Company donations not enough

Company donations not enough

All, analysts and critics, are 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 this Union 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-Swantra 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 came 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. Licenses, 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 new cult. However, before long 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 re-amended 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 minimizing 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. 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 of 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 on 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.




It was written by INFA’s editor late Mr. Inder Jit in the year 1985 regarding company donations to political parties as is topical today given the fact that BJP received 75 per cent of its donations from Tata Groups progressive Electoral Trust.


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Company donations not enough