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FW: Election expenditure and corruption

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From: "Dr Jayaprakash Narayan" <loksatta@satyam.net.in>
To: "Gopal Saraswat" <saraswat@erols.com>
Subject: Re: Election expenditure and corruption
Date: Tue, Mar 20, 2001, 3:53 AM

Dear Sri Gopal Saraswat,

Thanks for your email. I have never argued that high election expenditure is
the sole cause of corruption. The issues are more complicated. High
undisclosed and illegitimate election expenditure makes it impossible to
sustain honesty in public life. Even otherwise honest persons will be
compelled to resort to corruption for survival in office. Once such a
situation is reached, corruption becomes endemic and pervasive it is hard to
limit corruption to only election expenditure. More importantly, there is a
multiplier effect as money collected increases geometrically with
ever-widening circles of officials and employees involved in rent-seeking
behaviour. Perhaps the most important consequence of this is creating a
climate in which corruption is rewarded and honesty becomes a nuisance. In
that sense, electoral reform is fundamental to any serious attack on

Lok Satta has always argued that corruption is like cancer. Its forms and
causes are many. In addition to electoral malpractices and high expenditure,
centralization of power, lack of transparency, inadequate instruments of
accountability, absence of effective mechanism to punish the corrupt and
political control of crime investigation are the chief causes of corruption.
All these need to be addressed through governance reforms. Lok Satta has
been championing all these institutional improvements. However, as a
strategy, we should focus on a clearly defined and a easily understood goal,
and link the other reform objectives with it. Therefore Lok Satta has made
electoral reform central to the governance reforms agenda. It is obviously
not an exclusive agenda, and several components are needed to correct the
distortions in our governance system.

The real issue is, no matter what the answers are, they have to be
implemented by elected politicians. Politicians elected through a distorted
and corrupt process have no incentive to make the system clean and fair.
More importantly, decent, competent and public-spirited citizens have no
real chance of success at the hustings under our current electoral system.
Only those who spend abnormal amounts of money and deploy muscle power in
abundance can win elections most of the time. Big money does not guarantee
victory, but lack of big money almost certainly guarantees defeat.
Therefore, in order to ensure election of the best citizens to public
office, electoral reform becomes critical.

Electoral reform does not mean either unreal and unimplementable caps on
election expenses or state funding. Lok Satta strongly advocates strict
disclosure norms and compulsory auditing with severe penalties for
non-compliance or abuse of money power. This should be coupled with tax
incentives for campaign contributions. State funding, if any, may have some
role, but only after there is complete transparency in funding and
utilization, and after effective regulation of political parties to make
them democratic, open and transparent. Real electoral reform, however, lies
in moving towards a system of proportional representation. As long as
individual candidates in the FPTP system have the incentive to spend
abnormal money and resort to malpractices to win, and once they win, they
can indulge in the power game at will, there will be serious electoral fraud
and corruption. We should shift from the present FPTP system and have a
mixed-system as in Germany, which combines the best feature of FPTP and PR.

Decentralization of power to local governments is critical to reduce the
number of links in the chain of decision making, to effectively combine
authority with accountability, and to make the citizen see what is happening
to public money and what are the consequences  of misgovernance and
corruption. Then, and only then will the poor value their vote more than the
money they are offered on election day. To day many people sell their vote.
It is a rational response to an irrational situation. As voters realize that
the outcome of elections doe not really change anything, they are tempted to
look for short-term monitoring gains. In a decentralized government the
voter understands his long-term stakes, and is less likely to be induced to
vote for money.

One last point. Laloo Yadav did not set out to steal public money or indulge
in corruption. He was a great emergency hero who fought against tyranny. His
early record in power was quite decent. The compulsions of present day
politics made him what he is today. Once you indulge in corruption for
survival, corruption for personal gain is the next logical step for many
people. That is why we need to first remove the alibis for corruption.

As I stated before, there is no substitute to decentralization of power,
right to information, instruments of accountability and effective mechanism
to punish the corrupt so that the risk of corruption is high and reward is
low. Each of these is a necessary condition, but not sufficient. It is not
enough to reduce involvement of politicians and bureaucrats in economic
decision making. If conditions which compel or promote corruption remain, it
will continue to exist, but in different forms. The sovereign areas of
government functioning will be increasingly corruption-ridden, and the
citizen will be harassed even more severely on matters of life and death. It
is no accident that the liberalization preocess led to new forms of
corruption. There is now the one-time big corruption to kill the golden
goose. Power purchase agreements or privatization of PSUs are the favourite
sources of corruption now. Corruption in defence purchases has probably
increased, as defence is always going to be with government, and national
security is a holy cow. More dangerously, political and bureaucratic links
with criminal gangs and mafias have now become stronger. You can never take
away the power of policing and justice administration from government.
Corruption can be curbed only by an all-out assault on several fronts.
With regards,

Dr Jayaprakash Narayan
Campaign Coordinator

----- Original Message -----
From: "Gopal Saraswat" <saraswat@erols.com>
To: <fonderef@hd1.vsnl.net.in>
Cc: "AFI Staff List" <afi-staff@americanfriends.org>
Sent: Saturday, March 17, 2001 10:19 PM
Subject: Re: Election expenditure and corruption

> Let us examine Dr. Jayaprakash Narayan's claim that high election
> expenditure is the cause, and not the consequence, of corruption.
> Under this theory, lowering election expenses for candidates will
> lead to lower corruption. Since caps on election expenses are
> likely to be largely ignored or circumvented, given the rampant
> corruption in the system, the logical solution resulting from
> this theory is the public funding of elections.
> Let us apply this theory to Laloo Prasad Yadav. He is alleged to
> have stolen 10,000 crores from the public treasury. Going by Dr.
> Narayan's theory, he had to do so because he had to spend 1,000
> crores to get elected. Now, what would have happened if public
> funds had been used to finance elections ? For argument's sake,
> let's say 90 percent of the cost of elections were funded through
> taxes. Would Laloo then have stolen only 1,000 crores ? In other
> words, did Laloo steal 10,000 crores because that is the maximum
> he could get away with, or did he steal that amount because it
> was a fair return on his election expenses ?
> May I suggest that Dr. Narayan has it backwards ? People are
> willing to spend 1,000 crores to win an election because they
> know that they can steal 10,000 crores if they win. If you offer
> them that 1,000 crores from the public treasury, they will pocket
> it, and still steal that 10,000 crores. They will steal it
> because it can be stolen. And no matter how much tax money is
> spent on elections, those who plan to steal will always manage to
> outspend those who don't.
> The real solution is to reduce the opportunities for corruption,
> by reducing the involvement of politicians and bureaucrats in
> economic decision making.
> Sincerely,
> Gopal Saraswat
> American Friends Of India
> http:\\www.AmericanFriends.org

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