Chanakya's New Manifesto: To Resolve the Crisis Within India (14 page)

2.3    This is largely because most political parties and politicians have no overriding motivation to change the current system because they are the biggest beneficiaries of it. Hence the delay, or at best an incremental approach to change. For instance, in 2005, the Parliamentary Standing Committee on Personnel, Public Grievances, Law and Justice was asked by the chairman of the Rajya Sabha to examine twenty-two proposals on electoral reform drafted by the Election Commission. The Standing Committee gave its recommendations on only six minor proposals, and favoured no further action on such a fundamental matter as the criminalization of politics. It is no coincidence that the comprehensive Electoral Reforms Bill has been pending before Parliament for the last two decades.

2.4    Substantive change will only come about if Parliament is forced to act. It must be ‘requested’ to approve—through a special session—a substantive and comprehensive Electoral Reform Bill for changes in our democratic system, not later than July 2013 and if possible, earlier. Citizen groupings, NGOs active in this area, watchdog groups and the media must exercise consistent pressure and persuasion to ensure that this happens.

2.5    To facilitate this end, an Apex Committee must immediately be constituted to review all previous proposals for reform, including those proposed by the EC, relevant NGOs, and this book.

2.6    The committee should have five members: the PM, the speaker of the Lok Sabha, the chief justice of India, the leader of the Opposition in the Lok Sabha and the chief election commissioner (CEC), who would be the ex-officio secretary of the committee. The committee would endeavour to work by consensus, but if not, by majority vote. It must be mandated to submit its report within four months of being constituted. This time frame is not unrealistic because much of the groundwork on the change required has been done by the plethora of committees set up earlier; the EC has also given considerable thought to the subject, and has a set of proposals ready.

2.7    A key aspect of the proposed recommendations must be to sever the pernicious nexus between politicians and political parties on the one hand, and black money on the other. Although this is easier said than done, a systemic change will need to be brought about. This will necessarily include the enactment of new laws, quick and firm deterrent action, and constant surveillance.

2.8    The current practice which allows parties not to identify donors contributing less than
20,000 must be scrapped. This is the principal (but not only) channel for parties to collect vast amounts of undeclared funds. Every paisa given as a donation to political parties must be accounted for and transacted through auditable and transparent bank transactions.

2.9    Conversely, all payments made by political parties, exceeding
20,000 must be made by crossed account payee cheques. This has also been recommended by the Core Committee on Electoral Reforms sponsored by the EC and the ministry of law and justice.

2.10  All political parties must compulsorily make public their audited accounts every year. Currently candidates are required to disclose their assets and liabilities but not political parties. As far back as 2004 the EC recommended that ‘political parties should be required to publish their accounts (or at least an abridged version) annually for information and scrutiny of the general public and all concerned, for which purpose the maintenance of such accounts and their auditing to ensure their accuracy is a prerequisite. The auditing may be done by any firm of auditors approved by the Comptroller and Auditor General (CAG). The audited accounts must be made public.’
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2.11  The CEC and the CAG must be given powers to scrutinize and monitor all party funds. Currently political parties merely obtain a certificate from the EC that they have submitted their annual audited statement of accounts. This is completely inadequate.

2.12  The CEC, or the enforcement authority it designates, should have powers of search, and should be authorized to issue show cause notices at any time to any party when there is evidence of expenditures exceeding known sources of income.

2.13  Our vaunted prowess in IT should be harnessed for this purpose. A monitoring system will need to be set up to record and capture every transaction in digital form. The CEC should publicly announce a competition open to all registered IT companies to devise a common online accounting framework leaving as little place as possible for political parties to hide income and expenditure. The entries would be judged by the CEC, the CAG and an IT expert identified by both jointly. The winner would be given a suitable award and the contract to implement the selected programme. In this way, the nation would be a participant in a publicly desired goal, and this would contribute to the pressure on political parties to embrace greater transparency and rectitude in their financial dealings.

2.14  With such a system in place, the ceilings on donations, which in any case are breached by covert practice, should be abolished. However, the Right to Information (RTI) Act would be extended to all political parties with respect to their financial accounts. Since all transactions would be electronically recorded, it would not be difficult for parties to give information to any RTI query, including the identity of a donor and the amount contributed.

