this sorry state, judging candidates by what they disclose
would be foolhardy. Often, the honest candidate may disclose
assets, and the wily one may conceal his ill-gotten proceeds.
But disclosure of financial details still has a value. Usually
candidates would disclose what they submit to income tax
authorities. Over time, researchers, media and civil society
activists can expose the disparity between the life style
and properties enjoyed, and assets disclosed. This could
become a tool for curbing the influence of black economy
in politics, and to fight tax evasion and corruption. But
the problem of black money is much more deep-rooted. Ubiquitous
corruption has become the chief source of such unaccounted
and untaxed money. If an entrepreneur bribes the revenue
officials and evades excise duty, he enjoys multiple benefits.
His products become more price-competitive and he can undercut
his tax-paying rivals in the market. As he conceals production,
he evades sales tax and steals power, causing further loss
to the exchequer and utilities. Of course, he does not have
to bother about income or corporate tax, as there is no
official production! With competition stifled, the very
basis of market economy collapses. Legitimate entrepreneurs
are driven out of business, and unscrupulous ones thrive!
apart, our real estate transactions are rarely transparent.
A sizable portion of the consideration is accepted in cash
either to conceal illegal earnings, or avoid stamp duty
and capital gains tax. Most citizens who are otherwise honest
and well-meaning have become part of this vicious cycle
of concealment and perpetuation of black economy. No wonder,
our tax-GDP ratio is abysmally low for a modern economy.
Given these circumstances, it would be churlish and downright
hypocritical if we blame the politician in isolation for
concealment of assets. An all-out assault on black money
and corruption through practical, sensible and innovative
measures is heeded.
still need to answer a larger question: why do parties nominate
candidates with vast unearned and concealed resources? Reliable
estimates indicate that the visible, and largely legitimate
(even if illegal because it is over the legal expenditure
limit) for Lok Sabha election for serious contenders is
of the order of Rs.1.5 crore. But often, much of the expenditure
is 'invisible', and incurred in the last three days before
polls, and may exceed the visible campaign expenditure.
In certain states like Andhra Pradesh, Karnataka and Tamilnadu,
the total expenditure incurred by a serious candidate may
be of the order of Rs. 4 to 5 crores for Lok Sabha, and
Rs 1 crore for State Assembly - most of it spent to buy
votes, distribute liquor, hire hoodlums, and sometimes bribe
officials to turn a blind eye at poll irregularities. In
a five year cycle, the total expenditure for State Assemblies
and Lok Sabha is estimated to be about Rs 7000-10000 crores,
assuming there are no mid-term polls.
large expenditure is a result of many systemic failings.
As major parties have become electoral machines to acquire
power without purpose, most cadres are mercenaries. Most
parties have become private estates of those at the helm.
Absence of internal democracy means that candidates often
have to spend lavishly to be known, and party members have
no loyalty to the cause or candidate, and their time has
to be bought. With excessive centralization of power and
delinking of vote from public good, many voters have become
short-term maximisers. As a rational response to an irrational
situation, they seek money in exchange for their vote. Often
both the leading candidates end up bribing the same voters!
As a result, huge expenditure does not guarantee success,
but non-expenditure almost certainly leads to defeat! The
irony is that the final verdict at the macro level is unaltered,
as we developed a system of compensatory errors, in which
the malpractices of one candidate are neutralized by those
of his rival! Given this situation, the parties are compelled
to nominate 'winnable' candidates who can match their opponents
in mustering money and muscle. Money power in elections
and corruption in public office thus feed on each other.
Not surprisingly, a class of political 'entrepreneurs' emerged
in recent decades. Large sums are invested in elections,
and multiple returns are 'earned' in public office through
rent-seeking. This is the seemingly intractable crisis we
witness in our electoral politics. That is why repeated
change of players does not seem to change the rules of the
game. Over half of all incumbents are not returned to office
irrespective of which party wins. And yet, there is no real
change in governance.
September 2003, all parties acted with wisdom and impressive
unity of purpose to enact a sound law on political funding.
Honest funding of legitimate political activity and elections
is now possible. But no law can curb illegitimate expenditure
unless the incentives are altered in our electoral system
and power structure. The parties can no longer pretend that
all is well with our politics and elections. There is a
crisis of legitimacy of our political system. Recent initiatives
by Parliament on funding, defections, limiting the size
of Council of Ministers indicate a welcome recognition of
the need for reform. But much more needs to be done to change
our electoral system, bring down illegitimate expenditure,
alter the incentives in elections, and attract the best
and brightest into politics. The current elections are remarkable
in that the economic issues and governance have occupied
centre-stage. Is it too much to hope that after the elections
our law-makers will focus on political reform and restore
legitimacy to our electoral system?