The unfinished agenda of electoral reforms
The Finance Bill 2018, and Union Budget 2018, leaves much to be desired as far as clean political funding and electoral bonds are concerned
The Finance Bill 2018 and the Union Budget 2018 were passed without any discussion in the Lok Sabha. This meant that Parliament did not find the time to debate and analyse the proposal to spend Rs24.4 trillion of taxpayers’ money, amounting to almost one-seventh of India’s national income. The lawmakers, or rather people’s representatives in Parliament, however, found the time to hike their own salaries, and also approved by a mere voice vote, the authority to draw an additional Rs800 billion from the Consolidated Fund of India. This non-debate is not a proud moment for the world’s largest democracy.
The Finance Bill is technically called a “money bill”. It does not need to be approved by the Rajya Sabha. This year’s Finance Bill also had within it an embedded paragraph dealing with the Foreign Contribution Regulation Act (FCRA), 1976. That law banned political parties from accepting donations from foreign firms. The law was repealed in 2010 and replaced with a new FCRA (2010). In 2014, the Delhi high court found both the Bharatiya Janata Party (BJP) and the Congress guilty of having accepted donations from a foreign company, in breach of FCRA 2010. So, last year, the Finance Bill sought to modify the definition of a “foreign company”, which potentially renders the guilty verdict as null and void. But that still left open the possibility of a breach of the older law, which was in force till 2010. So, to eliminate any culpability on that count, Finance Bill 2018 simply backdated the amendment to 5 August 1976. This is classic retrospective amendment trickery, which the present government had forsworn. No other political party seems displeased with this retrospective amendment, even for the dishonourable intention of overturning a guilty verdict. It is as if a non-money bill item was smuggled into the Finance Bill.
The underlying malaise is the unfinished agenda of electoral reforms. The big-ticket pending items are ensuring complete financial transparency in the functioning of parties and of expenditure during elections, internal democracy within parties, and debarring candidates who have criminal record from contesting elections. The Chief Election Commissioner (CEC) wrote a letter with details of desirable electoral reforms to the then prime minister in July 2004. That had a list of 22 actionable items which required parliamentary action. That letter seems to have fallen on deaf ears. No action resulted.
Again in December 2016, the CEC compiled another list, incorporating the old one, and requested Parliament to enact reforms. The mandate of the Election Commission (EC) is to conduct free and fair elections, by providing a level playing field in an atmosphere without fear. It has plenary powers derived from a section of the Representation of the People Act 1951, under which it can issue orders to ensure free and fair elections. But clean politics requires clean funding, and clean candidates. This cannot be ensured by the EC alone. Even the expenditure limits for candidates are prescribed by Parliament, and not by the EC. There is no point saying that the limits are too low. If that were so, then the official audited expense statements of the candidates filed with the EC would show fully used up quotas. The data for past several elections, both national and state-level, shows that candidates barely spend 50% of the permissible limit. But clearly a lot of money does flow during elections, and if it not reported, it is illegal and unaccountable by definition.
A few years ago, a prominent leader, and later Union minister from a national political party, proclaimed in a speech that he had spent Rs8 crore for his election (when the official limit was only Rs40 lakh). This meant that 95% of his expenditure was illegal by definition. He just received a notice from the EC and nothing came of it.
The chief minister of Tamil Nadu died in December 2016, and by law, a by-election had to be held within six months. But the EC could not hold elections because of the uncontrolled flow of illicit money and large-scale bribing of voters. It cancelled the election in April 2017 after discovery and seizure of Rs90 crore as cash for votes. Finally, the election was held more than a year after the chief minister’s death, delayed mainly because of the sway of money power (anecdotally, it is learnt that parties and candidates distributed digital cash, SIM card top-ups or simply IOUs to be encashed after the vote counting is over, after which the EC’s remit ends).
Ensuring financial transparency in the affairs of the political parties as well as of candidates is, thus, of utmost importance. The issue of cleaning up of campaign finance is global and almost every democracy is struggling with it. But India is far behind global benchmarks, imperfect as they may be. For instance, parties in India so far have even resisted coming under the ambit of Right to Information law. When more spotlight should be shone on the money from donors to parties, we have taken a step backward in allowing anonymous electoral bonds. Now, voters cannot easily know about any potential quid pro quos between donors and candidates, since that link has become hidden.
With the Finance Bill retrospective amendment, even foreigners may be able to fund politics in India, who knows. Just when the US is grappling with allegations of foreigners “hacking” their presidential elections, India seems to have enabled this. Finally, it is high time that candidates with serious criminal charges be debarred from contesting. The average “criminality” in legislatures across states and the Centre is more than 30%. Surely the country can find clean candidates to vote for?
Ajit Ranade is senior fellow at the Takshashila Institution, an independent centre for research and education in public policy.
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