Demanding transparency in political finance

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hinduxBuilding on the work by RTI activists, India needs to set up a mechanism that can make for accountability on the sources and utilisation of party funds

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Throughout the world, political parties collect funds to build and sustain the organisation, to train party cadres and fight elections. Recognising that they are the main link to the citizens (as voters) and, by implication, the mainstay of democracy, many countries, including India, have helped cushion their expenses at public cost. But the major share of funding still comes from voluntary contribution. Undeniably the sources of such funding influence voting behaviour and that is why the subject impacts directly on democratic rights. Surprisingly when all important institutions of governance, including Parliament, the judiciary and certainly the executive, have attracted intense public attention, the financing of political parties has been left relatively untouched. Until recently.

CIC order

In 2011, two resolute RTI querists — the Association for Democratic Rights, an NGO, and an individual, Subhash Aggarwal — appealed to the Central Information Commission since political parties had refused to share information although by all accounts they were public bodies. The appeals were upheld in an order dated June 3, issued by the full bench of CIC, which ruled that six national political parties needed to provide information as sought by establishing the RTI apparatus as required. The logic: they were recipients of valuable state resources in the form of land, accommodation, and tax exemptions which amounted to “substantial funding” by the public exchequer. Accordingly, they were to be treated as public bodies and made answerable as such.

The day the order was announced, everyone knew that most political parties would come together to annul the damage done by the CIC. They would either seek judicial intervention or introduce fresh legislation to overturn the CIC’s order. Knowing this, the applicants forthwith filed a caveat to forestall the grant of a stay against the order. All newspapers have since reported that a bill has even been kept in readiness to be introduced in the forthcoming session of Parliament seeking to exclude political parties from the ambit of RTI.

The major points of discord are: first, unfurling the RTI umbrella over political parties has implications for political strategy and functioning as once conceded, even information on the distribution or denial of ticket can be sought — clearly a situation that is untenable given the competitiveness, secrecy and intricacy of political decision-making. Second, political parties do not maintain the documentation needed to respond to wide-ranging RTI queries and they cannot be expected to establish a new organisation only to fulfil the sweeping questions that will come under the RTI. Third, if the argument that political parties received “substantial funding” is applied equitably, it would apply to all similarly placed NGOs. The ensuing demands for information from all such bodies would explode the scope of CIC’s functions and belie the prime objective of the RTI which was to provide information on government functioning. Fourth, when it is well known and publicly admitted that most political funding comes from black money sources and in cash, it is impossible to declare whose contribution it was without first cleaning up the “number two” monopoly.

In their place the arguments are not without validity. But none of them addresses the fundamental need to regulate political finance — something that progressive countries enforced decades ago. According to the International Institute for Democracy and Electoral Assistance (IDEA) Handbook 2003 and its current website, in nearly 60 countries, which include the United States, the United Kingdom, Japan, Canada, France, Germany and Thailand, political parties are bound to disclose all contributions beyond a specified threshold. India is not among them. Alongside there exists a ban on making anonymous donations to political parties in more than 45 countries which include all the above countries. Again India is not among them. Happily, India does have a provision for public disclosure of expenditure by political candidates but even so, there is no ceiling on party election expenditure — only candidates’ expenses. That leaves enormous scope for gargantuan indirect spending on elections so blithely admitted to by Gopinath Munde who now faces the wrath of the Election Commission for publicly pitching a figure of Rs 8 crore spent on his own election against the stipulated limit of Rs 25 lakh.

Our political parties appear to see the whole business of being pulled under the RTI as brinkmanship. They rest sanguine in the knowledge that civil society in general and RTI activists in particular can do little harm as the latter’s sphere of influence is essentially urban, middle-class and, for that very reason, circumscribed. Ultimately with no bridges to the people and little influence, they are secure in the knowledge that civil society would have no option but to pursue the public interest litigation route. That alternative despite some resounding successes is exasperatingly slow.

Preventing abuse

Against this backdrop, is the almost universal position of political parties which refuse to give information at least on their funding to be accepted meekly? No, because at stake behind the demand for public disclosure of political finances are two important considerations: prevention of abuse (by using soiled money); the need to promote healthy political competition which requires sharing the sources and quantum of funding of each party with the voter.

Undoubtedly, the stalwarts in the RTI fraternity have done a great job by bringing the subject of political finance into prominence. That conceded, India now needs a law to bring it on a par with progressive countries world-wide. That means mandating disclosure and reporting rules that provide clarity about political funds — their sources and their utilisation.

We need a body akin to what has been set up in the U.S. under the Federal Election Campaign Act 1974 which created an enforcement agency called the Federal Election Commission. This body supervises all financial transactions by political bodies that have solicited or spent money to support or defeat federal candidates. The organisation verifies all reports presented, and discloses the same to the public and the media. Ideally our Election Commission should be empowered to do exactly this, by law. If this were done there is no need for individual parties to give responses under RTI.

An opportunity

Every right-minded political party should look on the CIC verdict as an opportunity — not a threat. In fact, were even two national parties to voluntarily adopt a common reporting system it would remove clouds of opacity, greatly enhance public faith and demonstrate a concern for ethical standards. Others would perforce have to follow suit. Indeed this is a priceless moment for the political system to collectively break itself loose from criminal elements, unaccounted and excessive money power and to remove illegitimacy from the power game.

Political parties should pledge to support a law to ban anonymous donations and cash contributions beyond a threshold and put a ceiling on election related expenses of individual political parties. The Election Commission or a new statutory body should have full authority to oversee the inflow and outflow of political finance and institute legal action if scrutiny is stone-walled. As a public body, it should suo motu give information collected by it on its website and also arrange for regular media briefings based on the declarations made by political parties. But it should have no compunction in resorting to the use of Section 8 of RTI if the information sought by querists goes beyond the subject of political finance — so relieving political parties from the rigmarole of RTI and free to steer their internal political strategies in secrecy.

But first voters need the reassurance that political parties are concerned enough to unite to clean the mess. The present opportunity and its timing can be used to augur the much-needed change. If it is merely used to remove the irritant called RTI, it will show that self-preservation is more important to political parties than bringing transparency into their financial dealings. When half the countries in the world have a strict code and laws on political finance, insist on full public disclosure and impose ceilings on party election expenditure, should the Indian voter be forced to accept any less? When the model code of conduct for elections could be evolved so successfully simply through consensus, why not a model code for political finance?

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