The Indian Economy Blog

May 2, 2008

Scrap The Spending Limit

Filed under: Corruption/ Red Tape,Politics — Karthik @ 11:28 am

There are two special things about the ongoing elections in Karnataka. The first is the presence of a large number of real estate developers in the elections. The second is the virtual non-existence of corruption, rather the removal of it, in party manifestos. These two points, I believe, are not independent. Under the current system, political parties are forced to rely on black money to fund election campaigns. For people with black money, election funding is an extremely lucrative investment, and with the right bets or good hedges, can give excellent returns.

The political parties have no way out of this. In the name of austerity, and conserving public money, there is a limit on spending in elections. Currently, it stands at a measly Rs. 10 lakh per candidate. In other words, what the rules say is that no candidate is allowed to spend more than this amount on his campaign. Assuming that the average assembly constituency has about 2 lakh voters (this is the case with Karnataka this time round), this works out to Rs. 5 per voter.

A “normal” election involves considerable expenses – banners and posters and fliers; speeches by national politicians; public meetings; door to door campaigning; rallies (And I’m not even thinking about “illegal expenses” such as buying liquor and saris and crowds). It is obvious that in order to put up a serious campaign, one needs to spend a large multiple of the official limit. There is only one way to fund this – using “black money”.

Notice that even if a particular party wants to be honest, and doesn’t want to use black money, it can’t do so unless it is willing to badly hurt it’s own chances in the elections. There is simply no way out. Yes, you might think of increasing the spending limit, but if the other guy is willing to spend over and above the new limit there isn’t much you can do.
As you might have figured out from the title of this post, my recipe is to scrap the spending limit on elections. It is fairly common knowledge that no one really sticks to these limits. Why not just legalize this? It still won’t stop parties from using unaccounted money. However, it gives the parties an OPTION to be honest, and use only honest sources of money.

If a party wants to go to the polls on an anti-corruption platform, it would be able to do so without being corrupt during the process itself. And once some party takes the plunge and “goes honest”, the other parties are likely to follow soon, unless they can afford to lose their reputation. And where will “honest” political parties get their funding from? I’m sure there is a large number of businesses who stand to benefit a lot from a corruption-free government. It shouldn’t be a problem to tap them for funds.

I concede that it’s not a foolproof solution. There is no guarantee that there will be some party which will take the bait and go “all white”. Even if one party does so, there is no guarantee that the entire flawed system can be cleaned up. However, this proposal doesn’t cost too much. I can see no real negative aspects of removing the cap (if you can think of anything, please let me know in the comments). It is definitely worth a try. It is definitely superior to give people the choice to be honest, rather than forcing them to be dishonest.

13 Comments »

  1. Wait till you get to the Andhra Pradesh Elections… Real Estate tycoons have already started lobbying to get tickets in the next general election.. Word on the street is that the new wealth is driving the election budgets to levels that have never been heard of.. expectations of the rural voters have gone up considerably.. Vote banks are estimating a minimum payout of Rs 1000 per vote along with many goodies like TV’s and Refrigerators.

    Comment by Babuj — May 3, 2008 @ 12:30 am

  2. India Election Reality
    ————————

    1. Political Parties have only nominal membership numbers. Does anybody have membership figures of major political parties in India?

    2. There is no intra-party democracy, without large membership base intra-party democracy has no meaning.

    3. Political parties don’t have any accounting norms so we do not know who funds the political parties.

    4. Electronic voting machines without physical vote tally can be easily manipulated. Here is how to build fool proof electronic voting machines : A ticket printer should be attached to the voting machine, when the voter press the candidate vote button the printer prints the symbol of the candidate, voter verifies the symbol and drops it in a box. The the vote machines and the vote boxes should be stored in two different locations. The vote tally can be still done in the voting machine and the physical vote chits used as backup verification mechanism.

    5. This year elections even the political parties seems to have given up on campaigning. In an electronic black box election, there is no relevance for campaigning and our politicians are smart enough to understand this.

    6. Disproportionate accumulation of wealth in the hands of few is proof that democracy is not working in a society and it is happening in India.

    Comment by Krish — May 3, 2008 @ 7:03 am

  3. Campaign spending limits go against freedom of expression and a person’s right to use constitutional means to effect changes. The limits should certainly be done away with.

    It’s one thing to ask politicians not to stick bills on private property..and quite another to decide how much money they ought to spend and where!

    Comment by Pramod Biligiri — May 5, 2008 @ 1:04 am

  4. Today the fear of getting caught may deter or moderate cheating. In case the limits are totally removed all we will achieve is add corporate lackies to tax evaders in influencing politics

    Comment by JC — May 5, 2008 @ 5:48 pm

  5. Krish,

    >Disproportionate accumulation of wealth in the hands of few is proof that democracy is not working in a society and it is happening in India.

    It is disproportionate spending that is the *real* indicator of the failure of democracy.

    JC,

    >Today the fear of getting caught may deter or moderate cheating.

    For one, it is difficult, even for the vigilance agencies to track and prevent political parties from spending black money in election campaigns.

