Home | Feedback | Contact Us
Legal Articles  
An analysis of the current initiatives in monitoring of election related expenditure

Raju Narayana Swamy I.A.S  analyses the current initiatives being undertaken by the Election Commission of India in monitoring election related expenditure in the light of the currently going on assembly elections in Tamil Nade, West Bengal, Assam, Puducherry and Kerala.
Introduction
Against the discouraging backdrop of a fundamentalist and acrimonious partition of the subcontinent, a hasty knocking together under one sovereignty of former British-administered provinces and barely assimilated erstwhile princely states and one of the most outrageously hierarchical societies in the world, India bravely chose a secular universal adult suffrage democracy to have every one participate in governance, in preserving an uniquely diverse social ethos and most of all, in keeping the country together. (J.M. Lyngdoh). Democracy in India has not only to survive, it has to thrive in the interest of our country and our people. Free, fair and impartial elections are the bedrock of a democratic set up. Curbing money power in elections is a must to ensure the same. To quote Sri. N. Vittal, former Central Vigilance Commissioner, “Black money is the oxygen for corruption and corruption is the oxygen for black money. A commitment to combat corruption should figure in any strategy to establish good governance in the country.”

As a Research study of the secretariat of the Lok Sabha points out, “Parliament is expected to reflect the social diversity of the society. Economically weaker sections should not face disadvantage.” As the Hon’ble Supreme Court observed in Kanwar Lal Gupta vs Amar Nath Chawla & Ors in the judgement delivered on 3 October 1974, “The democratic process can function efficiently and effectively for the benefit of the common good and reach out the benefits of self-government to the common man only if it brings about a participatory democracy in which every man, howsoever lowly or humble he may be should be able to participate on a footing of equality with  others… The small man’s chance is the essence of Indian democracy and that would be stultified if large contributions from rich and affluent individuals or groups are not divorced from the electoral process.”

Enabling provisions in Representation of People Act 1951 and Conduct of Election Rules 1961

The thrust of political finance reform in democracies world wide had four main characteristics.
  • public funding, full or partial, of elections

  • limits on expenditure (including sublimits on particular expenditure)

  • limits on contributions from individuals and organizations

  • reporting and disclosure of election, party and candidate finances in some form.
[Namit Oberoi]

The legal position on expenditure in the case of India is outlined in section 77 of the Representation of the People Act 1951. “Every candidate at an election shall either by himself or by his election agent keep a separate and correct account of all expenditure in connection with the election incurred or authorized by him or by his election agent between the date on which he has been nominated and the date of declaration of the result thereof, both dates inclusive.”

Section 78 provides for lodging of account with the district election officer.

“Every contesting candidate at an election shall within 30 days from the date of election of the returned candidate, ….. lodge with the District Election Officer an account of his election expenses which shall be a true copy of the account kept by him or by his election agent under Section 77.”

Incurring or authorizing of expenditure in contravention of Section 77 is deemed to be a corrupt practice U/S 123(6) of the R.P. Act.The Hon’ble Supreme Court of India in L.R. Shi Varamagowde vs P.M. Chandrasekhar has ruled that the Election Commission of India can go into the correctness of the account of election expenses filed by the candidate and may disqualify the candidate for three years U/S 10A of R.P. Act 1951 if he/she fails to lodge the account at all or lodges incorrect account or untrue account of election expenditure. Not submitting a true day-to-day account of expenditure can thus result in disqualification of a candidate even if he has won the election. Exceeding the prescribed ceiling of expenditure can be a ground for an election petition against a winning candidate.Each candidate is required to maintain a day to day account of his election expenditure in a register given to him by the Returning Officer at the time of filing of nomination papers. The particulars have been laid down in Rule 86 of the Conduct of Election Rules, 1961 that

“The account of election expenses to be kept by a candidate or his election agent under Section 77 shall contain the following particulars in respect of each item of expenditure from day to day, namely:-
  1. the date on which the expenditure was incurred or authorized

  2. the nature of expenditure (as for example, traveling, postage or printing and the like)

  3. the amount of expenditure

    1. the amount paid

    2. the amount outstanding

  4. the date of payment

  5. the name and address of the payee

  6. the serial number of vouchers, in case of amount paid

  7. the serial number of bills, if any, in case of amount outstanding

  8. the name and address of the person to whom the amount outstanding is payable.
A voucher shall be obtained for every item of expenditure unless …. it is not practicable to obtain a voucher.”

