How Do Politicians Recover Their Costs ? The Political Economy of Representative Democracy in India

This paper explores the features of political economy in the dynamics of representative politics in India. Politics is seen as enhancing economic benefits through acquiring and maintenance of power in the realm of democratic set up. The system of representation is riddled with competitive populism. Emerging leaders and parties are forced to accommodate their ideologies in coping with competitive politics. Electoral politics and voting behaviour reflect series of influences mooted by the politicians. Voters are accustomed to expect benefits outs of state exchequer. The electoral competitors show a changing phase of investment and return policy. Every elector has to spend and realize his costs in his tenure. In the case of defeated electors, even the cost recovery is not possible directly; there are indirect means to recover their costs. The series of case studies show the method of party funding, campaign financing, electoral expenditure, and cost recovery. Regulations could not restrict the level of spending. Several cases of disproportionate accumulation of wealth by the politicians reveal that money played a major part in electoral process. The political economy of representative politics hitherto ignores how a politician spends and recovers his cost and multiples his wealth. To be sure, the acquiring and maintenance of power is to enhance the wealth of the electors. Keywords—Political economy, representative politics, cost recovery, electoral politics


I. INTRODUCTION
ONARCHY was the major form of political system in India till the coming of the British. However, monarchs were governed by ethical and religious justice in ruling the territory and the people. Sometimes ministerial council governs in the absence of king. Dynasty rule had its own continuity during medieval time. The concept of representative democracy is an outcome of colonial rule. It necessitated political parties and various pressure groups. Agents of political socialization assumed greater significance as the political leaders have to mobilize support both on secular and ethnic modalities. Representative democracy had to evolve amidst the conflicting discourses between colonialism and nationalism on the one hand and between nationalism and subnationalism on the other. Elections are indispensable part of representative democracy. The pure idea of democracy is the government of the whole people by the whole people equally represented [1]. The man who represents the citizens in governance is governed by the laws of political economy. The process of governance itself paves way for such justification. Subramaniam Chandran is with the Vinayaka Missions University, Salem, India (phone: 91-427-3987000, email: s.chandran@rediffmail.com).

II. GROWTH OF REPRESENTATIVE DEMOCRACY
The main object of a political party is to capture power either singly or in collaboration with others. The Government of India Act 1919 provided a dual form of government for the large provinces. In each such province, control of some areas of government, the 'transferred list' were given to a Government of ministers answerable to the Provincial Council. The transferred list included agriculture, health and education. The Provincial Councils were enlarged. At the same time, the reserved list remained under the control of the Viceroy. These included defense, foreign affairs, and communications. The Imperial Legislative Council was enlarged and reformed. It became a bicameral legislature for all India.Based on the recommendations of the Montague-Chelmsford report, the Government of India Act of 1919 enlarged the provincial legislative councils and increased the number of elected members more than nominated members and Company officials. It introduced a system of dyarchy in the Provinces. The first legislative council election to Madras Presidency after the establishment of dyarchical system of government was held in November 1920. Elections were also held for the council subsequently in the year 1923, 1926, 1930 and 1934 for the 98 member councils in Madras Presidency.The 1935 Act further expanded the practice of representative democracy. The First legislative assembly election for the Madras Presidency was held in February 1937. The Indian National Congress obtained a majority by winning 159 of 215 seats in the Legislative Assembly. This was the first electoral victory for the Congress in the presidency since elections were first conducted in 1920. After independence new constitution was framed and it came into force in 1950. The first general elections were held during 1951-52. Since then the electorate and the electors have been on raising scale. Proliferation of political parties, emergence of new leaders and fragmentation of voters support prevail as a consequence of the practice of liberal representative democracy [2].
