The importance of money in Indian elections keeps increasing. This money demands returns and takes the focus of the politicians away from the voters. What can be done? We have the beginnings of a solution and hope to spark a debate. We welcome your comments and suggestions.

1. MONEY IN POLITICS
How can we put Voters
ahead of Funders?

2. The Ideal Candidate
Nandan also persuaded the state government to
construct a better road to the village and
introduce a regular bus service.
Nandan Kumar is a 40 year old Army retiree,
who has a farm in a village on the outskirts
of your town
A Real Estate Developer wanted to buy land in the
village. Nandan got his fellow villagers a very good
deal. They sold only part of their land and got cash and
apartments in return.
Everyone believes that Nandan lives honestly within his army pension.
Nandan decides to stand for the Lok Sabha elections.
Will you vote for him?

3. The Ideal Candidate
Will you vote for Nandan? Probably ‘NO’ because …
1. You have not
heard of Nandan
2. You are happy
with incumbent,
Suresh Kumar
3. You want to
vote for Party
XYZ to win
4. You want to
vote for Mr ABC
to be / not be PM
5. You want to
vote for Mr PQR
from your caste
?

4. The Ideal Candidate’s Challenge No. 1
• HOW does he make his good work
visible to You and the other 15
Lakh+ voters in the constituency?
• HOW does he convince You and the
other 15 Lakh+ voters in the
constituency to vote for him?
?
SOURCE: Page 41 of Electoral Statistics pocket book 2017, ECI. AskHow calculations.
You do not vote for Nandan
because you have not heard
of him, so …

5. INSIGHT
India’s Lok Sabha
15,00,000
US Congress
5,80,000
UK House
of Commons
70,000
SOURCE: 1. Electoral Statistics Pocket Book, 2017, Election Commission of India, Pg 41, AskHow India calculations.
2. www.federalregister.gov/documents/2018/02/20/2018-03372/estimates-of-the-voting-age-population-for-2017
3. www.ons.gov.uk, Electoral statistics, UK: 2018
The average Lok Sabha constituency
has 2.5X to 20X more voters
compared to other democracies.
After this Insight break,
back to our Analysis …

6. The FMCG Best Practice for Visibility
Fast Moving Consumer Goods (FMCG) Companies that sell goods like toiletries, packaged food and
beverages, believe that Consumers need to be exposed to a brand at least 3 times for recognition.
Then there is a long journey from awareness to making it desirable, and further to making it a regularly
purchased brand. These companies primarily rely on advertising on TV, digital, outdoor, etc. to get
visibility for their message with their potential consumers.
And advertising costs money - that Nandan does not have.
The Ideal Candidate’s Challenge No. 1
How do Companies make a good product visible,
and how do they make you buy it?

7. The Ideal Candidate’s Challenge No. 1
HOW can Nandan make his good work visible to you?
HOW can he convince you to vote for him?
Could Nandan use free PR?
Yes, but even if Nandan gets covered in the local
newspapers / television stations
–You may not get the particular newspaper / channel
OR if you do
–You may not read / watch the story OR if you do…
–You may not remember it by the time of elections!
So realistically, to fight an
election, Nandan needs money!

8. The Ideal Candidate’s Challenge No. 2
Current MP
Suresh Kumar
Attends weddings,
birthdays, etc
Distributes prize at
school functions
Supports
community festivals
Agitates for voter
facilities
Liaises with Govt
offices for voters
Inaugurates Govt
and pvt facilities
Hosts voters
visiting for help
… these and
the many,
many more
things he does,
keep him very
visible

9. The Ideal Candidate’s Challenge No. 2
Current MP
Suresh Kumar
All these activities
cost money.

10. All candidates and parties face this challenge
Senior leaders of political parties address
citizens all across the country, as they should, to
spread their message.
EXAMPLES: (a) According to Bhartiya Janta Party, in 2014 Sri Narendra Modi
(BJP’s, PM candidate) addressed 437 big rallies and participated in 5,827 events.
(b) In the recent 2018 Assembly elections, Sri Rahul Gandhi, attended 82 public
meetings in 2 months across 5 states.
And these meetings, rallies,
events - cost money.
Not only candidates, but also Political
Parties and Political Party Leaders face
this challenge
SOURCE: https://www.ndtv.com/elections-news/from-narendra-modis-team-some-stats-437-rallies-5827-events-3-lakh-kilometres-560938
https://www.theweek.in/news/india/2018/12/06/Rahul-whirlwind-campaigning-Congress-chief-addresses-82-poll-meetings-in-2-months.html

11. Both political activity and
campaigning, cost money.
This need for money
leads aspiring politicians
to Funders.
Political activity to meet
the voters’ expectations
costs money.
The common belief that only dishonest politicians need money, is wrong.
Campaigning to make
people aware of you and
your good work costs money

12. 1. The Funders demand returns on
their funding. Elected Representatives
therefore, commit more to Funder’s
agenda than to the Voter’s.
2. If only people with access to political funding can
contest elections, then elections lose their legitimacy.
3. If funding comes from criminal sources, it can be
bad for society.
But why are Funders a problem?

