P R I M E   C O N C E R N

election expenditure
Can the poll cash flow be plugged?
The money machine that drives electioneering comes into play each time. Black money is used to supply liquor, influence elements in the media and buy votes. With the 81-cr electorate vulnerable, these freebies work, while the EC remains the watchdog that can’t bite. 
By Ajay Banerjee
In a disturbing narrative pointing at the dark underbelly of elections in India, sleuths of the income tax department seized Rs 27 crore of unaccounted cash from political workers.
Posters, banners, vehicles, fuel for cars of supporters, expenses at rallies and advertisements in local newspapers, radio and TV channels, all require huge amounts of money. photos PTI/AFP

election expenditure
Can the poll cash flow be plugged?
The money machine that drives electioneering comes into play each time. Black money is used to supply liquor, influence elements in the media and buy votes. With the 81-cr electorate vulnerable, these freebies work, while the EC remains the watchdog that can’t bite. 
By Ajay Banerjee

In a disturbing narrative pointing at the dark underbelly of elections in India, sleuths of the income tax department seized Rs 27 crore of unaccounted cash from political workers during the December 2013 Delhi Assembly elections. The sum was enough to fund about 168 candidates in Delhi if the Election Commission of India’s expenditure limit of Rs 16 lakh per candidate for Assembly elections is taken as the benchmark for calculations.

The seizure of cash was the tip of the iceberg, an indication of an instituted malaise — black money that drives a parallel economy during elections and makes a mockery of the limit set on the expenses of candidates by the Election Commission.

There is no penalty for overspending beyond the limit of expenses laid down by the EC for contestants. The EC hiked the expense limit for the forthcoming polls between Rs 70 lakh and Rs 54 lakh. The variation is to cater for the location and relative expenses. The expense in a city like Mumbai will be more than say Imphal in Manipur. This is the second hike since 2009. Elections in 2011 saw the upper limit set at Rs 40 lakh.

The EC has issued a list of do’s and don’ts to monitor expenses. Despite the best efforts at implementation, the candidates have no fear of law, reducing the list to nothing more than a check and countercheck. Those using money power have various methods to evade the banking system and hoodwink the scrutiny system laid out by the EC.

In the 2013 Assembly polls in Delhi, Madhya Pradesh, Rajasthan, Chhattisgarh and Mizoram, central agencies seized Rs 58 crore from political workers. The focus on unaccounted cash has been immense since 2010 and over Rs 200 crore has been seized in poll-bound states. Unaccounted cash seized in the run-up to the 2014 polls till March 26 is Rs 79.20 crore. Andhra Pradesh tops with Rs 49.85 crore followed by Tamil Nadu with Rs 11.32 crore and UP Rs 9.39 crore. A sum of Rs 20 crore and 21 kg gold was seized in Chennai in March.

Within the EC, which takes on men and women on deputation from financial intelligence units of the Finance Ministry, it is estimated that such cash will go unaccounted and not be reflected in any expense. Other than seizing unaccounted cash, there is no law to include such cash into expenses of political parties to book contestants or declare their elections null or void. It is this money that makes it impossible for a ‘non-crorepati’ to contest elections unless the party backs him with funds that are generally collected from dubious and unknown sources.

‘Black money’ is used to supply free liquor, TV sets, gift coupons and even influence unscrupulous elements in the media, besides buying votes. With a large segment of the 81.45 crore electorate poor, these freebies often work.

New limit

The government has accepted the EC’s proposal to raise expenditure limit for the Lok Sabha elections. It was increased from Rs 40 lakh to Rs 70 lakh for each candidate in a Lok Sabha constituency in bigger states like Maharashtra, Madhya Pradesh, Uttar Pradesh, West Bengal, Punjab, Haryana and Karnataka, while it will go up from Rs 22 lakh in smaller states like Goa to Rs 54 lakh. The hill states of Himachal Pradesh and Uttarakhand have been clubbed with the category of smaller states of the plains, as have the north-eastern states, where the earlier limit varied between Rs 35 lakh and Rs 27 lakh for each parliamentary seat.

The cost of hiring a helicopter for 45 days is about Rs 2-3 crore.

Among the union territories, the limit is Rs 70 lakh in Delhi while it will be uniform at Rs 54 lakh for all other UTs like Chandigarh. The expenditure limit for the Assembly elections has been raised to a maximum of Rs 28 lakh and a minimum of Rs 20 lakh.

No limit has been laid down for the parties to follow. They hire helicopters and planes to fly out national leaders addressing rallies. The cost of hiring one helicopter for this period of about 45 days will be about Rs 2-3 crore. The parties just have to file expense sheets to the EC, which will be more stringent this time.

