ELECTION time is when Indian industry masters the art of denial. Denial of any off-the-balance-sheet funding of political parties. Just last week, India's largest private sector company, Reliance Industries, shot off a legal notice to an English newsmagazine that printed a picture of its chairman, Dhirubhai Ambani, in a report on political funding.
While admitting that "political funding in this country is like illicit sex, nobody wants to talk about it," Anthony Jesuda-san, senior executive vice-president, Reliance, feels that today, in post-liberalisa-tion India, "there has been a complete change in both people's as well as the companies' perceptions on political funding." Industry sources also hold the view that major industrial groups today feel far less need to court political patronage, since they are largely unshackled from the compulsions of the erstwhile licence-quota regime. "Frankly, post-reforms, it's very difficult for the government to stick a gun to any big company's head," says the CEO of a large consumer durables company. "The larger groups are doing things in a manner that is much more accountable and transparent," the executive adds.
There is also the growing exasperation among Indian industrialists with having to fund general elections so frequently. Today, more than ever before, Indian industry wants to dictate terms for the money it pays to politics.
TOO OFTEN, TOO MUCH: Setting the ball rolling is the Confederation of Indian Industries (CII), which has circulated a signed letter from president Rahul Bajaj urging industry to exercise restraint in funding political parties in their election campaigns. The letter, sent to all members of CII, asks industry to use its own judgement in funding elections and that "it should be strictly by cheques and not by cash". This practice, says Bajaj, will bring transparency into the process of the industry funding the election process.
Writes Bajaj in the letter: "Liberalisation, globalisation and competition may limit the ability of corporates to generate large surplus funds and, therefore, to contribute to the election process in the same measures as before. At the same time, with the listing of companies on Indian and foreign stock exchanges, corporate governance issues and FII participation in the stock-markets, the transparency of accounts and financial information of a company has become extremely important." But even CII agrees that payment by cheque is not easy due to various reasons, including the fact that some companies may not legally be in a position to do so due to inadequacy of profits "and also because most companies would like to donate to political parties in a con-fidential manner".
As far as frequent Lok Sabha elections go, Bajaj, in fact, suggests that amendments should be made to the Constitution to ensure that general elections are held only once in five years and Parliament should have a life of five years even if governments change within that period.
FICCI, the other apex industrial chamber in the country, agrees that political funding should be by the cheque route, but differs from CII on the once-every-five-years issue. "Business does not want to interfere with this," says a FICCI spokesperson. "We would like to leave it to the political system to decide. And if industry is willing to pay even if elections are held twice a year, why should FICCI impose its decision on it?"
IT'S THE SMALL FRY: As a direct result of big industry's relative freedom from government controls, and increased bargaining power, what's emerging is a new funding trend with small and medium-sized companies at the core, and revolving around people rather than parties. "Small and medium-sized companies, especially those in the export-import business, need to build bridges with the government. No minister will turn down an appointment sought by the Ambanis or
Tatas. But a small company has to start an association, and that starts through funding," says a senior private sector executive. Such funding—which is fundamentally a quid pro quo—could range from Rs 15 lakh to 1 crore, to extract benefits for their enterprises. Also, says a BJP politician: "Another segment which has become a very important source of funds recently is the stockbrokers' community which started funding political parties heavily after the securities scam in the early '90s."
Not just Indian companies, sources say, but a large number of multinational corporations have been active in funding Indian elections. Unlike Indian companies which often get mired in controversies over such political donations, the MNCs play it safe by restricting their funding to the state level. For example, it's common knowledge that a soft drinks multinational, with considerable presence in the Punjab and Haryana markets, has been heavily funding a significant number of candidates from these two states. "The modus operandi here is simple—over-invoicing. It could be for a banner at an election rally, or for a small logo advertised in the corner of a huge party poster. The other way is to quietly organise 15-20 cars and jeeps for a specified period of time or pick up the lunch tab for 100-200 party workers through the length of the campaign," says a Congress functionary.
WHO, NOT WHICH: The other change in the election funding process this time is that, as a senior BJP functionary puts it, "the focus is not the party but senior leaders. Now, companies try to find out who the possible finance minister is and zero in on him." So, industry would rather fund Cabinet sureshots than the political party in general. Says Congress' Ahmed Patel: "Poll funding now is more personality-oriented and depends on the charisma of the candidate seeking funds." Current estimates show that the national political parties require a bare minimum of Rs 70-100 crore for their campaigns. Individual candidates get approximately Rs 5-10 lakh from the party and have to raise another Rs 20-40 lakh from their own sources to fund their campaigns. And what sort of budgets do the various regional parties look at? "It varies from Rs 20 to Rs 30 crore. Besides, parties like the Telugu Desam, CPI(M), CPI and RSP have a signifi-cant number of dedicated volunteers who always work overtime for their candidates. This automatically ensures a low budget," says a Congress politician.
Sources claim that the funding for the 13th Lok Sabha elections is weighed heavily in favour of the BJP (possibly as high as 70:30), which has been more successful with the personality-oriented fund-raising drive. BJP treasurer Vijay Goel describes the party's fund-raising as "a two-pronged process". "We are raising funds from both companies as well as individuals for the party, while our candidates are raising funds on their own," he reveals. "And there are cases where people donate money at our election rallies," he adds.
Could all this bring a new clean sheen to the process of funding elections in India? Sadly, whatever the official stance Indian industry takes, no one truly believes that the traditional hush-hush system of funding elections will change overnight. As things stand today, the process may change a bit; but in a situation where most of the money used in elections comes directly from industries which are seeking to extract that little extra favour from the authorities, what goes on under the table will remain far different from what goes on above it.
