REWIND
New
Delhi, 16 November 2023
COMPANY
DONATIONS NOT ENOUGH
By Inder Jit
(Released on 26 March 1985)
Opinion on the latest Union Budget
continues to be sharply divided, as reflected in some refreshingly candid
comments and analyses on Doordarshan. Many people are inclined to go along with
Mr Nani Palkhivala and his view that the latest budget is “the finest for the
last three decades.” One of India’s leading thinkers and analysts, Mr
Palkhivala described it last Wednesday as an epoch-making budget for “redesigning
India” and said: “It bids fair to make the biggest economic story of South Asia
in the current year.” Many people, especially housewives and those with fixed
incomes, disagree. They describe the budget as “anti-people” and support the
view expressed by Mr H.M. Patel, formerly Union Finance Minister in the Janata
Government, on Doordarshan that the levy on petroleum products together with
the hike in rail freight has already led to an increase in prices. They concede
that the budget has offered many reliefs. But they quote Mr Patel to assert
that massive deficit financing is going to hit them harder. What has been given
by one hand is being taken away by the other!
Some critics have even been angry
with me for praising the budget and complementing Mr V.P. Singh on Doordarshan
a day after it was presented asserting: “You were good when you analysed the
poll outcome (on March 6) and described Rama Krishna Hegde as the man of the
match. But how could you, an independent journalist, praise the budget?” Alas,
independence is no longer viewed as it should be: objective and non-aligned.
Instead, it has come to imply total opposition to Government, right or wrong.
Anyway, I still agree with Mr Palkhivala. The latest budget may be a gamble in
the monsoon. But then budgets in India have all along been a gamble in
monsoons, as eloquently stated first by Jeremy Raisman, Finance Member in the
Viceroy’s Executive Council some four decades ago. Undoubtedly, a good monsoon
still makes all the difference. However, New Delhi is confident of facing a bad
monsoon with the help of its buffer stocks and in keeping prices under control.
Not unexpectedly, the critics have their view.
All are, however, agreed on one
point: Mr Rajiv Gandhi deserves a big hand for his decision to hark back to the
Nehru times and again permit companies to donate funds to political parties. This
single act on the part of the Government, as announced by Mr V.P. Singh in his
budget, should help in two ways. First, make our elections a little less
unfair. Second, eliminate one major stimulus or excuse for evading tax and
generating black money. Company donations enabled all the political parties
during Nehru’s rule to get funds across the table -- some more, some less.
Expectedly, industrial houses and shrewd businessmen took out what may be
described as political insurance covers with all the parties. But New Delhi
under Indira Gandhi began to have second thoughts when Big Business started
backing the Swatantra Party, which stood for free enterprise, in a big way.
Unexpected support for a fresh look at company donations came from the
Socialists, who were no less annoyed by the pro-Swatantra attitude of big
money.
In fact, Mr Madhu Limaye, if my
memory serves me right, even came forward with an unofficial bill in the Lok
Sabha to demand a ban on company donations -- a demand which received a favourable
response from Mrs Gandhi’s Government. He and other critics argued as follows: “The
profits of any Company belong to the shareholders -- the public. Company
donations come out of these profits. A part of these profits would normally
come into the Government’s coffers if company donations were disallowed and
taxed. Thus, a part of the contributions from the companies in effect comes
from the Government exchequer and the people at large. Why then should those
who head various companies be allowed to distribute patronage and exploit this
privilege to personal advantage. Let them do so personally out of their own
pockets.” The argument had its points. Logically, it should have taken India
towards direct and full Government funding of elections. Instead, it gave Mrs
Gandhi’s Government just the excuse it needed to ban company donations and
block the flow of funds to the Opposition.
Under the new dispensation, the
ruling party alone got funds -- of course under the table. But the decision
played havoc with the system as also with business ethics and morality. In one
fell stroke, it opened the flood gates of corruption. Funds were still required
for fighting elections. Since these could not be got lawfully, thoughts turned
to other ways. The late Lalit Narain Mishra and a few others showed Mrs Gandhi
the way and became her fund raisers. India then entered the era of political
quid pro quo and kickbacks. Licences, permits and what have you were
unabashedly hawked -- like chaat and peanuts on the pavements. Leading
industrial houses known for impeccable business morality refused to join the
now cult. However, before they were left with no choice. A top industrialist
then told me: “It is a question of survival.” Individual Ministers and their
men also made big money in the process. Worse, however, the electoral system
itself got heavily debased and corrupted. All ceilings on poll expenses were
rendered meaningless. The sky became the limit.
