by rupeindia
India’s private corporate sector and
foreign investors have left little doubt about their preference for Narendra
Modi. The stock market is experiencing one of its periodic bouts of euphoria,
in anticipation of Modi’s ascension to prime ministership. We plan to discuss
later the reasons for this preference. The routine explanation given in the
press – that Modi will take firm steps to revive ‘growth’ – does give us an
indication of the reason, but is also misleading if taken at face value. Before
we enter that question, it is worth clarifying a few points.
In one sense, the
private corporate sector as a whole is entirely indifferent to results of the
elections. Irrespective of which parliamentary party or coalition gets elected,
broad continuity of economic policy is assured, as witness the policies of
regimes since 1991 led by the Congress, BJP and the ‘United Front.’
This ‘neutral’ attitude of big
business is exemplified by the list of legal political donations made between
2004-05 and 2011-12: Private corporate firms donated more or less equally to
the Congress and the BJP.[1]>
In all the BJP received about Rs 192 crore of corporate donations, and the
Congress Rs 172 crore – a fair gauge of how the private corporate sector
currently rates the two parties. In fact, each major business house generally
donates to both parties: Thus the Aditya Birla group donated Rs 34 crore to the
Congress and Rs 27 crore to the BJP; similarly for Bharti (Airtel), Tata, L
&T, Torrent, and so on.
Real funding multiples of stated
figure
All this is only a trivial fraction,
of course, of the actual expenditures of national political parties, and hence
corporate funding. However, estimating those expenditures involves a lot of
guesswork. There is a considerable range among different estimates, and even
within estimates. In 2009, it was estimated that a serious candidate for the
state legislature spent between Rs 2 crore and Rs 6 crore; a candidate for
Parliament spent Rs 10-15 crore when elections were held simultaneously to
Parliament and the Assembly.[2] Gopinath
Munde, BJP MP and leader, confirmed these estimates when he declared (at a
function attended by Narendra Modi) that he spent Rs 8 crore on his election in
2009, i.e., 32 times the limit fixed by the Election Commission.[3] The
major chunk of election expenditure is said to consist of the purchase of
votes.
Typically, there are 1.5 lakh to
2.25 lakh voters in an Assembly constituency, of whom at least 30 per cent do
not vote. Among the remaining voters, candidates seek to purchase around
75,000. Each vote costs between Rs. 200 and Rs. 500. This time [i.e., simultaneous
assembly and Parliament elections in A.P. in 2009] it is likely to go up to Rs.
1,000 in some constituencies. Inclusive of expenditure on liquor, this accounts
for 65 to 70 per cent of the total…. [Other major items include] engaging at
least 2,000 active men for campaigning, poll management and counting; hiring or
purchasing, and maintaining, vehicles; organising publicity material; opening
village-level offices; preparing and distributing voter slips; fetching
electors to polling stations; getting star speakers and picking up the tab for
their travel, lodging and boarding; and other miscellaneous expenditure.[4]
The article cited above thus put the
cost of the 2009 A.P. elections at Rs 3,600 crore for the (then) three main
parties in the state. However, there are many more candidates, serious and
non-serious contenders. Kuldip Nayar points out that in the recent assembly
elections in five states, there were 6454 candidates in the fray for 722 seats;
taking expenditure at Rs 2 crore per candidate for an assembly seat, he arrives
at an estimate of Rs 12,908 crore. [5] Two
researchers at Axis Capital put spending for the elections to 13 assemblies in
2013 at $8 billion (roughly Rs 43,500 crore at the time), taking expenditure by
each candidate for an assembly seat at Rs 3 crore, and the number of candidates
for each seat at 15.[6] However,
the Axis figure perhaps overestimates the number of serious candidates.
Stimulus: Rs 20,000-30,000 crore
Taking Munde’s figure for 2009, and
adding only wholesale price inflation for the intervening period, we get a
figure of nearly Rs 12 crore per serious parliamentary candidate; even assuming
only three serious candidates per seat, we get a figure of nearly Rs 20,000
crore for the parliamentary elections. Even this very conservative estimate
dwarfs the official figure for corporate donations, or even the figure for all
donations parliamentary parties choose to declare. Inevitably, these donations
must be made secretly, in cash.
Reuters, citing a Centre for Media
Studies (CMS) estimate, puts political parties’ spending in the coming general
elections at Rs 30,000 crore (Rs 300 billion). [7]CMS’s
spending projections are said to be based on analyses of rising costs in local
and state elections in the past five years, and on surveys of voters regarding
the prevalence of bribes. We are unable to locate further details of the CMS
estimate, and how it was calculated, but the figure seems plausible. Reuters
claims that India’s projected campaign spending runs second only to the $7
billion spent by candidates, parties and support groups in the 2012 U.S.
presidential race.
