Editorial: Bad money in poll vault


AFTER FIVE YEARS, the voters in India have got another chance to elect a government at the Centre. As a democratic polity, we have done well in voting out governments and electing new ones. Save for a brief period when democratic rights were suspended during the infamous Emergency, our country has been such a delightful example of democracy at work. In comparison, our neighbourhood as well as other emerging countries, have performed abysmally on the democracy index. Does this really mean that India is better governed in comparison to other countries where there is no democracy? Can the exercise of adult franchise really provide some traction to the efforts to provide good government

There are no ready answers. Only thing that is certain is that all good intentions emanating from people electing their own government get squandered due to organised corruption. Truly, corruption and bad money subverts the mandate and content of democracy in a multi-party system where the State does not fund the polls. This is how it happens.

An estimation by the Center for Media Studies shows that Rs 10,000 crore may be spent in the coming elections. This equals the foreign direct investment that came in 1994-95. The CMS figure is a gross underestimation for Election 2009. This figure could go much higher if the recent assembly election in Karnataka and a by-election in Tamil Nadu are any indication.

Besides the expenses political parties incur to mount their campaign, there is a considerable spend by individual candidates which has seen a serious spike in the last few years. One of the reasons could be the serious wealth that has been created in the last few years. To illustrate, during the NDA rule, the Mumbai stock market index never went beyond 8,000, whereas during the UPA government it shot up to 21,000, before it came hurtling down during the economic turmoil. Much of the bounce of the stock market was artificially created through overvaluation of companies, over-estimation of demands and flawed projections of economy.

Although it did not reflect the state of real economy, a booming stock market, manipulated by dubious speculators and a rocking real estate sector, provided easy money to a new breed of socially mobile and politically ambitious class. These people had big money and they saw in politics an opportunity to multiply their wealth, earn legitimacy and gain social status. They cracked the code of many of the entrenched politicians who were corrupt, amoral and at times evil, but still kept their mask of respectability - that is, as long as it doesn't slip off. Their CVs are an evidence of how politics has made them wealthier, without really holding a well-paying job or running a job. Income tax returns of some top politicians show exponential rise in their wealth in the short period that they have been in power. Only part of their income shows
up in their returns, a major part gets parked with business houses and in tax havens.
A report suggested that $1.5 trillion of Indian funds are in Swiss vaults. A similar amount may be in other British-controlled tax havens, which are under pressure due to economic slowdown to reveal their depositors. A lot of the money comes back during elections. This means the money spent in elections is far more than a few billion dollars. Although this works as a stimulus and has a desirable multiplier effect on the economy, the long-term implications of bad money running elections are simply disastrous.

Corruption and lack of integrity in public life ensures that most of the MPs and MLAs are desperate to recover all the money they have spent. As ministers, some of them reportedly take commissions and kickbacks from deals and as MPs and MLAs they take "cash for questions". Also, many of them are manipulated, blackmailed by corporate houses - who may have funded their elections - to do things at their bidding. Parliament gets subverted by dubious money and, seemingly, there is no way it can be salvaged till political parties reclaim politics from the deathly stranglehold of dubious money that is fracturing the polity to serve their interest. It is a tall order,
but political parties will not win majority in elections till they recognise this vital link.