Indian politics: The never-ending battle to raise money

As one more election in India appears on the horizon, the issue of campaign finance, perhaps the biggest source of the flow of illegal money into the political system, remains unresolved. In India's system of privately-funded or corporate-funded elections, the power often lies disproportionately in the hands of the corporations that pay vast sums of money to political parties.

The earlier rule was that the names of donors to political parties do not have to be revealed if their donation is less than Rs. 20,000 (under that amount, the money could be received anonymously in cash). So political parties like the Congress and the BJP would declare some amount of their donations coming from institutional political donors like the Satya Electoral Trust (which has companies like Bharti Airtel, DLF, Indiabulls and the JK Group), the Tata Group's Progressive Electoral Trust, Bajaj Electoral Trust and big companies like Vedanta and others. Even with this rule, the Bahujan Samaj Party (BSP), for instance, has always claimed that it never gets any donation of more than Rs. 20,000. The trust system which brought together the money from several corporations under trusts and then distribute it to various political parties was started in the Congress-led United Progressive Alliance era.

The National Democratic Alliance government of Prime Minister Narendra Modi brought down the cash limit to Rs. 2,000 and a system of electoral bonds. In the electoral bonds mechanism, donors can buy electoral bonds and would have to disclose in their accounts the amount of political bonds purchased. The life of the bond would be only 15 days and a bond can only be encashed in an account of a political party. Every political party must declare the amount of donations it has received through electoral bonds to the Election Commission in its returns. But the name of the donor would not be disclosed even though, unlike earlier, the money must be routed through a formal banking system. This scheme has been criticised for making the system even more efficient for corporates to bankroll politics as their names would not be disclosed.

It is because of the complexities of campaign finance in India – unlike the full disclosure system in the US – that the position of the party treasurer (sometimes just referred to as fund raiser) has always been critical in India. The Congress Party had for many years the all-powerful Motilal Vora who had stints as chief minister of Madhya Pradesh, while two key fund raisers of the Bharatiya Janata Party have gone on to become influential cabinet ministers – Pramod Mahajan and more recently Piyush Goyal. In the Samajwadi Party, for instance, Amar Singh was once known as the most important man after party chief Mulayam Singh Yadav mainly because of his ability to raise money for the party.

This difficult balancing act of raising funds dates to the national movement where Sardar Vallabhbhai Patel’s struggles to raise money in a party led by the famously austere Mahatma Gandhi and capitalist- disdaining Jawaharlal Nehru are highly underappreciated.

Patel had a far more accommodating and tolerant attitude towards Indian business and Indian businessmen compared to other prominent leaders like Subhash Chandra Bose or Nehru (Nehru also believed in the Marxist idea that capitalism is in a sense a stepping stone towards fascism, and considered business as inherently exploitative and reactionary). Gandhi’s Theory of Trusteeship where he imagined evolved business leaders to hold their wealth ‘in trust’ for the benefit of society and not consume the wealth more than their needs was seen as utopian and a cop-out by many Congress socialists. But Indian industrialists had supported the Congress with funds and in kind for years and the mass growth of the Congress had come with the financial assistance of the homegrown business community. While Gandhi couched his support for indigenous businesses and industrialists in lofty rhetoric, Patel was far more direct and clear that having taken consistent assistance from industrialists through the freedom struggle, it was the job of the Congress to ensure that the Indian business community thrives after independence, which he believed would also naturally bring the added and much needed benefits of jobs and wealth creation in an impoverished country.

G. D. Birla, one of the industrialists both Patel and Gandhi had close association with, said about Vallabhbhai: “Sardar Patel was not a revolutionary. He was essentially a man of constructive ideas. Many a time he utilized my help and money. I would get a telegram, sometimes just two words – ‘Come immediately’ – and when I arrived he would tell me what I had to do. Inevitably the question of collection (of money) would come up. Once I told Patel what Gandhi said to me, ‘I do not like the Sardar collecting money from businessmen.’ His reply was characteristic: ‘This is not his concern. Gandhi is a Mahatma, I am not. I have to do the job’.” It was Sardar Patel who perhaps first realized, long before Sarojini Naidu would joke about it, that it cost a fortune to keep Gandhi in poverty.

One letter written from Yervada jail gives a sense of the kind of urgency to raise money that constantly plagued Patel which we don’t really see in the notes and letters of Gandhi or Nehru. Written in July 1933, in one short letter, four separate mentions of monetary worries. “Is the money of flood relief fund trust well preserved?... Please write to me two lines about it so that even an iota of anxiety will be removed,” writes Patel, and then goes on, “Is there any trace of drought relief fund for our Gujarat Sabha? Were you able to collect anything from Achubhai’s building, or is everything lost? If we need that fund now it can be used for drought relief. Influenza fund must have been increased by now. Can it be used for some work in Vadilal Hospital? Arrangement for the memorial be done and the fund may be used. It is useless to keep it there. When we require money for such work we will get it. Think about it. It is worthwhile to arrange for attachment of medical school or college with Vadilal Hospital. In Ahmedabad, there is B. J. Medical School. Three hundred students applied for admission and only fifty were admitted, other two hundred and fifty were stranded. It would be better if we can arrange for it. It is worthwhile to prepare a definite plan and estimate. There is education fund in Kasturbhai’s father’s name. If he wishes that can be utilized in this project. If you like this suggestion you can talk to him when you meet him.”

Many of today’s fund raisers could probably write letters like these.