Congress’s Crowdfunding: Back to the Future

Mobilising political funding directly from the people using UPI has radical possibilities for transparency, accountability and competitiveness

Congress's crowdfunding: Back to the Future

Congress party has launched a crowdfunding drive, in which it would seek money directly from the people, as it finds most institutional political funding, disbursed by industrial houses via electoral bonds, going to the Bharatiya Janata Party. This is an extremely welcome development that could radically alter the character of politics in India, going beyond providing succour to the Congress’s straitened finances.

Politics of the people, by the people, for the people, and funded by moneybags – this has been the standard operating framework political parties in India. Even parties that started off financing themselves with small contributions from willing donors, who saw them as champions of the people’s cause, have regressed, over time, to procuring the bulk of their funds from the well-heeled few, mostly industrialists and rich traders, who have to be on the right side of the government machinery, even if they seek no special favours.

The Kharge Model

Launching the campaign, party president Mallikarjun Kharge said, “if you work only by depending on the rich people, then you have to follow their policies.” Should we admire Kharge, for his candour as to for whom the Congress had been working till now, when it depended on rich people for its funds, or should we wonder at the competence of a party leader who permits such an inference to be drawn from his awkward choice of words?

Not only has politics relied on funding drawn from the rich, such funding has traditionally been made anonymously and off the books. The funds have to be off the books for two kinds of reasons. One set relates to political activity of the kind that cannot be openly owned up, such as inducing defections, distributing cash and liquor before polls and renting crowds for big rallies. You cannot really make payments for MLAs to switch their loyalty after getting elected, using funds that come in via electoral bonds. Another kind of reason for keeping political funding off the books is that, sometimes, it comes as payments for favours rendered, often at the expense of a rival industrialist.

Either way, once the contribution is off the books, the donor also has to stay under wraps, otherwise, he would be admitting to having cooked his books to generate unaccounted money, from which political contribution are made. We no longer live in GD Birla’s relatively simple times: listed companies are, these days, scrutinised for integrity of their accounts, concealed profits depress market capitalisation and invite investor hostility, resignation by auditors, and dumping of shares by ethical investors and managed pools that style themselves as Environmental, Social and Governance champions.

Taking a leaf out of Obama’s book?

The crowdsourcing campaign by the Congress, compelled by its the straitened finances, might change all this, and for good. In a rich country like the US, politicians who lacked deep-pocketed backers took to crowdsourcing of funds, and to everyone’s surprise, ended up collecting more funds than their sponsored rivals. Obama is a case in point. Even if this does not quite happen in India, crowdsourced political funding would build organic relationships between the people and parties and party workers. This would be a qualitative improvement, and make politics more representative and accountable.

How the Communists did it

It is not as if this is the first time parties have procured the means of political expenditure directly from the people. The Congress itself has, during phases of the freedom movement. The first non-Congress government to be formed in India was in 1957, in the first assembly election held after formation of the Kerala state in 1956. The Communists formed that government, without support from any rich industrialist, trader or landlord, who tended to see the Communists as their class enemies. Political spends were modest, and could be financed out of small contributions from party supporters. The contest was essentially driven by public perceptions as to which party stood for advancing the interests of the mass of people, rather than the interests of a powerful few.

Of course, once the Communists became the ruling party and stayed continuously in power, it began to be funded by industrialists and traders, just like any other ruling party.

While industrialists funded the party championing the freedom movement with no particular favour or partisan interest in mind, things changed after Independence. Industrialists parted with regular, considerable sums of money, in order to keep politicians in good humour, in return for specific favours or because they gave in to extortion. Often, granting specific favours to particular industrialists entailed suborning governance, with the collusion of civil servants, public enterprise managements and bank chiefs. Once these worthies bend the rules for their political masters, they feel free to bend the rules on their own account as well, with elected representatives lacking the moral authority or the incentive to hold them in check. Corruption becomes generalised. Political funding becomes the route to building illicit personal fortunes.

Funding politics directly by the public, every paisa automatically accounted for, would do a lot to clean up politics itself, and to make parties accountable to the people.

UPI Integration will be key

With the Unified Payment Interface (UPI) now widely used by the public at large, there is no justification for continuing with the rule that contributions above Rs 20,000 alone need to be made in a form that can be recorded -- by cheque, given the technology available when the rule was made.

Software automatically logs every small contribution, even one-rupee donations, when made by UPI, with total transparency as to who made the payment and when.

Putting paid to anonymous donations would end the practice of registering small political parties for the sole purpose of laundering black money, for a fee. You give party X Rs 4 crore, say, in cash, it will give you Rs 3.6 crore back by cheque, probably through multiple cheques as alleged payments for fictitious but legitimate procurement of goods and services by the party.

Electoral bonds are a double fraud on the people. The apparent fraud is that it conceals from the public who funds a particular party, essential for clarity on whether a particular policy owes its specific tonal modulation to the old rule that who pays the piper calls the tune. The less apparent fraud is the implicit suggestion that political funding has now been cleaned up, except for that element of anonymity, as the contributions made through electoral bonds go through banking channels and do not involve hoards of black money. This, of course, distracts attention from the ongoing funding off the books, made to finance activity too dirty to be accounted for.

Let all parties source all their funds through crowdfunding, making use of UPI.