Saturday, June 29, 2013

EC should listen to Gopinath Munde…..not disqualify him

Gopinath Munde, senior leader of the BJP in Maharashtra made a rather candid admission the other day in Mumbai. He said that he had spent Rs 8 crores four years back on his LS election. The Election Commission is now starting an enquiry to establish if this statement was actually made by him. It will disqualify him if it finds he really said all that. Rather than disqualifying him, the EC would serve the country better if it listened to him and took a pragmatic view at the point he made. It would help clean politics up, and reduce the scourge of corruption.

The EC allows a ridiculously low spend of Rs 40 lacs per LS seat. Rs 40 lacs? The EC’s got to be kidding right? 40 lacs wouldn’t get even be enough for a low-key brand marketing campaign, spread over a short period of time. Election campaigns take place over an elongated period of time, and are far more intense. The competitive intensity in most LS seats is far higher than what most brand marketers face; and if 40 lacs is inadequate for brand marketing, surely its inadequate for elections right?

That’s the bitter truth that the EC doesn’t want to acknowledge. It has drawn this ridiculous line and it wants politicians to tow it. So politicians do that – only officially of course. In reality, they spend far far more than that – Rs 8 crores as Munde said. The moment they do that, they have become some sort of criminals, who should be disqualified. Their spends become branded illegal. Further, this leads to instantaneous generation of black money, as illegal spends can only be justified by illegal generation. The sourcing of the funds goes underground. This is the starting point of corruption in India. It is estimated that politicians spend a combined of Rs 1 lac crores every five years for their LS and assembly elections. If 90% of this spend is beyond what the EC allows, then Rs 90,000 crores of illegal money has to be generated every five years. To facilitate this, a parallel banking system (parallel to the RBI) has come about in the country. This parallel system is what is under attack from civil society activists. But all of them only attack the symptoms of the malaise; none wants to go after the root cause of the problem, which is this bizarre EC specified election-spend limit. Such large spends are not possible to generate very quickly, and so large “chit funds” of various hues and shapes have come about (SEBI/SC is hounding the biggest of them these days).

The biggest generators of these illegal sums are of course “land banks” of all forms. They are called “real estate” in the urban context of housing and commercial properties, and cities like Mumbai and Delhi become the biggest generators of this type of black money. They take the form of “mines” in the context of coal and iron ore mining. And now, if the CAG is to be believed, then our politicians have become even more innovative and started making money off “virtual” landbanks – airwaves/spectrum (2G, S-band etc) etc. We’ve seen alleged scams in mining/2G over the last few years. The only reason why a full scale real estate scam hasn’t broken out yet is because all politicians (of all parties) are in on it, and they have agreed to a code amongst themselves (the “Omerta” code) to split the booty rather than to croak on each other.

The EC has to recognize these ground realities. But the EC wants to fool itself and continue with some cocky figure set in a bygone era. Rather than being pragmatic, it is happy to put a blindfold on itself. It’s this unwillingness to address the elephant in the room that corruption has risen so much in the country. Along with encouraging legal contributions to political parties, it is essential that we also encourage the declaration of the correct spends. The EC should get confidence from studying what happened when we reduced our Income Tax rates. Declarations improved; and black money generation from tax evasion reduced significantly.

Why should there be any shame if large amounts are spent on elections? We are a democracy and everyone knows that in a democracy, politicians need to undertake extensive “people contact programs” which can cost a lot of money. No one complains about nearly a billion dollars being spent by the two US Presidential candidates because those monies were collected (and spent) legally. Imagine if there was an arbitrary limit of, say, $25 million imposed on each candidate there. All the legal monies would turn illegal in no time! That’s effectively what the EC is guilty of doing here.

Wrong laws and policies are the one of the major reasons for corruption in India. Wrong laws such as the 25-year age requirement for consuming hard liquor. It’s almost impossible to identify who a 25-year old is (in contrast, it is possible to identify an 18 year old) and this law almost encourages a youngsters to “pay and sway”. Wrong laws on FSI (floor space index) make builders do illegal things (build non-existent flower beds for instance!) and allows politicians to access the booty so generated. Wrong traffic laws (speed limit of 50 Kmph on the Bandra Worli sea link for instance) make people bribe policemen. Wrong laws are not made accidentally in India. They are made intentionally. So as to help unscrupulous elements make money. And fund the politicians. We need practical laws to remove corruption…..and it’s a good time for the EC to make a start.

The real truth is that we should pay heed to what Munde said; and make amends in the spend limits. We do need limits, so that it doesn’t become a purely money game. Having practical limits will make election spends legal. And reduce election-related corruption…..

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