How Can India Cleanse Its Politics of Dirty Money?

India’s 875 million voters make it the world’s largest democracy. Yet Indian elections, though generally seen as free and fair, have become the country’s “fountainhead of corruption.”Parties and candidates spend billions getting themselves elected—current forecasts predict $8.5 billion will be spent in the 2019 election, making it the most expensive election globally. Much of that money comes from illegal or at least questionable sources, a problem exacerbated by the fact that campaign financing in India is a black box, with no transparency into donors or income sources. Recent changes by the Modi government have made the process even more opaque. And much of the money raised is spent illegally. For example, up to 37% of Indian voters have received money for votes. 

The massive amount that politicians are willing to raise and spend to win elections is understandable when the payoff to the winning candidate is considered. Putting aside any ideological or egotistical motives for seeking public office, there’s also a material incentive: studies have found that, in the years following an election, winning candidates’ assets increase by 3-5% more than losing candidates’ assets, and this “winner’s premium” is even higher in more corrupt states and for winners holding ministerial positions. The material benefits of office may also partly explain the alarming percentage of Indian politicians with criminal histories. Currently, over a third of Members of Parliament (MPs) in the Lok Sabha (the Lower House of the National Parliament), are facing at least one serious criminal charge, and politicians with cases pending against them are statistically more likely to win elections. Moreover, the ever-greater spending on elections means that winners, in addition to lining their own pockets and saving for the next election, need to repay those who helped them prevail. The more money politicians spend on elections, the more they need to earn back or repay through political favors.

The high payoff to candidates who win elections (often because of the opportunities for corruption) both attracts dishonest individuals to seek office and encourages ever-higher election spending, which in turn inspires corrupt behavior to repay debts, whether through money or political favors. Therefore, any serious attempt to reduce corruption in India has to begin with electoral reform. The constitutional body tasked with administering elections in India is the Election Commission (EC). The EC oversees the election process, and it also can issue advisory opinions (though not binding decisions) regarding the post-election disqualification of sitting MPs and Members of State Legislative Assemblies (MLAs). The EC is also responsible for scrutinizing the election expense reports submitted by candidates. But the EC is in many ways a toothless tiger, able only to recommend actions and electoral reform to Parliament, without any real power to fix the electoral system. 

There are, nonetheless, a few things that the EC could do now, acting on its own, to help address at least some of these problems. But more comprehensive and effective reform will require action by the legislature or the Supreme Court.

With respect to actions the EC could take on its own, there are two things the EC can and should do right away:

  • First, while the EC might be unable to unilaterally increase transparency in donations, it can increase its control over campaign expenditures.As noted earlier, spending by political parties often takes the form of bribes, with $19 million worth of cash and liquor bribes seized by the EC last year in five states. The EC should bulk up its vigilance taskforce, setting up checks earlier and widening the net to include mass purchases of not just liquor but also goods like electronics and household items. In doing so, the EC could make more effective use of information technology. While the EC launched a citizen vigilance app last year, which allowed people to file complaints and upload photographs of questionable activities during polls, a better route would be to use existing apps such as WhatsApp, which enjoys over 200 million monthly active users, and is a key news tool in India.
  • Second, the EC needs to be more aggressive in using its power to issue advisory opinions on the post-election ineligibility of sitting MPs and MLAs. The EC should advise that a legislator is ineligible to serve if that legislator’s party was found to have paid bribes in the legislator’s constituency during the election. Additionally, in those cases where the winning candidate has a criminal history or is currently facing criminal charges, the EC should run an independent audit to determine the seriousness of the criminal conduct, and in the case of incumbents, the EC should investigate any unexplained asset growth during that legislator’s time in office. Based on its findings, the EC should advise the disqualification of candidates who fall short. The EC’s findings should be publicly shared. Winners it views as ineligible should be marked as such in the polling booth if they run again, although this could require a court mandate. 

