Black money and politics
People expect too much of
their politicians. They wish
them to be clean, moral, ethical,
honest, upright, truthful and saintly,
if not saints. In a word, people want
their politicians to be all that they
themselves are not. This is an attitude
we have inherited from a generation
of politicians who actually fit this bill.
Early public life in India did not
require much money. The times were
simple then and participation in
public causes was voluntary,
spontaneous. The first generation of
public leaders comprised mostly
journalists, judges and teachers. They
often spent their own money for
public causes, such as printing and
distributing pamphlets, resolutions,
etc., for protest meetings and rallies.
That was the case from the 1883 Ilbert
Bill protests to the founding of the
Congress in 1885, when organisers
charged a membership fee from
delegates, a convention which
continued largely until Gandhi’s
ascendance in the Congress at Nagpur
Gandhi then became the first big time political fund raiser. He called for contributions at public meetings and did not hesitate to seek and collect donations from the rich and the wealthy. Many businessmen, like Jamanalal Bajaj, became members of the Congress and contributed liberally to its funds. Gandhi was an innovative fund raiser. His four anna membership is an instance of his innovative ways. He did not hesitate to ask women to contribute gold jewellery for national freedom. In later life, when he had become popular enough, he even charged fees for autographs. All money so collected went to the Congress treasury.
The need for funds under Gandhi grew as the Congress expanded its activities and the party developed into a formal political organisation with regular office-bearers. The Congress leaders began to draw funds from the party treasury for organisational and political work, for travel, publications, etc. The Congress leaders of that generation were, however, scrupulous people with a high-minded sense of integrity in public life. Every one of them maintained meticulous accounts with receipts for even the smallest expense. Instances of malfeasance or misuse of organisational funds did occur even in those days but these were few and were strongly looked down upon.
Things changed after Independence. The needs for funds changed. State leaders and factional satraps now needed funds to rehabilitate their colleagues who had spent years in jails and whose families had suffered much deprivation during the freedom movement and who could not find jobs on coming out of jails. Congress leaders at various levels began looking for ways to help them. One way was to set up hospitals, dispensaries, schools and colleges, libraries, and trusts named after the national leaders. All these needed funds.
Those days because of scarcity conditions rationing was in force. That in many places became an avenue for making money. Allotment of ration shops and release of foodgrains, cloth, etc., were skillfully manipulated. Businessmen and manufacturers and shopkeepers all indulged in black marketing and hoarding, buying political protection. The news of such wrongdoing reached Gandhi, who protested to Jawaharlal Nehru and Sardar Patel. “Some people are even saying that the rule of the English was better than that of the Congress now,” he wrote to Patel in one letter.
The situation got worse with the beginning of post-independence competitive electoral politics in 1952, especially in the factional politics within the Congress itself. Use of money to advance personal and factional interests became widely pervasive. Even in the very first general election, money began to get important, though it would still be quite some years before its use would become worrisome. The establishment of the license, quota and permit raj that Nehru’s industrial policy of 1956 introduced at national and state level institutionalised corruption. This phase continued until the ascendance of P V Narasimha Rao and the opening of the economy. Big industry and business and the political and bureaucratic bosses at all levels became the major beneficiary of the license raj.
What was bad about the license raj was not that it bred corruption but that the licenses obtained through this corruption contributed but little to investment in new industries or expansion of the old ones. During this period, licenses were bought not for raising production but mainly for controlling production to make monopoly profits out of scarcity. Industrialists cornered licenses and never implemented them. Vested interests were created in creating and continuing conditions of scarcity and shortages. As the Government restricted production capacities, incentives were created in the economy for avoiding implementation of manufacturing licenses. Industry and businesses made huge profits in a scarcity market by selling things in black. A considerable part of these profits found their way into the pockets of politicians.
It is only when a new generation of young and ambitious entrepreneurs came up on the scene during the Indira Gandhi’s time that the stranglehold of the blackmarketeers was somewhat broken. This new generation used the ways of the old to smash monopolies. As they grew, so did their contributions to political parties, mainly the Congress, though. Other ways funds were raised for politics included quid pro quo for government contracts for development projects like building of roads, bridges, irrigation canals, etc. State electricity boards were treated as milch cows.
Things changed after Independence. The needs for funds changed. State leaders and factional satraps now needed funds to rehabilitate their colleagues who had spent years in jails and whose families had suffered much deprivation during the freedom movement and who could not find jobs on coming out of jails. Congress leaders at various levels began looking for ways to help them.
Then came the social and political changes of the 1980s when
politics began fragmenting and
numerous local parties emerged in
different states. As politics became
more and more destabilised and
uncertain, big business and industry
felt reluctant to set up manufacturing
facilities outside a few select areas.
The economies of the States began
declining, leading to dwindled avenues of raising funds for political
activity. It was then that land deals
and liquor licenses and manipulation
of excise duties became prevalent.
That is when the D P Yadavs, Venod
Sharmas and Ponty Chadhas began
This has proved to be the most regressive way of raising political funds. Favours done to big and industry and business of Kolkata and Mumbai was in a sense progressive because these deals led to growth of economic activity whereas fund raising through liquor and land deals serve only to de-accelerate economic growth. Ponty Chadha was a symbol of that regression.