P V Indiresan

Corruption stems from poll funding

P.V.INDIRESAN | Updated on November 20, 2017

Black money led to proliferation of criminals. Slowly, they started taking over politics.

Politicians use high cost of elections as an excuse to collect funds illegally. That excuse will vanish once the government reimburses legitimate election expenses. Corporates should support state funding in their own interests.

The theme for the 175th annual conference of the Bombay Chamber of Commerce and Industry (BCCI) was what corporates could do to improve governance. In view of the ongoing agitations launched by Anna Hazare and Baba Ramdev, that might appear natural, but it is not.

The BCCI's main task is promoting business interests, not confronting the government on political governance. It is an act of courage that the BCCI is getting interested in ‘Corporate Political Responsibility', as it would be in Corporate Social Responsibility.

An old student of mine who has been a top manager tells me that corporates should first improve their own governance. For long years, management and labour have perceived each other as antagonists. With labour as an antagonist, managements do not want governments as an additional adversary.

So, they have not been able to influence social and political developments as much as they would like. Hence, internal management-labour disputes have half-paralysed businesses and enfeebled them in tackling politicians.

The result is India remains at the bottom of the table in Human Development Index, Competitiveness Index and Transparency Index.

The BCCI has sowed a seed which, hopefully, will lead to an improvement in all three aspects.


Corruption was not always as bad as it is today. J. R. D. Tata was once asked in an interview about pre-War corruption. His reply was there was none. On further questioning, he said there was no corruption because there was no one to corrupt. Unfortunately, the situation has changed dramatically.

It began when Indira Gandhi insisted that political contributions should be paid to her and not to the party and in cash, not by cheque. Her idea has been picked up by all politicians, and their hangers on. I was told recently that, on being refused a contribution by a lowly electricity inspector, a municipal councillor just put her (it was a woman) hand in his pocket and took away his purse!

It is a fact that most politicians have no source of professional income; they are all officially quite poor. On top of it, election expenses are extraordinarily high. Therefore, they see every justification in collecting money — under the table. They are also in a position — as we have witnessed recently — to decide to whom contracts will go. Thus an unholy nexus has developed between politicians and contractors as well as agents that act as go-betweens.

It is doubtful whether there is enough unity within the corporates to resist improper demands of this nature. Incidentally, Indira Gandhi raised marginal rates of taxation to 98 per cent and added on top of it a wealth tax too. Thus, corporates too found it necessary to have black money — money on which they had not paid the taxes in full. Black money led to proliferation of criminals. Slowly, they started taking over politics to the extent that a significant number of legislators have serious charges like murder and rape pending against them. Evidently, the laws of the country are unable to prevent even serious criminals from taking over governance of the country. Fortunately, the civil society has started a movement to change election laws. Let us hope it succeeds.


High cost of elections is the excuse and justification that politicians have for collecting money illegally. That excuse will vanish once the government reimburses in full all legitimate election expenses. That looks doubtful. The Chief Election Commissioner, who was my co-panellist at the BCCI meet, was opposed to state funding of elections. I do not suggest that the state pays any money to the candidates; I suggest that they supply all the legitimate needs of the candidates — office staff, vehicles, postage, telephones, posters, access to both government and private radio/ TV channels; it may organise even joint debates. Naturally, that should be confined to serious candidates only.

How do we decide who is a serious candidate and who is not? We do need a system of primary elections that will remove the prevailing dictatorial powers of the “High Commands” of political parties. However, primary elections too may get corrupted. Hence, I have suggested that only taxpayers — whose money the governments spend — should vote. They may vote for as many candidates as they desire, and anyone who gets as little as 5 per cent of the total votes polled may be declared as serious candidates to get state support. A little thought will show that it is in the self-interest of business houses to support such a move.

There are two features of this scheme. First is that candidates are selected locally by local citizens and not by High Commands. That internal democracy is totally absent in our politics and it is very much in the interest of clean business that such a democracy is imposed. Second, the state meets in full all legitimate needs of the candidates — no candidate (once declared as a serious one) has to spend even a penny of his or her own. In that case, no candidate can ask for funds (particularly under the table) and force businesses to pay. Then, we will be back to the golden times J. R. D. Tata talked about; businesses will not need black money any more the way they are compelled by so called “honest” politicians to have it at the present time.

Internal democracy for political parties through local and not central selection of candidates and complete state support for all legitimate expenses of all serious candidates are the vital needs to improve governance in our country. Let us hope someday our corporates discern a self-interest in lending their support to such schemes.

(The author is a former Director, IIT, Madras. Response to >indiresan@gmail.com and >blfeedback@thehindu.co.in.)

(This is 305th in the Vision 2020 series. The previous article appeared on June 4.)

Published on June 18, 2011

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