The Government’s decision to lift
the ban on company donations will undoubtedly help the system. But it would be
folly to think that it would eliminate the scourge of black money or the
requirement of the political parties for unaccounted funds. Once having tasted
blood, the political parties are not going to easily give up the privilege
unless several reforms are undertaken. Today, the ceiling on poll expenses has
become meaningless. Candidates are, no doubt, required to file returns of
election expenses. But the Commission has no power to see whether the returns
are accurate. It is only empowered to see that the returns were filed in time
and were in the prescribed manner. What is more, the ceiling per candidate does
not include the expenses incurred by a political party following an amendment
of the Representation of the People Act in 1975 -- under Indira Gandhi. In
1980, the Election Commission recommended that the Act be reamended to restore
the earlier position. But nothing was done. This alone has made nonsense of any
ceiling on expenses.
Costs of elections have continued to
increase. Yet, little has been done to determine the sources that should be
legally tapped for campaign expenses. Unless this is done, there is little hope
of minimising the evil influence of unaccounted money power and vested
interests. Company
donations will at best be a few drops in the electoral bucket. At the same
time, we have to see that deserving candidates are encouraged to stand for
election even though they do not possess the minimum money to conduct their
campaign. The reader may be tempted to say: This is left to the parties.
However, this will not help so long as we are unable to get the political
parties to function on democratic lines through a law, as in West Germany. The
answer lies in one direction, as recommended by the former Chief Election
Commissioner, Mr S.L. Shakdher, in 1980. The State, according to him, should be
made responsible for financing the candidates’ election expenses. In fact, he
believes that it is not difficult to lay down norms for identifying the areas
and the quantum of financial assistance on the basis of the poll performance at
an election.
Not only that. Mr Shakdher went one step further and in the Election
Commission’s report on the General Elections to the Lok Sabha (1980) and
Legislative Assemblies (1979-80) specifically recommended state funding of
elections. The report said: “The Commission is of the view that there
should be an election fund from which amounts could be drawn as and when
required under orders the Election Commission for the following purposes: (1)
Revision of electoral rolls; (2) Conduct of elections; (3) Storage of election
materials and records; (4) Payment of subvention to political parties; and (5)
Issue of photographed identity cards.” The Commission also went into the size
of the fund and proposed that “the fund should initially be of the order of Rs
100 crores for a period of five years. The share of the
Central Government on the one hand and various State Governments and Union
Territory Administrations on the other may be on 50:50 basis. The Central
Government and state Governments each may contribute Rs 10 crores every year so
that over a period of five years the proposed fund of Rs 100 crores may be made
up.”
A fund of Rs 100 crores may appear
to be small in the context of astronomical figures purportedly spent by the
Congress-I and other parties on the recent elections to the Lok Sabha and the
State Assemblies. But Mr Shakdher maintains that the amount is adequate even
today to take care not only of Government expenses but also the expenses
incurred by the candidates and political parties. Assistance could be provided
in the following forms: supply of paper and electoral rolls, printing of a
limited number of posters, supply of petrol and diesel coupons for a restricted
number of vehicles, provision of posters and payments to polling agents and
other personnel. It should not be difficult for the Centre to manage by itself
an amount twice as large, namely Rs.200 crores over a five-year period. A
contribution of Rs 40 crores every year out of an annual Union budget of some
Rs 50,000 crores is insignificant indeed. We should surely not grudge this amount
for sustaining and strengthening our young democracy -- and in enabling our MPs
to enter Parliament with a clear conscience. Government funding of elections,
as in West Germany, is bound to come some day. The earlier this happens, the
better for India and its democratic health --- and prosperity. --- INFA
(Copyright, India News and Feature
Alliance)
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