13. WHO funds Political Activity?
Primarily Businesses that need preferential treatment
Heavily regulated businesses
such as Real Estate, donate
expecting preferential
treatment in getting regulatory
approvals.
Businesses dealing in Scarce
Resources that depend on licenses
(ports / airports, defense, spectrum,
mining), donate expecting licenses
on favorable terms.
Businesses dependent on
Government for revenues, such
as Contractors, Media houses, etc.
donate in expectation of getting
government contracts.

14. Political Funding’s TENTACULAR INFLUENCE
Politicians & Political Parties
who control the Government
Businesses
that are
Heavily
Regulated
Businesses
dealing in
Scarce
Resources
Businesses
depending on
Government
Business
Businesses
Govt
Contracts
Licenses &
Permissions
REGULATORS BANKS
InstructionsInstructions
Soft
Lending
Lax
Regulation
Political Funding

15. Summarising the Political Funding Situation
Political activity and
election campaigning
requires money
The needs of the
Funder then drives
the Government’s
agenda ahead of
voters’ interests.
Parties and politicians
get this money from a
few Funders
Political Funding is like a disease infecting our democracy.
We need an Antibiotic - a regulatory mechanism, to limit this disease.

16. Antibiotic Approach: Regulating Political Funding
Source: We first saw the 4 pillars in the book Costs of Democracy: Political Finance in India – Devesh Kapur and Milan Vaishnav.
Regulate Fund Flow for Political Activity
The following are considered the 4 pillars of
regulation of political funding.
A. Limits on expenditure
B. Limits on contribution,
C. Reporting and Disclosure requirements, and
D. Public subsidy of Elections and Political parties

17. Antibiotic Approach: Regulating Political Funding
2.A: Limits on
Expenditure
Current rules: No Expenditure limit on Political party spend,
limit only on candidate’s spend (In 2014, it was Rs.70 lakhs in
bigger states)
Rationale: Money should not have excess influence on
elections.
Actual situation
• Very easy to circumvent rules by making the expenditure
‘party spending’ rather than candidate spending.
• Businesses can fund expenses, rather than routing them
through party or candidate.
• The winning candidates submit their expense reports and
ECI validates them easily. The scrutiny is not rigorous.
Source: https://eci.gov.in/files/file/2170-conduct-of-elections-amendment-rules-2014-amendment-of-rule-90-of-conduct-of-election-
rules-1961-–increase-in-maximum-limit-of-election-expenses-regarding/

18. Antibiotic Approach: Regulating Political Funding
Source: https://adrindia.org/content/analysis-election-expenditure-statements-mlas-punjab-assembly-elections-2017 (Page 5 of 31) Retrieved 11.02.2019.
One Example of Actual situation
ADR analysis of expenditure in Punjab Assembly elections in
2017, reveals that
• 50 out of 117 MLAs claimed that they did not spend any
money on electronic or print media in their campaign,
• 35 claimed that they did not spend any money on campaign
workers and
• 1 even claimed that he did not spend any money on vehicles.
In Indian elections this is unlikely
Note: These expense reports have all been validated by ECI as
of June 2017, in spite of these problems.
2.A: Limits on
Expenditure

19. Antibiotic Approach: Regulating Political Funding
Current rules: A. Cash funding limit reduced from Rs 20,000 to
Rs 2,000. B. No corporate limit on funding of political parties.
Rationale: No single entity should have excessive influence on
one political party.
Actual situation
• There is no limit on any one funder.
2.B: Limits on
Contribution
Source: http://pib.nic.in/newsite/PrintRelease.aspx?relid=157861

20. Antibiotic Approach: Regulating Political Funding
Key rules:
– All political parties are to submit audited accounts
– Cash donations only if amount is less than Rs 2,000.
However,
– Funding via instruments such as Electoral Bonds is
anonymous.
Rationale: If we know the Funders of Political parties than
we can monitor the party’s behavior, to check if they are
unduly favoring their Funders.
Actual situation
• Political funding in India is very non transparent across
party lines.
Source: https://adrindia.org/sites/default/files/Additional_views_ADR-NEW_political_finance_255th_Law_commission_ECI.pdf
2.C: Reporting
and Disclosure
Requirements