According to news reports, the
Congress and the BJP are planning to award contracts of Rs 500 crore and Rs 400
crore, respectively, to leading advertising agencies.[8] Madison
Media projects the advertising budget of the coming election at $800 million,
or about Rs 4800 crore.[9] It
is impossible to estimate another form of corporate support: Coverage by the
private corporate media. For example, Reliance controls the Network18 media
group, which has actively promoted Narendra Modi.[10] Another
effective, and pervasive, form of advertising and ‘sales promotion’ is the
distribution of liquor, envelopes stuffed with cash, and even (an innovation)
mobile phone credit. The emergence of the Aam Aadmi Party, and its campaign
against corruption, do not seem to have much affected the actual practice of
electoral politics so far.
Indeed, so large is this unaccounted
election expenditure that it temporarily stimulates a recession-affected
economy. In 2009, the financial press reported increased advertising revenue of
media firms and a pick-up in the sales of utility vehicles; these trends are
being repeated now.[11]Edelweiss
Securities predicted before the 2009 elections that alcohol sales would rise.[12] Axis
Capital terms the 2013 assembly election expenditure a significant stimulus.
Rajiv Biswas, the Asia-Pacific chief economist at IHS Global Insight, says that
“This election spending largesse will help to boost Indian consumption
expenditure over the second quarter of 2014, but this will be a temporary
spike.”[13] However,
we also need to keep in mind that those who invest in acquiring seats will
ensure a healthy return on their investments when in office, as well as set
aside a sum for contesting the next election.
Iron grip
The corporate sector is not, of
course, the only donor. (We can safely ignore contributions from the common
people: By and large, parliamentary parties are unable to produce evidence of
large numbers of small donations; the few small exceptions merely prove the
rule.) Other major contributors include landlords, traders/moneylenders,
contractors, and criminal syndicates. In many cases, the candidates themselves
belong to one or more of these categories, and spend from their own pockets as
a form of speculative investment, to be recovered once in office. However, it
is a safe guess that the private corporate sector accounts for a large share of
the total expenditure.
Apart from expenses directly related
to contesting elections, all political parties must incur costs for the routine
running of their party machinery, travel, posters and other propaganda, the
organising of periodic rallies, and so on. Party functionaries at various
levels must also be rewarded in various ways in order to keep them with the
party; such an exercise, of course, is best done when the party is in power. As
is well known, and was amply documented in the Nira Radia tapes, corporate
funding of the party in power also takes the form of commissions for particular
policy decisions.
The sheer size of this entire
expenditure merely confirms what we know from practice, namely, the iron grip
of the ruling classes on the political parties and the entire parliamentary
process. Ruling class influence extends well beyond funding, as we see in the
exceptional case of the Aam Aadmi Party.[14] Yet
funding on its own would suffice to establish that grip.
[1]
Association for Democratic Reforms, “Analysis of Donations Made By Corporates
and Business Houses to National Parties between FY 2004-05 and 2011-12”. The
list shows that business houses donated Rs 379 crore during this period to
national political parties, accounting for 87 per cent of the contributions
received by the latter from known sources. However, 75 per cent of the
donations they received were from unknown sources. For example, the Bahujan
Samaj Party claimed to have received no voluntary contribution over Rs 20,000
from any source for the period covered.
[2] A Saye
Sekhar, “Fighting elections – the unofficial cost”, Hindu, 6/4/09.http://www.thehindu.com/todays-paper/tp-national/fighting-elections-the-unofficial-cost/article298935.ece
[3] http://www.thehindu.com/news/national/other-states/munde-admitsspending-rs-8-crore-in-2009-polls/article4857676.ece
[5] Kuldip
Nayar, “Role of Money in State Assembly Polls”, Mainstream, vol. LI
No 52, December 14, 2013.
[7] Sruthi
Gottipati and Rajesh Kumar Singh, “India set to challenge US for
election-spending record”, 9/3/14,http://in.reuters.com/article/2014/03/09/india-election-spending-idINDEEA2804B20140309
[8] http://timesofindia.indiatimes.com/india/BJP-close-to-unveiling-Rs-400cr-ad-blitz-for-polls/articleshow/29461560.cms
[10] See
the well-researched article by Rahul Bhatia, “The Network Effect”,Caravan, 1/12/13, http://www.caravanmagazine.in/reportage/network-effect
[11] See http://www.thehindubusinessline.com/industry-and-economy/for-some-sectors-election-is-partytime/article5361257.ece andhttp://articles.economictimes.indiatimes.com/2009-03-04/news/28412106_1_gm-captiva-suvs-mitsubishi-outlander
[12] http://www.businessweek.com/stories/2009-03-13/indias-new-economic-stimulus-election-spendingbusinessweek-business-news-stock-market-and-financial-advice
[14]
Despite not being funded by the corporate sector as yet, the Aam Aadmi Party
affirms that it will pursue the same economic policies as the Congress over the
last decade, only more honestly; see Arvind Kejriwal’s speech to the
Confederation of Indian Industry (CII).
No comments:
Post a Comment