Hawala money. Benami deals. Cash for votes. Corporate payoffs. Everyone knows it is happening, even the Election Commission cannot control it. HNN maps the invisible funding of Indian elections.FEROZESHAH ROAD is a quiet, tree-lined boulevard, in the heart of the Indian capital. Considered — by any standard — one of the finest addresses in the city, it houses political leaders and has a few select multi-storied buildings. Not the kind of place one expects surveillance to happen. But last week, intelligence officials — after a tip-off — kept watch on a third-floor flat at 34, Ferozeshah Road. They had reliable information that the occupants of the apartment were in the process of laundering — through hawala — a staggering Rs 380 crore from an undisclosed destination in south-east Asia (read: Singapore). The money, say intelligence officials, was meant for spending in the upcoming general election. Intelligence sources said that those involved included a wealthy businessman from Kolkata and his associate, a wellknown figure in Delhi’s illegal foreign liquor racket.
It may be the world’s largest democratic exercise, what the British weekly The Economist called India’s “jumbo election”. But it’s also one of the most expensive shows on earth. An Indian parliamentary general election is the ultimate political spending spree. And the fuel powering this frenetic activity is almost all black money. Like the proverbial iceberg, the official statistics of what candidates are spending — and therefore, announcing to the Election Commission (EC) — is just the tip. Nine-tenths of it lies beneath, silent, but powerful.
On the surface, everyone, candidates and political parties alike, toe the official code of the Election Commission. While submitting individual details, they offer proof that they are not crossing the commission’s stipulated limit of Rs 25 lakh per candidate.
Not that the commission is fooled, however. The presence of black money in the political arteries of the Indian economy is so overwhelming that the EC knows it plays a powerful role in an election. It has actually admitted it cannot control the deluge of money in election season. Election Commissioner SY Quraishi sounded exasperated when he told a television news channel in Delhi recently, “No, we have little control over money that flows underhand in the elections.” The next week, his office noted breaking news on television that an estimated Rs 10 lakh was found from the drawers of the offices of filmmaker Prakash Jha, who is contesting elections from Bettiah, Bihar on a Lok Janshakti Party (LJP) ticket. “The cash was meant to be distributed among the voters,” Bettiah superintendent of police KS Anupam told reporters.
WHETHER THE charge will be substantiated or not is to be seen. There’s no proof and the clout money has in an election is so routine, it’s accepted. “I am currently in Chennai and my conservative estimate for just three constituencies in Madurai alone is Rs 700 crores. The spending in South India is always higher than in North India,” former Finance Secretary S Narayan told TEHELKA this week. The Bharatiya Janata Party (BJP) held a twoday opinion poll in Gujarat on black money stashed by Indians in banks abroad in early April. Ordinarily the EC would have been expected to raise objections to this sort of grandstanding. The quiet joke in the capital was that the the hardworking election watchdog would have preferred to come to grips with the money political parties spend during the polls, estimated at over Rs 50,000 crore ($10 billion) by those entrenched in the electioneering proces. That figure, incidentally, is almost one fifth of the figure arrived at by a recent national survey.
The survey conducted by Centre for Media Studies (CMS), a Delhi-based think-tank, says that across the country, one-fifth of voters have said politicians or party workers offered them money to vote in the past decade. In some states like Karnataka, Tripura, West Bengal, Kerala, Tamil Nadu and Andhra Pradesh, says CMS, nearly half say they have been bribed. Even in the Indian capital, 25 percent of voters received money for their votes.
The organisation estimates that onequarter of the actual election budget is directed towards illicit activity. “For political parties in India, the main objective is to win at any cost. As a result, parties are opening up their purse strings for the polls,” says Jagdeep Chokkar, a former Indian Institute of Management (IIM) professor.
Raymond Baker, author of Dirty Money and How to Renew the Free Market, writes that, since 1970, at least $5 trillion has moved out of poorer countries to the banking systems of the West. But a portion of this black money comes back to India — election time. That the entire process is unofficial is certain: the transactions, both back and forth, involve hawala operators, sale of benami properties and bagloads of cash ferried to the party faithful for redistribution. And this money transfer operates more efficiently than India's official economy channels.