21. Antibiotic Approach: Regulating Political Funding
Moreover, Funders can directly fund Party expenses
rather than route the money through the party. For
example, Funder could:
– Pay for the diesel required by the politician’s
entourage
– Pay for all or most of the expenses of organizing a
rally
– Pay cash to the ‘volunteers’ of the party.
Source: https://adrindia.org/sites/default/files/Additional_views_ADR-NEW_political_finance_255th_Law_commission_ECI.pdf
2.C: Reporting
and Disclosure
Requirements

22. Antibiotic Approach: Regulating Political Funding
• Parties are supposed to file
annual accounts. But, the
lack of independent audit
scrutiny and meaningful
enforcement make the new
provisions ineffective.
• Congress, BJP, CPI (M), CPI,
NCP and BSP have failed to
comply with Central
Information Commission
(CIC) orders and CIC has
given up.
2.C: Reporting
and Disclosure
Requirements

23. Antibiotic Approach: Regulating Political Funding
Source: https://adrindia.org/content/analysis-sources-funding-national-parties-india-fy-2017-18-0 Page 5 of 5. Retrieved April 10, 2019
2.C: Reporting
and Disclosure
Requirements
Total Income: BJP, 1027 cr
INC, 199 cr
BSP, 52 cr
Unknown Sources: 54%
60%
21%

24. Antibiotic Approach: Regulating Political Funding
Would it help to increase the powers of Election Commission?
That is risky!
If the EC becomes too powerful, then the EC’s
appointment would become even more politicized
and it may become very difficult for EC to remain
neutral.
So what can be done?
As we saw, the AntiBiotic - regulatory mechanism, to
curb the disease has proven ineffective. Maybe it is
time to try a ProBiotic - a participatory approach.

25. So the AntiBiotic regulatory mechanism is failing. Now what?
Public Subsidy of Election and Political Parties.
This ProBiotic or public participation approach
of getting small contributions from a large
populous - is worth considering.

26. The ProBIOTIC Funding Ideas
SOURCE: Republic, lost. Version 2.0: Lawrence Lessig..
1 Would citizens fund politics?
NO because, it is believed that very little money in India
comes from voters. In US also, the record is not better.
NOTE: In 2014 only 5.4 million Americans gave anything to a congressional
campaign or political party or PAC. That is less than 2% of citizens!
2 Could the public money fund politics?
YES but, who decides how much money each party will
get? Criterion such as vote share in previous elections, etc –
are pro incumbent. Private money in any case is pro
incumbent. We want money that supports change.
NOTE: India has many times been anti incumbent (Example: BJP, AAP)

27. The ProBIOTIC Funding Ideas
Inspiration: Republic, lost. Version 2.0: Lawrence Lessig..
3 Possible solution: Public money
directed by citizens
Every voting citizen is allocated between Rs. 100 and Rs. 200
that they can only allocate to a political party. Such a proposal
could be considered with safeguards such as
• The citizens cannot spend this money – they would have to
allocate it to a political party.
• A political party would get the money only after it is able to
persuade a minimum threshold number of voters.
How much funding would be required?
Here are some ways to arrive at estimates.

28. How much Funds are required for Politics?
What do Political Parties spend on?
How much would all this cost? No exact answers, but we
have a back of the envelope calculation to get the scale.
A. Regular and Legitimate Political
Activity for Constituency’s citizens
Agitating
for Citizen
Meeting citizens
to know issues
Community
functions
Govt liaison
for citizens,
as accessing citizen rights
also needs interfacing
B. Election
campaigning

29. How much Funds are required for Political Activity?
Political Activity Costs Min. Max.
No. of constituencies 4,120 4,120
No. of party / constituency 3 3
No. of employee / constituency 5 10
Salary / employee 2,00,000 5,00,000
Total / year (Rs. Crore) 1,236 6,180
Other expenses (assuming all other
expenses are equal to employee expenses) 1,236 6,180
Total / year (Rs. Crore) 2,472 12,360
Bottom up Costing of Political Activity
Assumptions
i) 5 people / Political party ii) 3 party / Constituency
iii) Other Expenses = Overheads + Cost for agitations
BUT India is diverse.
Example * The entire state of Sikkim is 1 Lok Sabha
constituency, while megacity Delhi has 7
* Almora is 90% rural voters, while Mumbai South
constituency is very urban and modern.
Hence, the outreach and
activity spends across the
country is likely to be
significantly different.

