Something About The Law

2012 marks 60 years since the first Indian general election.  In this time, the Election Commission of India has come a long way in ensuring the conduct of free and fair elections at various levels, -thus cementing its reputation as one of the most respected constitutional bodies in recent times. Inspite of its reputation, elections have become perhaps the biggest source of corruption in the country. Inevitably, the proceeds of corruption worms its way into funding election campaigns. So much so, that the National Commission to Review the Working of the Constitution, 2001 noted that “electoral compulsions for funds become the foundation of the whole superstructure of corruption”.

In more recent developments, surprisingly, none of the various Lokpal bills address the issue of electoral corruption. While the apparent silence of the politicians on this issue is understood, one can only speculate as to why Team Anna and various other non-governmental bodies pitching for a strong Lokpal have remained silent on this issue. Reforms, if any, have come from the judiciary and the Election Commission. Two such measures stand out: firstly, the 2003 Order of the Supreme Court of India in “PUCL v. Union of India” mandating that all electoral candidates submit an affidavit disclosing their assets, liabilities and criminal records, and, secondly, the usage of electronic voting machines (EVM’s) that have greatly helped in tackling vote rigging.

However, mere directives and enforcement by the Election Commission and Supreme Court are insufficient. In about 2008, pursuant an order of the Chief Information Commission declaring political parties as ‘public authorities’, the parties submitted detailed balance sheets indicating the availability of funds, income and expenditure incurred by them. The results reveal that national parties like the Congress and BJP had incomes of Rs240 and 220 Crore respectively in the year 2010. This figure is measly when compared to the fact that the Election Commission itself estimated that over Rs.3500 Crores ($750 million) was paid in bribes during the elections in five Indian states in April and May 2011.

Some analysts believe that one of the means for tackling corruption would be to stifle the ends that corruption money seeks to serve, i.e. the thriving use of financial resources by those who wish to stay in power. Various Government, Non-Governmental bodies and individuals have suggested proposals in this direction. However, considering the greed of those hungry for power, these proposals may meet the same fate as that of the Lokpal and the Women’s Reservation Bill. Three such proposals, however, ought to be highlighted.

Firstly,  an argument for state funded elections. In 1998, the Indrajit Gupta Committee on State Funding of Elections backed the idea of state funded elections stating that it saw “full justification, constitutional, legal as well as on grounds of public interest, for a grant of state subvention to political parties so as to establish such conditions where even the parties with the modest financial resources may be able to compete with those who have superior financial resources“. Such recommendations, in some form or the other, were later also approved by the Law Commission of India in 1999, National Commission to Review the Working of the Constitution in 2001 and the Second Administrative Reforms Commission in 2008. In fact, Mr. Salman Khurshid, the Union Minister for Law and Justice, informed the Lok Sabha on Nov. 28, 2011 that a ‘Group of Ministers’(GOM) had been constituted by the central government to look into the introduction of state funding of elections. The Chairperson of the UPA, Smt. Sonia Gandhi also outlined such a proposal in her speeches.

Such proposals would involve the Election Commission or any other state body giving each party requisite funds to run day-to-day services and election campaigns in the country. Across the world, such measures were first introduced by West Germany in 1959 and today over 75 countries, including more than 90% of the European Union have provisions for state funded elections. The introduction of such measures may not have been extremely successful in these countries, but few would deny that, at the least, these measures enabled the respective election commissions to conduct proper audits as to the use of election money and better help in identifying the sources of black money used in election campaigns. According to the Election Commission in India, however, such a proposal may be futile, as to address the real issues, radical changes are required in the laws regarding receipts of funds by political parties and the manner in which they spend such funds.

Secondly, an argument for regulation and close monitoring of corporate financing of elections and political parties. Currently, the Companies Act, 1956 allows for companies to donate as much as 5% of their net profit to political parties. Such donations also enjoy tax exemptions. In order to ensure a degree of transparency in such funding, the Representation of People Act, 1951 states that political parties are required to submit details of contributions received in excess of Rs 20,000 from any individual, group or company. Nevertheless, by the admission of the Election Commission itself, such measures haven’t been adequate in addressing corporate corruption and financing of political parties. Despite the presence of strong corporate laws, Companies still manage to squeeze out crores in bribes. What is required are elaborate laws that can effectively monitor corporate donations, bribes and black money paid by corporates to political parties- unlawful actions that companies manage to undertake with ease under the current laws. It may be noted that the non-addressal of this issue was also used as a trump card by Mr. Sitaram Yechury of the CPI in the Rajya Sabha for preventing the passage of the Lokpal and Lok Ayuktas Bill, 2011.

It is also quite ironic that on the one side the ruling government has formed committees and vehemently argued for state funded elections, while on the other hand, in December 2011, the Government introduced the Companies Bill, 2011, which in one of its provisions has suggests increasing corporate funding to political parties from 5% to 7.5% of the net profit earned by a company.

The third proposal would involve the maintenance of accounts by the candidate and the political party. Currently, the spending limits by a candidate include Rs 40 lakh for campaigning for a Lok Sabha seat and Rs 16 lakh for a state election. However, the National Commission to Review the Working of the Constitution, 2001 noted that “the campaign expenditure by candidates is in the range of about 20 to 30 times the legal limits”.The flaw in the current law is that while under Section 77 of the Representation of People’s Act, 1951, a candidate is to maintain a correct account of all expenditures relating to the election, the explanation to the section excludes the expenditure incurred by his/her political party on this account. Thus, candidates contesting elections are easily able to show that they are within the prescribed limit while the political party has incurred massive expenditures for the same purpose.

Inclusion of expenditures by political parties under the Act would not by itself be enough. The Chief Election Commissioner, Dr. SY Qureshi, in a televised interview, stated that the problem faced under the current law is the lack of permanent auditing agencies to scrutinize the accounts filed by candidates. Placing political parties under the ambit of the law would require even greater numbers of administrative personnel to monitor and audit the accounts.

It is not that each of the above proposals are mutually exclusive of each other. Reforms to tackle corruption related to electoral funding would require thorough deliberation of each of the proposals and the extent to which they may be applicable in the Indian socio-political system. These reforms will have to come from the legislative branch of Government- the same people the law will be applicable to. Given the current milieu with the Lokpal, however, electoral reforms on the part of the legislature seem a distant reality. This leaves a great void, and one which a proactive judiciary will have to fill in. It was the effort of the Supreme Court and the Election Commission in 2003 that led to candidates declaring their assets and criminal backgrounds. A further fillip to checking electoral corruption has come in the form of the Supreme Court recently asking the Centre as to why persons charge sheeted as per law should not be barred from contesting elections.

That said, 2012 will witness the Election Commission organizing elections in five states in the country. Despite the current powers and limitations of the Commission, these elections would see a massive deployment of resources. Income tax officers will be monitoring expenditures by candidates with each candidate being asked to open separate bank accounts for election expenses. With the legislature not doing anything to improve the situation at present, perhaps the Court would again step-in to introduce reforms. 

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