III. FUNDING OF POLITICAL PARTIES Democracy needs responsible political parties and free and fair elections. The nature of funding of political parties and for elections will tell the dark stories of democracy. How much the political parties are spending is very difficult to know. There are always possibilities of inflow of funds from illegitimate and criminal sources. The Election Commission tries to enforce the ceiling on election expenditure by individual candidates. However, it is difficult to control in practice as the parties manipulate the records. The public is unaware of the funding process unless some media reveal the facts [3].It is widely known that the existing ceiling on expenditure for candidates is bypassed by various means. Actual expenditure is many times the ceiling set by law. The most important thing is to prevent flow of unknown funds from entering the electoral battle and thereby seek to influence in undesirable ways. The basic logic of economic markets applies readily to the arguments that 'money buys favors' or that contributions are 'investments in future benefits.' IV. ELECTION EXPENDITURE The increasing role of money power in elections is too well known and is one of the maladies which sometimes reduces the process of election into a mere farce by placing some privileged candidates with financial resources in a distinctly advantageous position as compared to other candidates. The result of such an election cannot reflect the true choice of the people. The system also sometimes deprives qualified and able persons of the prerogative to represent masses. An important pre-condition for fair election is to curb the money power which undermines the level playing field. This can be achieved by keeping a proper watch on expenditure incurred by the candidates and political parties. The election law provides for an interval of not less than thirteen clear days between the last dates fixed for the withdrawal of candidatures and the poll. This period should be properly utilized for canvassing and educating the voters and for training the large number of workers and agents that you will have to employ.Under Section 77 of the Representation of the People Act, 1951, every candidate at an election to the House of the People or State Legislative Assembly is required to keep, either by himself or by his election agent, a separate and correct account of all expenditure in connection with the election incurred or authorized by him or by his election agent between the date on which he has been nominated and the date of declaration of result of the election, both dates inclusive. A candidate is required to maintain the day to day account of election expenses in a register giving the details of the expenditure incurred. Further, under section 78 of the said Act, every contesting candidate has to lodge a true copy of the said account within 30 days from the date of declaration of result of the election, with the District Election Officer in all states and Union Territories.India is able to spend Rs. 10,000 crores on general elections. Only Rs. 2,000 crores are expected to be spent on valid election process but other Rs. 8,000 crores are to be spent by Indian parties to catch voters. Every party spends a big amount on flags, posters and banners. In political economy models of electoral competition, the traditional intuition has been that opportunistic politicians will manipulate economic policy around election times for political gain. Since the first elections in 1952, there have been 15 general elections for the Lok Sabha and over 450 state elections for the state legislative assemblies, and for district and village councils. The average voter turnout in general elections has been about 56 per cent, and even greater in state elections, averaging to more than 60 per cent in the states in the sample [4]. An increase in voter's turn out needs distribution of some sort of gifts or money unless it some change wave takes place.Parties need to generate income to finance not just their electoral campaigns but also their running costs as political institutions with a role to play between elections. Political parties are also under increasing pressure, faced with a vicious circle of escalating costs of campaigning, declining or negligible membership income, and deepening public mistrust about the invidious role of money in politics. Their problems of fund-raising are causing deep anxiety not just to politicians but to all those who care about democracy.The Congress declared its assets amount to Rs. 340 crores in 2007 with an opening balance of Rs. 271 crores. The assets of BJP were not more than Rs. 120 crores. According to income tax returns of political parties for the assessment year 2008-09, Congress spent more than Rs. 110 crores on elections, meetings and publicity. CPM showed Rs. 69 crores as income while BSP and SP showed Rs. 79 crores and Rs. 22 crores respectively [5].Being in power for several years the Congress was able to mobilize more funds. Its total assets were valued at Rs. 65  Interestingly, BSP, in a statement submitted before the tax authorities, claimed it had not received any donations above Rs. 20,000. It is beyond doubt that contribution by companies is given not because of any ideological reason but really as a device to be in the good books of the ruling party. Thus between 1966 to 1969, 75 companies paid down Rs. 1.87 crores out of which Rs. 1.44 crores were given to the ruling party.Ratan Tata, the chairman of Tata Group, revealed that his group donated money to political parties through a Trust created by Tata Sons. It stands as a tribute to the neutrality with respect to the electoral Trust held by independent Trustees with no discrimination. Mamata Banerjee, the leader of Trinamool Congress, had returned Rs 27 lakhs donation made by the Trust on the ground that her party did not accept donations from corporate houses.

V. LIMITS OF ELECTION EXPENDITURE
The Central government has raised the election expenditure limit for both Parliamentary and Assembly constituencies by around 60 per cent with immediate effect. The spending limit for a Parliamentary constituency in major States now stands at Rs. 40 lakhs as against Rs. 25 lakhs earlier. The limit for Assembly constituencies in the major States moves from Rs. 10 lakhs to Rs. 16 lakhs. The revisions are made taking into consideration the demands of the political parties on the grounds of inflation.