Facts ignored

The hike in expense limit came about after MPs and parties complained to the EC that it was too low and needed to be doubled. The Parliamentary Standing Committee on Law and Justice submitted a report on “Electoral Reforms: Code of Conduct for Political Parties and Anti Defection Law” on August 26, 2013. It said: “The actual expenditure on elections has been more than the ceiling fixed by the EC and it is alleged that candidates have been concealing election expenditure. The committee recommended that election expenditure needs to be substantially enhanced.”

An important fact was glossed over. A total of 129 MPs in the last Lok Sabha declared that they managed to contest by spending less than 50 per cent of the Rs 25 lakh election expense limit in 2009. “Were these MPs being frugal in spending or in their declarations?” asked a senior functionary while pointing out if 129 MPs spent less than Rs 12.50 lakh, the hike of the limit to Rs 70 lakh opens the floodgates for black money being used under various guises.

When the Union Cabinet cleared the EC proposal on February 28 this year, the National Election Watch and the Association of Democratic Reforms (ADR) released statistics to show what all MPs had declared. “Based on the election expense declarations of 437 MPs from the 2009 Lok Sabha to the EC, the average amount of money spent by each of them in the elections is only about Rs 14.62 lakh, which is 59 per cent of the expense limit,” it said. The ADR, an NGO working exclusively on election reforms, went on to say: “Party-wise average election expenses show that the average spending for 161 MPs of the Congress is Rs 14.38 lakh and for 91 MPs of the BJP Rs 14.43 lakh (in both cases 59 per cent of the average expense limit).”

Undeterred by these facts and unsatisfied by the first hike in 2011, political parties petitioned the EC seeking an increase in the limit, electors, polling stations as well as the cost inflation index. Dr Jagdeep S Chhokar, founder and trustee of the ADR, is not impressed with the hike. “We studied the poll expense sheets of 6,753 candidates across the country and 6,719 of them said they had spent between 45 and 50 per cent of the limit of 2009,” he says, adding “Where was the justification to hike the limit to almost thrice? But there are some like BJP leader Gopinath Munde who say it takes Rs 8 crore to contest an election.”

Dodging EC

Since it is mandatory for candidates to file their expenses, some unbelievable claims have been made, leading to doubts if these were genuine. About 33 MPs have declared that they have not spent any amount on public meetings, etc. The next one is even bizarre — 418 MPs have claimed that they have not spent any amount on campaign workers, meaning their teams were generous enough to bring along their own food, vehicles and phones in services of their ‘neta’. Another 22 MPs said they did not spend anything on vehicles while 21 said they had not spent on banners, etc.

Corporate funding

A report of the ADR on September 13, 2013, claimed that 75 per cent of funding sources of parties is unknown. It cited the returns filed by the parties with the EC to buttress its argument. The Supreme Court in its judgment the same month said no part of the declaration 24A submitted by parties providing details of donations above Rs 20,000 should be blank. This may improve matters.

In the past, only 25 per cent funding has been validated with PAN cards of donors. Of the accounted donations, corporate and business houses made 87 per cent to national parties between financial years 2004-05 and 2011-12. The BJP received the maximum donations of Rs 192.47 crore from 1,334 donors from corporate and business sector followed by the Congress that got Rs 172.25 crore from 418 donors, an ADR report says.

A virtual who’s who of the Indian corporate world is among the donors. The issue of state funding for elections has been hanging fire with the Government of India. The Indrajit Gupta Committee recommended in 1998: “State funding of elections is fully justified — constitutionally, legally and also in the larger public interest.” Almost 14 years later, the matter is still under debate. The BJP and Congress have said elections should be funded by the state. A Group of Ministers (GoM) headed by Defence Minister AK Antony has already suggested state funding to curb black money. “There is no reliable assessment of the money spent. As per an estimate, Rs 10,000 crore was spent in the last Assembly elections in UP,” says an insider.

Voter value

The cost of conducting elections has gone up 20 times since the first Lok Sabha polls in 1951-52. The government earlier spent 60 paise on an elector whereas it spent Rs 12 in the 2009 general election. The overall expense was Rs 10.45 crore in 1951-52. It rose to Rs 846.67 crore in 2009, as per an EC assessment.

Cost-wise, the 2004 general election was the heaviest on the government exchequer, with about Rs 1,114 crore spent during the elections. This was the first election conducted entirely using the electronic voting machines, hence the cost went up.

In the first six general elections, the cost per elector was less than a rupee. Various voter-friendly initiatives like voter awareness campaigns, distribution of voter slip ahead of poll date, use of voter verified paper audit trail for the first time in the forthcoming election may increase the expenditure further.

Quick take

• There is no penalty for overspending beyond the limit laid down by EC.
• The EC hiked the limit for the forthcoming polls between Rs 70 lakh and Rs 54 lakh.
• The limit during the 2011 polls was Rs 40 lakh.
• In the 2013 Assembly polls, Rs 58 cr was seized from political workers.
• Only 25 per cent funding has been validated with PAN cards of donors.