Informed sources told HNN that an estimated Rs 10-15,000 crores ($2-3 billion) has been earmarked by political parties for “unofficial” purchases of individual votes. Besides this, politicians in their effort to squeeze every last vote out of the world’s largest electorate — are criss-crossing the country’s 2.97 million square kilometre land mass, running up crores in air transport bills. With campaign costs virtually doubling every election, political observers feel the country’s democratic process is being hijacked by the kind of spendingpower politics that is more often associated with the US elections. Worse, it’s without the level of transparency in both collection and spending that is also associated with the US.
That the EC is troubled is understandable . The bulk of the money is transferred to the states even before the stringent EC code comes into force; more than 60 percent of corporate funding to all political parties is in the form of black money; on an average, a candidate spends anywhere between Rs 3-15 crore in a single constituency. Recently, Chandrababu Naidu, former Chief Minister of Andhra Pradesh, was admonished by the EC for handing out colour televisions and announcing a ‘special’ cash scheme for voters. Code violations such as Naidu’s — cash distributed at rallies or offerings of gold chains or similiar bribes — are merely the infringements that are caught out. Most of the infringements happen before the EC code kicks in.
AS A result, odd stories float around the offices of political parties in Delhi: the capital is the hub for receiving funds from which payments are radiated to state units. Sources say a television channel received nearly Rs 200 crore for slanted publicity; that a top corporate chief visited the offices of the Left brigade with an offer of support to the Third Front with the explicit condition that a leading woman aspirant not become the prime minister; that the UP-based owners of tobaccolaced chewable products have become the conduits for money transfers to state units because of their huge cash reserves. Top Mumbai-based companies are now funding elections in states where they have big business interests.
“Perhaps this will be the election that will see an all-India display of money power as never before. It is only in the urban and better-educated areas — and if the younger people turn out to vote in large numbers — that one can see some hope for transparency, clean voting and genuine democratic selection,” said former Finance Secretary S Narayan in a newspaper column.
Insiders say receipts and payments have been at record levels for the last two months. A number of kickbacks offered by brokers in various deals have slowly found their way to the coffers of the parties in power in each state. “You will find nothing on paper but it is true that a portion of government tenders, running into thousands of crores, is routinely channelled back to the funds of the party in power,” says a corporate insider. He adds that there is also a serious drive in the states to pick up money through various means the moment elections are announced. It is unofficially called the Chief Minister’s slush fund. The fund takes care of the cash transactions of the state and — if required — sends to the party’s centralised funds for distribution to states where the party is not in power. “Besides Delhi, there are certain pockets that take care of the regions. It is like Maharashtra funding Gujarat and Andhra Pradesh unit of the party funding Karnataka, (where it is not in power)” adds the insider.
CONSIDER THE case of the general managers working in the Rural Road Development Agency (RRDA) in Madhya Pradesh districts who received calls from the offices of a minister, demanding Rs 5 lakh. Tired of the calls, they complained to the EC in writing last week. It will be interesting to see how the EC reacts to the complaint. Those in the know say the demands such as the ones faced by the RRDA managers are routine in almost all states. In fact, the Samajwadi Party made four campaign films about Bahujan Samaj Party (BSP) supremo Mayawati, that portrayed the Dalit leader as having a penchant for erecting her own statues and demanding money from bureaucrats in her state. The EC rejected the films, but most people seem to agree with the content, ostensibly because similar reports have routinely filled the media about the UP chief minister and her way of operation.
State-owned companies are hardly the only ones tapped for funding — the country’s top corporate houses say the pressure from political parties for money is high indeed. Corporations want an immediate overhaul of the system, to bring in transparency to political funding. The issue cropped up during a Confederation of Indian Industry annual session meant to discuss the country’s troubled job market. Tata Communications chairman Subodh Bhargava and Bajaj Auto chairman Rahul Bajaj, also a Rajya Sabha MP, moaned about black money flowing into elections. “Clean money makes a difference. Currently, as much as 60 percent of companies are financing political parties with black money,” an enraged Bajaj told reporters.
Federation of Indian Chambers of Commerce and Industry (FICCI) secretary- general Amit Mitra says the problem is not the politicians or industrialists. “We must fund elections and take a call on how much an individual can donate. India could either go the US way (of capping corporate contributions) or follow the European model and allow elections to be completely funded by the government,” he says.