VI. EXPENDITURE PATTERN IN RECENT ELECTIONS
The expenditure pattern of 2006 and 2009 elections reveal the level of amount received and expenditure incurred on different heads [6]. The national parties and regional parties have their own influences in receiving donations and other receipts. The reports of the political parties submitted to the election commission show the pattern of cost involved in elections. However, the official disclosures are always lower than the actual receipts and expenditures. Let us see the financial position of four political parties, namely the Congress, the BJP, the DMK and the ADMK. The first two are national parties and the later two are regional parties.   In this ways, the balance of candidates left consisting of 99.5 percent of total candidates in the fray were shown to have incurred expenses to the tune of 45-55 percent of the share of the prescribed limit of Rs. 25 lakhs which will come down to meager Rs. 12-14 lakhs of rupees only.The irony is that if at all the 99.5 percent of the total candidates in the election fray spend only the 50 percent of the prescribed limit of expense then what is the need to increase the expense-limit? This only goes to show that the candidates do not give the details of the actual expense incurred and why so much of hullabaloo is being raised for increasing the limits. Secondly, this goes on to prove that majority of the candidates do not give information of the actual expense incurred. The candidate's expenses are far much more than the limits prescribed. It is under compulsion of the rules that they provide information showing all details within the expense limits prescribed. Thirdly, the biggest question mark hangs as to why election expenditures are so whopping? The only aim is to win elections at any costs. The contestants are given tickets not on accounts of the works done by him in his areas but by weighing his chances of winning the elections.

VIII. STUDY PROFILE
The trend of election studies in India has been influenced by the evolution of actual electoral politics. In addition, theoretical development of election studies in developed countries, especially the United States, has inspired an upward trend in election studies in India. Studies on voting behaviour, notably the Columbia and Michigan studies, have had an impact on studies in India relative to determining what the important research questions are. Party identification, issues, candidates, campaigns, socioeconomic status of voters, and other areas have been recognized as important realms for studies in voting behaviours. But because of peculiar elements that are characteristic of Indian society, such as caste, electoral studies in India have unique features. Studies are divided into those based on aggregate data and those based on survey data of the individual electorate. This division has the advantage of providing data that may be used in different analytical areas. Voter turnout and votes polled by party are the two main variables to be explained [7]. However, election from the perspective of political economy is yet to be given attention.This case study was conducted in Tamil Nadu, a southern state of India. The province of Tamil Nadu has 39 parliamentary and 234 assembly constituencies. The recent elections to parliament were conducted in 2009 and to assembly in 2006. Tamil Nadu has a legacy of colonial representative democracy [8]. Electoral politics has been an interesting sphere of political discourse since 1920. Political parties, leaders, electors and voters are given much importance in representative democracies. As an individual elector, one has to give and receive funds from the party. Parties receive funds from individuals, societies, companies etc. The financial management of parties comes to forefront during elections. A large amount of funds are transferred from civil society to party and from party to voters during elections. As far as an elector is concerned, the spending and revering his costs are crucial in the political economy of representative democracy. Winner has the opportunity not only to recover his costs but also to accumulate wealth by all means. The runner has to wait for another opportunity.The political economy of representative democracy is a larger theme which needs an extensive study. However, how the elector incurs and recovers his costs in the process of representative democracy needs micro study. Four cases have been recorded in describing the process of costs and recovery. It includes two from parliamentary constituency and two from assembly constituency.    IX. METHODOLOGY For preliminary research design and foundation arguments, reports of the Election Commission of India have been used. These reports provide the basic information about constituencies, candidates, performance of political parties and election expenditure incurred by parties and individual candidates. For specific case studies, one parliamentary constituency and one assembly constituency were selected. In each constituency four candidates were selected for this study representing two national parties -Congress and BJP and two regional parties -DMK and ADMK. Interviews were conducted among the electors and voters. Names of the constituencies and the candidates were kept confidential for the sake of social research ethics.
