The business-politics nexus

Money can't really decide elections. But why does India's poll finance remain so murky?

An intriguing paradox of contemporary Indian politics has been insufficiently noted: corporate India finances India's elections, substantially if not wholly, but it is unable to determine election outcomes. Money matters, but it is not always electorally decisive.

The recent Uttar Pradesh elections provide the clearest illustration of this proposition. As is well known, the Congress, BJP and BSP were all better financed than the SP which, especially after the departure of Amar Singh, had lost its biggest conduit to corporate India. But the SP won, and the best funded parties, the Congress and the BJP, lost quite badly. The voter listened more affectionately to the less well-funded.

It used to be said in the 1970s and 1980s that the party that could provide blankets, saris or liquor to the voters would swing the elections in its favour. By now, all major parties have the capacity to provide such side benefits and more; the voter collects them from each party; and then she goes to the polls and votes according to her conscience. India has reached a new point in its electoral history. Votes can't easily be bought.

In political and corporate circles, the empirical validity of this paradox — businesses funding elections, but unable to determine election results — has long been noticed. But in intellectual circles, very few have systematically analysed this aspect of Indian democracy. In the US, how elections are financed is a huge and recurring topic of public discussion. India has, on the whole, shied away from such debates. Indian democracy will be better off if we explicitly analyse the larger implications of election funding and put our findings and arguments in the public domain.

There was a time, roughly until the mid-1960s, when political campaigns cost very little and were heavily, though not entirely, financed by janata ka chanda (citizen contributions). Mahatma Gandhi was India's first, and most original, political party builder. After the 1920 Nagpur session of the Congress party, he invented the four anna (roughly 25 paise) per year membership. At today's prices, that amount would perhaps add up to Rs 50-60, roughly equal to one US dollar. A Gandhi-led, reinvigorated Congress raised a lot of funds through this method, and also took the freedom struggle to the masses.

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