2.15  If any unaccounted transaction is traced, the giver and the receiver should be penalized. If a party worker, on behalf of the party, or on his own behalf, collects funds for the party which are not reflected in the mandatorily established system of financial transparency, and the allegation is established, he or she should be expelled from the party and forfeit the right to fight elections for the next six years, and the party should be issued a show cause notice to explain its role in the matter.

2.16  Culpability with regard to illicit funding transactions, if established on more than three occasions, should render a party liable to being deregistered.

2.17  Similarly, a false declaration of accounts should entitle the EC to derecognize a political party after giving it a reasonable opportunity to show cause. This has been recommended by the Law Commission, and endorsed by the EC. Both organizations have also recommended the imposition of penalties or criminal prosecution. Section 29(A) of the Representation of the People Act (RP Act) 1951, must be amended to give the EC necessary powers to deregister political parties.

2.18  Any judicial appeal from a finding by the EC, and all matters arising out of the election process, should be dealt with without any further court of appeal by fast-track courts/special election tribunals established for this purpose. Such legal bodies should be required to give their verdict within a maximum time limit of six months. Their setting up under Article 329(B) of the Constitution has been recommended by the EC and several official commissions.
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2.19  The institution of fast-track courts has been accepted by our judicial system. The government approved the scheme in 2002 and the Eleventh Finance Commission recommended the creation of as many as 1,734 fast-track courts. The right to speedy trial is implicit in Article 21 of the Constitution, and Supreme Court Justice Krishna Iyer underlined the fact that the ‘slow motion syndrome’ of our justice system militates against the right of fair trial. Since the concept of fast-track courts is approved, and many have been set up in the past with a proven ability to dispense fair justice, there is no reason why they cannot be harnessed in an area of such seminal importance as ensuring the financial honesty of political parties.

2.20  The vast unaccounted funds with political parties are a major reason why candidates routinely and illegally spend sums far in excess of the prescribed ceilings during elections. The strict monitoring and auditing of party funds and deterrent action for violations will, hopefully, contribute towards curbing this malaise.

2.21  However, much more needs to be done, because campaign expenditures by candidates are as much as twenty to thirty times the legal limit. Often, a significant proportion of the funds spent is raised by the candidate themselves. An official government commission has noted that ‘the sources of some of the election funds are believed to be unaccounted criminal money in return for protection, unaccounted funds from business groups who expect a high return on this investment, kickbacks or commissions on contracts, etc.’ The same commission further notes that ‘electoral compulsion for funds becomes the foundation for the whole superstructure of corruption’.
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2.22  Political candidates, motivated by the ambition to win at any cost, will spend as much as they can. Thus, there is no point in having ceilings for expenditure which are unrealistically low, and whose breach is universally known. On the other hand it is also essential to have some ceiling, for otherwise wealthy candidates will bankroll their way to victory. The modus vivendi is to fix the ceiling nearer actual expenditures and in conformity with increasing costs. An appropriate ceiling would be to double the current limit of
25 lakh for a Lok Sabha seat and
10 lakh for an assembly seat; even this increase can be reviewed upwards by the EC from time to time.

2.23  However, it is essential that raised ceilings are accompanied by two stringent provisions whose breach would invite quick, deterrent action. The first is that all candidates must show the source of their income through a compulsory declaration of assets and liabilities prior to the elections. This is being done now under Form 26 of the Conduct of Election Rules 1961. However, it is common knowledge that such declarations mostly hide more than they reveal and are in fact a tribute to the ingenuity of chartered accountants. For instance, according to the CBI, Mayawati declared her assets in 2003 to be one crore rupees; this grew to
50 crore in 2007; and, in 2012, when she filed her papers for the Rajya Sabha, her personal wealth, by her own estimation, was 111.64 crore. In such cases, there is no reason why the EC cannot interrogate the return with the help of the income tax authorities. The EC has already recommended that Section 125(A) of the RP Act be amended to provide for much stronger punishment to those who conceal or provide wrong information. The EC would like to substitute the current provision of a mere fine by imprisonment for a minimum period of two years.