X. CASE STUDIES Case 1: Ramu belongs to Congress party since his early days. This is due to his father's affiliation with the Congress even at the time of national movement. His father was elected four times as a member of parliament. Ramu got his legacy from his father as a congress leader. He is comfortable with his agrarian background and inherited huge wealth associated with landlordism. After the demise of his father he came to the forefront of Congress party with his supporters. Despite the factions and splits within the party, he was able to maintain his support base. He contested in 2009 parliamentary elections and won. He was included in the cabinet. The election scenario was somewhat difficulty with his rivalry candidates who belonged to ADMK. Ramu received Rs. 20 lakhs from his party for election expenses. Besides, he spent Rs. 40 lakhs in order to buy votes from his partymen as well as neutral voters. Apart from this, some corporate houses spent Rs. 40 lakhs for his campaign. The expenditure limit prescribed by the election commission was Rs. 25 lakhs then. In his report, he declared Rs. 12.5 lakhs as his total expenditure. The basic logic is that he spent his own money Rs. 40 lakhs for his win and Rs 60 lakhs spent by others. The implication is that he has to recover his cost as well as contribute to the party funds together with favouring the corporate houses. Fortunately he became the minister. This situation facilitates to recover his costs as well as accumulate more wealth. After assuming office, the very first week he was offered a gift of Rs. 5 crores by a corporate house for facilitating a license. Thus, he recovered his costs in multiple terms within a week of his assuming office. Interestingly, after a month, a felicitation was organized by the party in his own constituency. During the felicitation, his supporters gave him Rs, 50 lakhs for party. In fact, the amount was originally contributed by him. Being not accountable, it was said collected from the people of the district. In other words, he received Rs. 20 lakhs for his election and returned to the party as Rs. 50 lakhs within a month. This explains one of the dimensions of the political economy of representative democracy. Subsequently, flow of funds was very liberal as various schemes and developmental projects sanctioned by the government. Being a minister it was not difficult for him to feed his supporters. Finally, the salary and other allowances he would receive for his five-year tenure will come over Rs. 50 lakhs. One can infer from this analysis that the elector can recover his costs in multiplicity.
Case 2: Sundar is very religious and teaching history in his early part of career. He joined BJP for its principles. He served in the party for the past ten years from a volunteer to district secretary. As he hailed from middle class, he is fully dependent on the support of the party during elections. However, he was able to spend Rs. 5 lakhs for his election. He received Rs. 10 lakhs from his party. His friends and some corporate houses spent another Rs. 10 lakhs for the election. Though his spending was within the limits of election commission, he declared his election expenses as Rs. 10 lakhs in total. The party was aware that the Congress had a hold in the constituency and chances for win are very less. However, for the sake of political honour, the BJP had to field the candidate. As expected, Sundar could not win. Ironically, he recovered his costs during the process of election itself. The secret was that what he spent Rs. 5 lakhs as his money was nothing but taken from the party fund as well as the corporate contributions. In other words, he had no financial loss even though he could not receive financial benefits from other ways if he would have won.
Case 3: Tamizhmani has been a member of DMK party since his student days. He organized several rallies and organized meeting to promote the interests of the DMK. He is very close the party president. He won two times in his constituency. He contested third time in the same constituency. Due to alliances of various parties, competition between the groups of parties became tough. He did not receive any funds from the party as he himself rich in spending. He has multiple businesses and is a de facto shareholder in several firms. The assembly elections were conducted during 2006 and the limit of election expenditure was Rs. 10 lakhs. He spent over Rs. 30 lakhs for his win. His supporters and corporate houses spent Rs 20 lakhs for him. In recent days, the expectation of the voters is high. Voters expect money for their votes. This was generated by the party leaders themselves. Hence in each election the practice continues. Apart from distributing money for votes, free gifts of household articles are another exercise. Already, the election manifesto promises several goods and services. The same kind of trend is set by the rival parties as well. After the election Tamizhmani won in considerable margin of votes. He became a minister in crucial sector which promises free flow of funds. Within a month, he approved the procurement of goods from certain companies which funded for his campaign. For this favour, he received a gift of Rs. 70 lakhs. During his five-year tenure he was able to accumulate more than Rs. 20 crores as his fellow ministers revealed. Thus the process of cost recovery and accumulation of wealth became smooth with the principle and practice of representative democracy.