Political Financing and Lobbying

Coalition against Corruption (CoCo)

Bangalore, 14-15 Jan 2014

Jagdeep S. Chhokar

About ADR

• Association for Democratic Reforms (www.adrindia.org)

• Improving governance and democracy in the country

Governance

Governance

Political Governance

Governance

Political Governance

Democracy

Governance

Political Governance

Democracy

Elections

Governance

Political Governance

Democracy

Elections

Electoral Reforms

Governance

Political Governance

Democracy

Elections

Electoral Reforms

De-criminalisation of politics

Governance

Political Governance

Democracy

Elections

Electoral Reforms

De-criminalisation of politics

Transparency in the political system

Evolution of ADR

• 1999: Public Interest Litigation (PIL): DelhiHigh Court

• 2001-2003: PILs in Supreme Court of India

• 2002-On going: Election Watch

• 2006-2008: Income Tax Return of Political Parties

• 2010-2013-??? Political Parties public authorities

• 2002-On going: Database of over 75,000 persons who have contested elections

Some recognition• NASSCOM award for ICT led Innovation by Multi-

stakeholder Partnership with Webrosoft– National Association of Software and Services Companies

– 2011(December)• mBillionth Award South Asia for 'Mobile Innovations for

Good Governance’– Digital Empowerment Foundation

– 2012 (August)• Social Impact Award, The Times of India

– 2013 (January)• Indian of the year for Public Service, CNN-IBN

– 2013 (December)

Election Financing

Ten year analysis of candidates (since 2004)

• Average assets of ALL candidates (62847): Rs. 1.37 Crores ($221,310)

• Average assets of all MPs/MLAs (8790): Rs. 3.83 Crores ($618,700) • Average assets per citizen: Rs 10 Lakhs ($15,000)• Number of Recontesting Candidates Analyzed: 4181 • Average increase in wealth of all 4181 recontesting candidates:

Rs.2.34 crores ($378,000)• Average growth in assets of the 4181 recontesting candidates: From

Rs.1.74 crores ( $281,080) to Rs.4.08 crores ($659,080)• Increase in wealth of over 200%: 1615 out of 4181 • Increase in wealth of over 500%: 684 out of 4181 • Increase wealth of over 800%: 420 out of 4181• Increase wealth of over 1000%: 317  

Asset comparison of MLAs2008 2013

Karnataka 6.37 Crores ($1,029,010)

23.66 Crores ($3,822,040)

2007 2012

Gujarat 1.64 Crores ($264,930)

8.05 Crores ($1,300,397)

Punjab 3.47 Crores ($560,545)

9.92 Crores ($1,602,480)

Himachal Pradesh 1.27 Crores ($205,160)

7.45 Crores ($1,203,473)

Uttrakhand 75.02 Lakhs ($121,478)

1.85 Crores ($298,849)

Uttar Pradesh 1.13 Crores ($182,540)

3.28 Crores ($529,850)

Election Expenditure by winners/candidatesState/Lok Sabha Average expense Prescribed limit

Karnataka 2013 7.44 Lakhs ($12,020) 16 Lakhs ($25,850)

Gujarat 8.66 Lakhs ($14,000) 16 Lakhs ($25,850)

Himachal Pradesh 6.77 Lakhs ($10,940) 11 Lakhs ($17,770)

Uttar Pradesh 8.65 Lakhs ($14,000) 16 Lakhs ($25,850)

Uttarakhand 6.61 Lakhs ($10680) 11 Lakhs ($17,770)

Punjab 6.77 Lakhs ($10,940) 16 Lakhs ($25,850)

Nagaland 4.62 Lakhs ($7,460) 8 Lakhs ($13,000)

Tripura 4.56 Lakhs ($7,370) 8 Lakhs ($13,000)

Lok Sabha 2009 14.40 Lakhs ($23,260)

25 Lakhs ($40,390)

Lok Sabha 2009 (Candidates)

7.94 Lakhs ($12,826) 25 Lakhs ($40,390)

Lok Sabha 2009Election Expenditure by candidates

• Expenditure affidavits analysed: 6753• Candidates who declared expenditure above the

limit: 4 (Four)• Candidates who declared expenditure up to 90-

95% of the limit: 30• Candidates who declared expenditure up to 45-

55% of the limit (6753-34): 6719 (99.4965%)

Election Financingvs

Political Financing

Getting information of financing of political parties

• Income tax returns

• Statement of donations received

• Sources of income

Income of six national political parties (2004-05 to 2011-12)

Total income Rs 4,895.96 crores ($792 million)

% of total income

From Electoral trusts  Rs 105.86 crores ($17.1 million)

2.16%

From known donors Rs  435.85 crores ($70.4 million)

 8.90%

From other known sources

Rs  785.60 crores ($127 million)

16.05%

From unknown sources

Rs 3,674.50 crores ($594 million)

75.05%

• Known donors: Details of donors as available from contribution report submitted by parties to Election Commission

• Other known sources: For example, sale of assets, membership fees, bank interest, sale of publications, party levy, etc.

• Unknown sources: Income specified in the IT Returns whose sources are unknown

Why secrecy about political funding?

• Does this question need to be asked?

• India’s RTI Act second best out of 89 countries rated by www.rti-ratings.org

• Law Commission of India’s observation

“In the very scheme of things and as pointed out by the Supreme Court in its various decisions, the bulk of the funds contributed to political parties would come only from business houses, corporate groups and companies. Such a situation sends a clear message from the political parties to big business houses and to powerful corporations that their future financial well-being will depend upon the extent to which they extend financial support to the political party. Indeed most business houses already know where their interest lies and they make their contributions accordingly to that political party which is likely to advance their interest more. Indeed not sure of knowing which party will come to power, they very often contribute to all the major political parties. Very often these payments are made in black money” (Para 4.1.6.1) (1999)

Possible Solutions

• Financial transparency in the working of political parties

• Maintenance of accounts by political parties in a standardized format – ICAI recommendations

• Audit by CAG or ECI empanelled auditors

THE Final Solution

• Internal democracy in the functioning of political parties by law– Already recommended by several commissions

over the years

“On the parity of the above reasoning, it must be said that if democracy and accountability constitute the core of our constitutional system, the same concepts must also apply to and bind the political parties which are integral to parliamentary democracy. It is the political parties that form the government, man the Parliament and run the governance of the country. It is therefore, necessary to introduce internal democracy, financial transparency and accountability in the working of the political parties. A political party which does not respect democratic principles in its internal working cannot be expected to respect those principles in the governance of the country. It cannot be dictatorship internally and democratic in its functioning outside” (Para 3.1.2.1).