Both suggestions are sound, legislatively speaking, but the question is whether any legislation can bring change to a system in which funds are both collected in the form of off-the-book payments and then paid out in silent backhanders.
Conglomerates like the Birlas and the Tatas have separate electoral trusts, through which they donate money to political parties. The Tata Electoral Trust does not distribute funds to individual candidates but to registered political parties, based on their number of elected members to the Lok Sabha. “I think there is obviously a case for laying down procedures for funding as it is at the heart of Indian democracy,” says Communist Party of India (CPI) deputy general secretary Sudhakar Reddy, who is trying to raise the issue of Indian deposits topping the list in secret Swiss Bank accounts. “Companies who fund political parties obviously see returns if the supported party comes to power,” he adds.
IT’S THE return on investment that fuels corporate funding of elections. But even for political parties, the need to increase spending exponentially with every election has become imperative. “Politics is actually a big game of money. Those spending heavily are doing so only as an investment and expect a ten-fold return on their money,” says Anil Bairwal, chief coordinator of the Association of Democratic Reforms. It’s an umbrella group of NGOs that launched the National Election Watch to keep an eye on party and individual campaign budgets and spending.
Bairwal says that in the past, candidates and parties organised mega events such as mass weddings, and handed out money there in return for votes, but patterns are constantly changing in the country’s political landscape. “From Rs 100 for a vote more than a decade ago, the rate has gone up to Rs 1,500-2,000 a vote. In fact, the cash-for-vote often works as a hit-and-miss syndrome in India because booth capturing is out and you actually do not know who’s doing what,” he told HNN.
The EC is aware of the money movement. “Our emphasis will be on controlling the money power in elections,” outgoing chief election commissioner N Gopalaswamy told reporters last week. He added that the EC has also deployed 2,000 observers — many of them senior tax revenue officials — with a special brief to keep tabs on all pollrelated spending.
IT’S A daunting task, because of the sheer numbers involved — both the number of candidates and the size of their funds. Very conservative estimates say the Congress will officially spend approximately Rs 1,500 crore — one expense is its Rs 1 crore ($200,000) blowout to acquire the rights to the Oscar-winning Slumdog Millionaire song Jai Ho from its copyright holder, T-Series. The BJP’s official budget is estimated to be about Rs 1,000 crore: this includes a Rs 200 crore advertising fund.
The BSP has a kitty of Rs 700 crore, similar to that of the Nationalist Congress Party. The Dravida Munnetra Kazhagam (DMK) — thanks to some recent fund-raising drives by Union Communications Minister A Raja — has a kitty of Rs 400 crores. The official budget of the All India Anna Dravida Munnetra Kazhagam (AIADMK) is close to Rs 300 crores. The CPM and its allies have a more modest Rs 250 crore budget.
Of course, not every outlay is about glad-handing and buying votes. Many of the expenses are legal though one could question the extravagance. One such is the cost of hiring choppers and executive jets by political parties. For this election the number of helicopters and small jets hired by the political parties have doubled since the last polls in 2004. Currently, political parties have hired an estimated 45 to 50 choppers — half of them from abroad — and 22 small jets. (Most are sixseater jets while some are 13-seaters.)
“The demand is sky-rocketing and political parties do not mind the cost,” says R Puri, who heads Air Charters India, which has rented out its entire fleet of helicopters and jets at prices that range between Rs 75,000 and Rs 1.5 lakh per hour. Hi Flying Aviation, India’s oldest air charter firm, also finds its order book full. Operators like the stateowned Pawan Hans have large fleets which are not allowed to rent out to political parties. However, the political companies are allowed to borrow Pawan Hans helicopters leased to corporations. During the elections, almost anyone and everyone pushes their choppers and planes towards the politicians.
And there are 16 private helicopter owners — read big corporate houses and five star hotel chains — who could spare a chopper to a friendly politico, of course with no financial consideration involved as per rules. In short, it means the favours would be asked for later. And finally, there are 17 state government choppers that can be used for campaigning purposes, in accordance with EC norms.
But flying high costs money. For India’s political leaders, who aim to fly very high indeed, the money to do so, it seems, is easily forthcoming.
