Scandal revives debate on political funding in India

By John Chalmers

NEW DELHI (Reuters): A few seconds of grainy video footage of Indian political leaders being offered cash by journalists posing as arms dealers has revived an old debate over how to keep black money out of party coffers.

Everyone agrees: all parties take money under the table to finance the huge cost of contesting frequent elections in a country of more than 600 million voters.

And that could be why, so far, no government has had the courage to unravel a murky practice which keeps parties afloat and -- critics say -- lines the pockets of their leaders.

"Just utter two magic words, 'party funds', and get away with murder," said K.K. Katyal, consulting editor of The Hindu daily.

"This had been the case with our political elite for decades -- they sought to cover, blatantly and shamelessly, their sins in collecting huge sums by invoking the name of their party."

The first head to roll when the Internet news website www.tehelka.com released its secretly shot documentary last week was Bangaru Laxman, president of Prime Minister Atal Behari Vajpayee's Bharatiya Janata Party.

Laxman was caught on camera taking a wad of banknotes from the website's investigative reporters, who were pretending to be agents for the sale of thermal-imaging cameras to the army.

He denied any wrongdoing. The money was a donation to his party, and not a bribe to peddle influence with the defense establishment on behalf of the "agents", he said.

The president of the Samata Party, another partner in the coalition government, made the same protestation of innocence when she quit two days later.

"You can't run democracy without parties and you can't run parties without funds," said political analyst Yogendra Yadav, who believes it is high time the government opened up avenues for legitimate funding of parties.

Parties and their benefactors -- often industrialists seeking favors from policy-makers -- are not held legally accountable for funding, and the absence of tax breaks on donations to parties means there is little incentive for donors to come clean.

Then there is the cap on how much candidates standing for election to parliament can spend on their campaigns.

Many believe that, given that the average parliamentary constituency has more one million voters, the limit, set at 1.5 million (US$32,000), is far too low and inevitably encourages unscrupulous funders who then establish a hold on policymakers.

Kuldip Nayar, a commentator and upper house deputy, said it had been proved that the parties which spend more money get more parliamentary seats.

This has led parties to field candidates who can afford the expense, and they are often people with links to industrialists and criminals. Sometimes they are criminals themselves.

President K.R. Narayanan, in a recent speech, railed against the "money, muscle power and mafia" behind the ballot box.

He cited Election Commission estimates that 500-800 of India's elected representatives, including those in state assemblies, have criminal backgrounds.

The Election Commission itself once confided that of the 13,952 candidates who contested the general election in 1996, more than one in 10 were facing criminal charges.

Steps have been taken in the past five years to clean up Indian politics, and Vajpayee's government has promised a bill of electoral reform. But corruption has proved tenacious.

A recent study, by the Political & Economic Risk Consultancy Ltd, found that India was the third-most corrupt of 12 Asian countries.

Many believe that companies should be forced to make donations by cheque and show them in their accounts, and parties should be forced to register all receipts in audited accounts.

To prevent unaccounted or illegally earned money entering the electoral process, it has also been suggested that the state should fund parties' election costs, though there is still a debate on who would be eligible and how to divide the funds.

"It... seems inevitable that sooner or later India will have to do what other democracies have done: get the taxpayer to pay for the luxury of democracy," the Business Standard said.

"But if 'how much' is one part of the problem, 'how' is the other part. This is because it is absolutely essential to establish criteria for eligibility. Without that, the whole process could become just another racket."