    >In case the limits are totally removed all we will achieve is add corporate lackies to tax evaders in influencing politics.

    At this point of time, some corporate influence in Indian politics wouldn’t be too bad. This will eventually pave the path to freer markets. It is too much influence which is bad.

    In any case, democracy is ingrained in our culture, even though it is corrupt. The poor don’t have money, but they do have collective bargaining power (votes).

    I think a removal of restrictions on private political spending should be removed as it is an unneeded hindrance to political parties by the courtesy of obsolete laws.

    Comment by Anirudh Bhati — May 5, 2008 @ 9:10 pm

  6. Good idea. Lok Paritran, a new and honest political party founded by
    ex-IITians in 2006 is contesting in Karnataka elections, fielding 11 candidates.

    http://www.lok-paritran.org/?q=node/539

    Comment by K.R.Athiyaman — May 6, 2008 @ 11:48 am

  7. Rather than going with grpaewine one should understand real politics and speak to someone on ground.
    My friend’s father has become MLA in Madhya Pradesh by being within limit due to tough rules of election commission on no late night meetings , no convoy of vehicles, no graffiti , and no excess banners or hoardings.

    Expense limits give honest people a chance to contest election and those spending out of limit are always in danger of being caught or tipped of by someone.

    What author is suggesting is like because you can not enforce a law or can not catch the culprit make the offence legal.

    Comment by Anshul — May 8, 2008 @ 1:24 pm

  8. @Anshul,

    We cannot always take the law for a ride, and if the enforcing agency is really willing to enforce the law, it becomes a nightmare for the violators! The brightest of the examples is the last general elections in Bihar, where many of us remember how the election commissioner personally toured every nook and corner in Bihar, sometime even on motorcycle, to ensure everything to be free and fair!

    But to be very frank, how many times does it happen? You, me and everyone knows the answer! Corrupt people do get away through many loop holes that exist. It is the honest ones who suffer! But at the same time we cannot remove the spending limit as a whole, because that is not the solution.

    The solution lies in enforcing the law, strictly! It is time we have to find alternative ways to do so, rather than the traditional ones! At the same time we have to make the law more applicable by revising it to suit the time’s need!
    Regards
    Tara Prasad

    Comment by Tara Prasad — May 9, 2008 @ 12:19 pm

  9. [...] like the kind of articles are published over there. In response to such a thought provoking article Scrap The Spending Limit I gave this [...]

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  10. @ Tara

    >But at the same time we cannot remove the spending limit as a whole, because that is not the solution.

    Why not? Is this conventional wisdom you are touting?

    >The solution lies in enforcing the law, strictly!

    This is Republic of India, and not People’s Republic of China. People do not respond well to authority, unless it is the invisible hand of the free markets. Set them free, and watch them work for themselves.

    >At the same time we have to make the law more applicable by revising it to suit the time’s need!

    Huh? So what is the time’s need?

    Comment by Anirudh Bhati — May 11, 2008 @ 6:08 am

  11. @ Anirudh

    Please try to find a better word than ‘touting’ while commenting on a blog !

    Elections have expenses of which some are legal and others illegal. The legal expenses include the cost of banners, posters, vehicles etc where there is a limit set by the govt. on these expenses that is Rs 10 lakh for an assembly constituency. It might have sounded as a handsome amount a decade back, but today it is just insufficient keeping in mind the costs involved. So the “time’s need” is to have a reasonable amount as the spending limit, so that the candidates need not have to lie on their legal spending.

    However the concern is the illegal expenses, which is not being affected anyway whether there is a spending limit or not. The only way to tackle the problem is making the enforcing agencies more vigil and giving them the authority to take stringent actions, of course with accountability.

    Yes, I repeat, the solution lies in enforcing the law strictly, not by doing away with them. What we could see in Bihar last election, we can always see the same across India.

    For that we need not live in China !!!

    Regards
    Tara Prasad

    Comment by Tara Prasad — May 13, 2008 @ 3:22 pm

  12. You are sounding more like an Indian newspaper now. (-:

    “Laws should be enforced strictly.” That is exactly what our politicians have been trying to do, since India’s independence. We know what has happened to our country since then.

    Pray do let us know what those illegal expenditures are? Giving someone a few hundred bucks for a vote is illegal? I wouldn’t think so. A person like me would just take the money and give my !vote to whomsoever I may want.

    If our people are not capable of understanding this, then maybe we do not need democracy at all. Fools should never be allowed to participate in governance, Aristotle hath said.

    The Government’s job is not to control the lives of the citizenry, but to instill the values of self-reliance and resilience.

    Comment by Anirudh Bhati — May 14, 2008 @ 12:37 pm

  13. @ Anirudh

    “That is exactly what our politicians have been trying to do, since India’s independence. We know what has happened to our country since then.”

    So let’s stop living a good life here onwards coz our politicians have not been able to provide us a good life till date!!!
    Does anyone over here agree ‘self-reliance and resilience’ means the freedom to decide how much money and from whom one can take to cast his vote for him?

    Comment by Tara Prasad — May 15, 2008 @ 7:24 pm

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