monitor political funding?

On contributions, the best way to ensure transparency is to insist that parties go digital. Every donor should be required to submit a PAN or Aadhaar number when making a donation. On spending, EC needs greater authority to penalise candidates who do not submit their statements on time or who obfuscate. This requires revamping the Representation of the People Act. As for parties, nobody trusts their accounts. In our view, party accounts should be subject to independent scrutiny by a respected third-party auditor. The disclosure of false accounts is not much better than no disclosure.

How do you assess recent attempts to thwart unaccounted money flows into politics? Is there a danger of one party gaming the system to its advantage?

Recent moves will do very little to enhance transparency or dampen flow of black money. In UP elections following demonetisation, EC seized more than Rs 115 crore in cash, three times the cash recovered in 2012. As for electoral bonds, their upside is that corporations now have a legitimate channel to contribute funds to parties while protecting their anonymity. But the upside is also the downside: transparency, as far as public is concerned, is arguably the biggest victim. Then in the recent FCRA change where Congress and BJP joined hands to save their skin, they did so under the cover of darkness using fine print in the Finance Act, adding insult to injury. In sum, there is a certain ‘honour among thieves’. Arguably the most politically advantageous thing BJP could do is enact real political finance reform. It would be a political winner and, given BJP’s current strength, it would still out-fundraise its opponents. But government clearly has a different view.

How much harder does cash economy make regulation of political finance?

Government has launched a war on cash but it has taken contradictory steps. Cash is opaque so it pushed for electoral bonds, which rely on digital transactions but are completely hidden from public view. The Finance Act instituted a new Rs 2,000 limit for cash donations. But why not take it down to zero and insist on digital transactions? Whenever an arbitrary limit is imposed, it is an incentive for those wanting to game the system.

This article was originally published in the Times of India.