UPAs agenda till 2014

Updated: Nov 27 2012, 08:59am hrs
State funding of elections and regulations in the real estate sector can be the big-ticket reforms in governance for the UPA-2

Tehseen Poonawala

With less than two years to go for the general elections, the Congress-led UPA at the Centre is perhaps fighting its toughest battlechanging the perception of being the most corrupt government to have ever governed the country. While charges of wrong-doings may be exaggerated and may perhaps not withstand legal scrutiny, there is no denying that it has, in some measure, taken a toll on the Congress. The urban middle class support that propelled the Congress party to cross the 200-seat mark, the highest figure that any party has managed over the last decade, seems to be the most disillusioned today. However, neither the principal opposition party nor the newly formed civil society-turned-political party, which claims to be a product of the collective soul searching of India on the issue of corruption, has an answer to the systemic changes required to cleanse the system.

There is no doubt that there exists an unholy nexus between politicians, real estate developers and corporate entities, thus leading to an influence on policy formulation and governance. Crony capitalism is a reality, with those close to people in power amassing huge sums of wealth in a short span. The money made by these entrepreneurs is then used in elections to ensure that candidates most suitable to them win. This current, mutually-beneficial system of funding of those candidates, who then make policy and executive interventions in favour of their sponsor, is the biggest countervailing factor in the emergence of democratic India as an honest state.

Elections in India are largely fought with black money. One hears of large sums of money being doled out to buy votes. There is almost a rate-card of votes in placevotes from slum-dwellers in a state like Maharashtra may cost as high as R1,000 a vote, and for a place like Bihar the asking rate would be much less. Naturally, a candidate who invests so much capital will look for recovering costs. The rot of corruption in our polity and system not only begins at the electoral stage but is furthered by it. But if we want an honest set of managers running the democratic system in India, we have to revamp the selection process of these managers by undertaking holistic electoral reforms.

And herein lies an opportunity for the ruling dispensation to improve its image by seriously considering state funding of elections along with regulations in the real estate sector. The state funding of elections/parties will provide financial independence to the political parties and candidates and that, in turn, will reduce the incentives to raise funds through corrupt means. Public financing will also level the playing field, which means poorer candidates can challenge well-funded ones. The state funding of elections should be accompanied by strict accounting procedures. Swift and stern action should be taken against candidates or parties found violating the rules. This will also encourage honest people to join the electoral battlefield and improve the image of the polity.

Various figures suggested that India spent close to around R10,000 crore during the summer elections of 2009. Of this, it is estimated that a fourth, or R2,500 crore, was spent as bribes or unofficial money in cash to buy votes. By introducing state funding of elections, this amount will be greatly curtailed. India today is almost a $2 trillion economy; therefore, if we were to go by the above figure of R10,000 crore, it is approximately 0.125% of our GDP. This money can be set aside, directly under the Election Commission, to carry out elections. This would also not cause a strain to our economy.

Another change that will help cleanse the system and bring credibility to the government is regulations in the real estate sector. Indias black money is not hidden in Switzerland, rather it is invested in real estate (mostly land). The real estate sector in India constitutes about 11% of the GDP. It is no secret that anything from 40% to, in some cases, 70-80% cash is used in the purchase of property. Therefore, investment in property is an easy method of parking unaccounted money, as a large number of transactions in real estate are under-reported, thus leading to unreal prices and unaffordable homes. No wonder, most politicians enjoy a cozy relationship with those in the real estate. As a result, the costs of houses in Delhi and Mumbai are on par with those in New York and London. By bringing in regulations, the government can attack the problem of black money. It will also bring the costs of houses down, giving a large section of citizens the opportunity to buy a home. Which government would not like to go before its electorate with an achievement that includes delivering affordable homes! This also helps the ruling UPA snatch from the principal opposition one of their most vocal election issues, and the black money that otherwise is invested but unaccounted for can be brought into the system, thus boosting the GDP and creating equitable growth.

It would be naive to think that only these two steps will cleanse the system. State funding of elections must be accompanied by internal democratisation of political parties too. It would be better suited for the wellness of our democracy that substantive electoral reforms get more space in public domain rather than the allegations-a-week brand of effervescent discourse. Similarly, simply bringing in regulations in the real estate sector will not wholly solve the problem of black money. This must be accompanied by reforms in the tax laws like introducing the DTC, GST, etc. Quick and demonstrable action against those found violating the rules and swift delivery of justice (read judicial reforms) are steps that eventually have to be taken.

The UPA-1s RTI has ushered an era of accountability in governance, hitherto unknown in this country. Fortunately, good political sense prevailed and the government refrained from diluting certain provisions of this Act. In the fight against graft, this step would have been regressive. State funding of elections and regulations in the real estate can be the big-ticket reforms in governance for the UPA-2. It will certainly help improve the image of the government and, with a combination of the right social measures like Right to Education, the Food Security Legislation and Aadhara technology-driven, efficient delivery platformthe UPA can still muster enough ammunition to take on the opposition on the issue of corruption-free governance in 2014.

Tehseen Poonawala is a political commentator