What We Need Is A Comprehensive Law To Regulate Political Parties

Updated: Aug 18 2002, 05:30am hrs
In 1947, five young men of very modest means got together, pulled out a 40-page note book and wrote down the rules and regulations of a new political party. Thus was born the Dravida Munnetra Kazhagam (DMK). It was a poor and struggling party until 1967, when it came to power. Today, it is one of the most affluent organisations in the country. It owns or controls valuable real estate, buildings, trusts and bank accounts. Its members own or control newspapers and the Sun TV network.

In 1972, one of the DMKs most charismatic leaders, Mr. M.G. Ramachandran, left the party because of acute differences with the leadership. Not over ideology or policies. It was over money. MGR dared to ask questions about the partys funds. The irony was that, at that time, MGR was the Treasurer of the DMK! He was promptly thrown out of the party, he formed his own political party, and rode to power on the plank of anti-corruption. The party that MGR founded, the AIADMK, rivals the DMK in terms of wealth. It has also shed all pretensions of being a party opposed to corruption.

Politics and money have never been apart. Indias first political party, the Congress, was the pioneer. All political parties claim to have followed the example of the Congress. For well over 60 or 70 years of its existence, the Congress was virtually blemishless. People voluntarily gave the Congress money, land and buildings. Congress leaders truly held them in trust, and applied them for constructive work (khadi, prohibition, abolition of untouchability). The Tamil Nadu Congress Charitable Trust, established by K Kamaraj, was a fine example of trusteeship and political philanthropy. Congress State units all over the country were encouraged to establish similar trusts and, for the most part, the money and affairs of these trusts were managed with admirable rectitude.

What changed everything was elections. Before 1967, elections were fought on small budgets. The story goes that in 1962 Kamaraj calculated that he needed about Rs 10 lakh for the Assembly poll in Tamil Nadu. Two party members both businessmen were assigned the task of raising the money. Cotton spinning was a flourishing industry. The two men decided to tap the mills and levied a sum of eight annas (50 paise) per spindle, and raised a princely sum of Rs 12 lakh. Each candidate was given Rs 5000 or Rs 10,000 by the party.

That was the Age of Innocence. That Age is dead. Politics, today, is business. The bigger the party, the bigger the business is. Small parties aspiring to become big ( Samajwadi Party, BSP ) have to acquire the fund-raising skills of the bigger parties. Regional parties, confined to one State, face a peculiar problem their fortunes are linked to their performance in that State alone. There is also the absence of trust between the leadership and the members. Will the party give me a ticket and, if it does, will it fund my election expenses are the questions uppermost in the minds of the members. So, while the party builds its fortunes, every member is tempted to build his or her own nest-egg.

How is this done The stock-in-trade of a political party is only political power and, therefore, while the party is in power, it trades in its stock. In the early years, the Congress would give licences to big industrial houses. In return, they would provide funds to the Congress. After the great split of 1970, and with increased political competition, that situation changed drastically. Firstly the Congress, and then the others, realised that it would not do to depend solely on the big industrial groups and that a party must have its own war-chest. The Communist parties are no exception. Over time, they have added economic savviness to their political acumen. Witness the investments they made in UTI, Indias largest mutual fund, even while they denounced capitalist and the capital market!

Amongst the highest net-worth individuals in the country are several political leaders and their immediate families. They take their places along side Mr Ratan Tata, Mr Azim Premji, Mr N.R. Narayana Murthy et al. The crucial difference is that Mr Tata, Mr Premji and Mr Narayana Murthy file income and wealth tax returns and pay their taxes, while most political leaders pay no taxes. It is because our political leaders are so poor that they or their immediate families have to be given petrol pumps or LPG or kerosene agencies. Because the BJP and its sister organisations have to make up for lost time, they have to be allotted prime plots in Delhi at prices which are a fraction of the market price.

This is the reality. It cannot be wished away. There is no return to the Age of Innocence. Politics is and will be business. All that we can hope to do is to put in place adequate laws and rules to regulate the business of politics in order to ensure a modicum of transparency and accountability. There is precious little on the statute books to regulate the affairs of political parties. The Election Commission has laid down some rules but these are purely formal and have no teeth. For example, political parties are required to hold party elections periodically and elect their governing bodies and office bearers.

No party, except the Communist parties, conducts a genuine election within the party. Every party is required to submit an annual statement of income and expenditure, but the Election Commission simply files it away, and there is no scrutiny. What we need is a comprehensive law to regulate political parties. Just as we have a Companies Act to regulate the affairs of companies, we must have a law that will lay down detailed rules to govern the functioning of political parties. The Income Tax Act must visit political parties with the same consequences for breach as it does in the case of companies and individuals. We also need a body like the Company Law Board to oversee the functioning of political parties and resolve internal disputes. Just as corporate governance has become a big issue, governance of political parties must also be raised as an important issue. Because, if we have poor governance in our political parties and if they do not observe any principles or ethics, the governance of the country will also descend to more abysmal levels.