30. How much Funds are required for Election Campaigning?
Further, in B. Election Campaigning, there is 2 types of spending
on rallies, posters,
TV ads, print
media, social
media campaigns,
door to door
campaigning, etc.
B.2 Illegitimate
Spending
B.1 Legitimate
Spending
on cash bribes,
liquor for voters,
thugs to stop
certain voter
blocks, vote
spoilers, etc.
In spite of EC’s best effort,
there are many reports of
illegitimate spending.
This menace has to be
eradicated by:
A) Strict B) Voter
enforcement education

31. INSIGHT
SOURCE: https://indianexpress.com/article/india/politics/the-curious-case-of-chandu-lal-sahu/ After this Insight break,
back to our Analysis …
The Case of 10 Chandu Sahus, Chattisgarh, 2014 LS Elections
In the Mahasamund Lok Sabha constituency, Chandu Lal Sahu was
BJP’s candidate. He fought 7 other Chandu Lal Sahus and 3 Chandu
Ram Sahus. These 10 Chandu Sahus got 70,000+ votes and many of
them were reportedly paid off by the opponents of the ‘real’ Chandu
Lal Sahu. Many of the Chandu Sahus were from distant places, with
zero political experience. Note: Chandu Lal Sahu (BJP) managed to
beat his nearest rival Mr. Ajit Jogi by around 1,000 votes.
WHAT IS IT?
Propping candidates of the
same caste, religion and
even name as opponents, so
that some of the opponent’s
votes are reduced. In the
first past the post system, it
pays to reduce opponent’s
votes, as much as it pays to
increase your own.
The Vote Spoiler Phenomenon

32. How much Funds are required for Election Campaigning?
How much should Legitimate Election Campaigning cost?
Again nothing exact, but we have a back of the envelope calculation to get the scale.
Election Campaigning Costs
No. of constituencies 543
No. of candidates / constituency 3
Salary / candidate 3 crores
Total / LS Election (Rs. Cr) 4887
Note This calculation is for LS elections only. State assembly and Local body elections would be additional
or approximately 5,000 crores

33. How much Funds are required for Election Campaigning?
How much is the actual Election Campaigning cost reported?
30,000 CR
CMS estimate of
Total Election spend
5,000 CR
HT estimate of
BJPs Ad spend
714 CR: BJPs EC filing
516 CR: INCs EC filing
NOTE: All numbers are for the 2014 Lok Sabha Elections
10,000 CR: 2018 Karnataka Assembly
Elections Cost Estimate, according to CMS
Note: Costs rise + Competition rise - So LS 2019 ???
SOURCE: https://timesofindia.indiatimes.com/india/BJP-spent-over-Rs-714-crore-Congress-Rs-516-crore-in-2014-elections/articleshow/45911356.cms
https://www.hindustantimes.com/india/bjp-s-advertisement-plan-may-cost-a-whopping-rs-5-000-cr/story-y8x34eYh26xwoAxeRuaCoO.html
https://www.ndtv.com/elections-news/rs-30-000-crore-to-be-spent-on-lok-sabha-polls-study-554110
https://indianexpress.com/elections/karnataka-assembly-elections-2018-total-expenditure-bjp-congress-jds-5176467/
We came across all these estimates in the book, How to win an Indian Election by Shivam Kumar Singh

34. How much Funds are required for Election Campaigning?
The estimates of actual spending are way more than
theoretical calculations. That could be because
Politicians / political parties
spend inefficiently
In a quasi arms race, Politicians /
political parties spend all they raise
Politicians keep a significant
part of the money raised

35. The BENEFITS of the ProBIOTIC System
So there is a chance that a ProBiotic or public participation system of
political funding - even when the funding is much lesser than actual
spends - can make a difference.
This is because an challenger using the limited money, could be:
More More
efficient honest
HONESTY

36. Summarising the Probiotic Funding approach
A sum of 10,000 Crore / year for political
activity and 5,000 Crores / election seems
very high. However, it is not a big amount
from the budget: 55,000 Crore for 5 years
For comparison, India has spent Rs. 25,000 Crore on Air India!
Public funding of elections has been successfully tried
elsewhere…
SOURCE: http://164.100.47.194/Loksabha/Questions/QResult15.aspx?qref=51752&lsno=16

37. INSIGHT
After this Insight break,
back to our Analysis …
Germany’s
ProBIOTIC
Success
Others
16%
Corp Donors
4%
Ind Donors
10%
Party Officials
12%
Membership
28%
Govt Funds
30%
• This gives minor parties a fighting chance in elections.
• Parties receive funds in proportion to the latest election results, plus a
partial matching of EUR 0.38 per donated Euro 1 of private donations,
with some limits.
• Individual donors get a tax deduction for contributions, upto a limit.
Corporate donors don't get any benefits.
• There is a limit on total funds disbursed to all parties. A party also can't
receive more public funds than private.
• The Government disburses funds 4 times a year.
In Germany, the government funds
political parties (not candidates).

38. Summary
1. Political activity and
election campaigning
requires money
3. Regulation of
money or the
Antibiotic approach
has not been very
effective in India
4. It is time to consider the
Probiotic approach for the
health of our democracy!
2. The provider of this
money will ask for
returns and this takes
away the focus of the
elected representative.
Further reading? Click here: http://www.askhowindia.org/resources-political-funding/
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