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Campaign finance—what really matters?

LiveMint logoLiveMint 27-03-2017 Jessica Seddon

The Finance Bill 2017 upped the ante on campaign finance reforms by eliminating caps on corporate contributions and implementing electoral bonds in a sweep of procedural gymnastics. With the first, the nature of competition changes. With the second, the potential for transparency disappears. In the process, a wide avenue has been opened for other quick-fast-fundamental policy change. The commentary has generally been negative and shocked. But there might be a silver lining to find.

Working backwards through the developments—first, the process. Meera Siva’s review of electoral bonds in The Hindu BusinessLine concluded with the sanguine thought that “Nothing is going to change in a hurry…electoral bonds will need amendments made to the Reserve Bank of India Act. We know how long getting the Act together takes!”

Time compressed with the use of Rule 388 to suspend Rule 80 and the decision to test the size of the umbrella that money Bills confer to work things through Parliament without Rajya Sabha concurrence. Rule 80 of the Lok Sabha Rules of Procedure and Conduct of Business restricts amendments to meaningful changes related to the subject matter of the original Bill. Rule 388 allows the Speaker to let any member move that any rule can be suspended for discussion of a particular matter. According to Article 110 of the Constitution, money Bills are “only” supposed to include provisions related to taxes, borrowing, and dealings with the Consolidated Fund of India. Clause (g), however, gives the requisite opening in the fence by allowing “incidental” matters to be included without removing the money Bill status. We may hear more on the meaning of “incidental”.

Second, transparency. Electoral bonds are essentially specific-purpose bearer cheques that allow citizens and domestically controlled companies to give “accounted for” money anonymously. The anonymity allows people and companies to give freely without fear of retribution, but also removes the hope that a shift towards “white” financing would allow civil society to trace fund flows and thus influence possible quid pro quo arrangements.

The blow to transparency has gotten most of the headlines, but may be the least significant of the three developments. Transparency is supposed to clarify financial relationships. Media and civil society are supposed to highlight and bring these links to light. Voters are expected to temper their political behaviour to punish those who seem to be bought, and their consumer behaviour to punish those who seem to do the buying. Even where the first two parts work reasonably well, however, there is little evidence that citizens change their practices.

The US, for example, has (relatively) astounding levels of information about campaign finance links as well as active and sophisticated processing, including visualization and dissemination in various media, languages and formats. People—and candidate attack ads—express concern about the murk. But at the end of the day, what one can buy with the money is generally enough influence to overcome the stain of where it (visibly) came from. I’d love to see empirical analysis to the contrary.

The effect of lifting electoral contribution caps is likely to have a far more serious effect on political competition and the prospects for dissenting voices. The most obvious (and oft-made) projection is that it will reinforce incumbent advantage by removing all restraint on donations to those with the power to return the favours. However, removing the limits on donations also opens up the only visible chance for a wild card new entry into Indian state or national politics.

It would take an enormous amount of money to mount a credible, policy-relevant challenge to the incumbent majorities in various states and levels of government. No quick, low-cost social media-driven mass campaigns in a country that is still becoming digital; no rapid on-the-ground-shaking-hands-and-kissing-babies barnstorming with geographic distance amplified by poor infrastructure. No quick market-research-into-scientific-strategy without the money to invest in one’s own data.

The returns on investment require a big initial bet on more than just a candidate. The parliamentary political system, and particularly India’s version of it, means that individual lawmakers have limited agenda-setting power, almost no ability to represent constituencies rather than party platforms, and negligible prospects for effecting change. I’ve written about this elsewhere and in earlier Mint columns. In this context it means that small bets on change have a return of approximately zero.

The kind of money required to get over these entry barriers is easier to raise from a few than from a coalition. One of the less-acknowledged consequences of the 2010 Citizens United decision in the US, a court ruling that effectively removed caps for corporate donations, was an increase in competition from candidates with new ideas and voices. Lee Drutman of the Campaign Finance Institute shows that the number of competitive Republican primaries, in which challengers won more than 25% of the vote, more than doubled from 20 to 50 between 2008 and 2014. These candidates were the far right kind that many self-appointed champions of free and fair elections do not particularly sympathize with—but they were, nonetheless, new voices.

And in the end, that, the preservation of openings, the prospect of continued electoral competition within the white economy, may be the silver lining to find.

Jessica Seddon is managing director of Okapi Research and Advisory and visiting fellow at IDFC Institute. She writes fortnightly on patterns in public affairs.

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