While these measures would be a good start, the EC will not be able to fulfill its mandate effectively without more support from other institutions. Here, two reforms are especially urgent:

  • First, with respect to substantive law, the legislature needs to impose stricter transparency rules for political spending. Over the 2005-2015 period, for example, nearly 70% of funding for political parties came from unknown sources. Under Indian law, not only are donors of amounts below Rs 20,000 (~$285 USD) allowed to remain anonymous, but as of 2017, the Modi government announced an electoral bond scheme that extended this protection to large-scale donations. Furthermore, while the law limits how much individual candidates can spend on elections, there is no such limit on spending by political parties—an obvious and easily-exploitable loophole. The EC has pushed for parliament to address the anonymous donation problem by lowering the threshold above which donors must reveal their identities, and has also pushed parliament to address the excessive spending problem by imposing spending caps on parties. So far, though, the Parliament has failed to act, thus making it difficult for the EC to address the corrupting influence of money on Indian politics. 
  • Second, at an institutional level, the government needs to empower the EC to act on its own, rather than relying on the legislature. To take just one example, the EC has filed an affidavit with the Supreme Court, in a public interest litigation case, asking for rule-making authority over elections. The Supreme Court should direct parliament to take steps to confer this authority. 

India’s current ruling party, the BJP, opposes both the changes to the law proposed by the EC, and an expansion of the EC’s authority. This is unsurprising, since the BJP benefits more from the status quo than any other party. (The BJP receives nine times more than the five other national parties combined. Consequently, it is also able to outspend its competitors, contributing 80% of the total expenditure of the 10 parties in the Gujarat and Himachal Pradesh elections in 2017.) But the outlook is not so negative. Political power frequently switches hands in India, with anti-incumbent bias a unique feature of Indian politics. The BJP is starting to look less shiny, losing power in three states late last year. Clamping down on election spending will level the playing field, and is in the best interest of almost every other party, many of whom are facing financial crises grappling with the BJP’s fundraising power. Installing spending limits in elections should therefore be made a key legislative priority of any coalition that comes to power in 2019.

3 thoughts on “How Can India Cleanse Its Politics of Dirty Money?

  1. Disha — fascinating post, thank you. There seems to be tough but potentially fruitful work ahead for the EC. After reading, I’m wondering when the role of the EC in investigating corruption in India gives way to another institution responsible for investigations of non-election related corruption. You mention the post-election advisory opinions that it can issue, but is ‘post-election’ time constrained, and if so what is the body that takes over if suspicious activity continues? For example, the BJP’s apparent decline has seemingly prompted them to take more extreme measures to retain power, such as bribing state assembly members to party “flip” (see https://www.economist.com/asia/2019/03/23/indias-election-campaign-is-racked-by-dirty-tricks). I’d be interested to see if the EC still has jurisdiction over something like this, or if it’s not closely related enough for it to be involved. In any case, I look forward to seeing how the forthcoming elections unfold, and great work on this.

  2. Great post, Disha. To what extent are the EC’s findings currently available to the public? You argue the EC should publish audits of legislators’ finances––does it already publish its findings on campaign expenditures? Perhaps the EC could leverage what legal power it has (information gathering) to pressure the legislature and Supreme Court to act on corruption by publicizing instances of corruption and inciting public opinion. This “bully pulpit” strategy could be one way for the EC to increase its influence without securing additional legal authority. Has the EC has ever tried something like that?

  3. Hi Disha, thanks for this great post. In reading your piece, I’m hopeful that steps can be taken, both large and small, to curtail and combat corruption in India. I’m curious after reading your recommendations as to what the EC can and should do itself about how the EC is funded. You suggest that the EC “should bulk up its vigilance taskforce.” Could the EC do that on its own through its own constitutional authority, or would it have to go to the Lok Sabha for additional budget appropriations? Also, I’m curious about how aggressive the EC is now in its use of advisory opinions. Under what circumstances does the EC currently issue one of these opinions on post-election ineligibility, and what effect do these opinions have? You state above that the EC is considered a paper tiger, and I’m wondering if that’s because it seldom takes actions like issuing an advisory opinion or because when it does so those opinions are ignored. If the former, it seems more likely that a newly active EC might have a material on corruption; if the latter, then your proposals for legislative reform seem even more urgent.

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