The Election Commission has clarified that in fairness to the contesting candidates they will be permitted to file returns of election expenses in English, Hindi or the local language(s) in which the electoral rolls are printed. Rule 87 stipulates that the district election officer, shall, within two days from the date on which the account of election expenses has been lodged by a candidate under section 78, cause a notice to be affixed to his notice board specifying the date on which the account has been lodged and the time and place at which such account can be inspected. As per Rule 88, any person shall on payment of a fee of one rupee be entitled to inspect any such account. Rule 90 provides the maximum election expenses (which has now been hiked to Rs 16 lakh per assembly constituency for Kerala elections vide notification dated 23.2.2011).

SI No. Name of State or Union Territory Maximum limit of election expenses in any one
1 STATES
Parliamentary Constituency
Assembly Constituency
1 Andhara Pradesh
40,00,000
16,00,000
2 Arunachal Pradesh
27,00,000
10,00,000
3 Assam
40,00,000
16,00,000
4 Bihar
40,00,000
16,00,000
5 Goa
22,00,000
8,00,000
6 Gujarat
40,00,000
16,00,000
7 Haryana
40,00,000
16,00,000
8 Himachal Pradesh
40,00,000
11,00,000
9 Jammu& Kashmir
40,00,000
-
10 Karnataka
40,00,000
16,00,000
11 Kerala
40,00,000
16,00,000
12 Madhya Pradesh
40,00,000
16,00,000
13 Maharashtra
40,00,000
16,00,000
14 Manipur
35,00,000
8,00,000
15 Meghalaya
35,00,000
8,00,000
16 Mizoram
32,00,000
8,00,000
17 Nagaland
40,00,000
8,00,000
18 Orissa
40,00,000
16,00,000
19 Punjab
40,00,000
16,00,000
20 Rajasthan
40,00,000
16,00,000
21 Sikkim
27,00,000
8,00,000
22 Tamilnadu
40,00,000
16,00,000
23 Tripura
40,00,000
8,00,000
24 Uttar Pradesh
40,00,000
16,00,000
25 West Bengal
40,00,000
16,00,000
26 Chattisgarh
40,00,000
16,00,000
27 Uttarakhand
40,00,000
11,00,000
28 Jharkhand
40,00,000
16,00,000
II.       UNION TERRITORIES
1 Andaman & Nicobar Islands
27,00,000
-
2 Chandigarh
22,00,000
-
3 Dadra & Nagarhaveli
16,00,000
-
4 Daman & Diu
16,00,000
-
5 Delhi
40,00,000
14,00,000
6 Lakshadweep
16,00,000
-
7 Puducherry
32,00,000
8,00,000

It also deserves special mention that two former Chief Ministers are facing
disqualification proceedings from the Election Commission on expenditure related issues.

Provisions in the Indian Penal Code

Sec 171 B stipulates that whoever gives a gratification to any person with the object of inducing him or any other person to exercise any electoral right or of rewarding any person for having exercised any such right commits the offence of bribery. Sec 171F prescribes the punishment for undue influence or personation at an election. Sec 171H deals with illegal payments in connection with an election whereas section 171 I states that “whoever being required by law for the time being in force or any rule having the force of law to keep accounts of expenses incurred at or in connection with an election fails to keep such account shall be punished with fine which may extend to five hundred rupees.”

Exclusive Bank Accounts to be opened

From the general elections to the Bihar Legislative Assembly in 2010, the Election Commission has embarked on a new experiment as regards monitoring of election expenditure. It is stipulated that each candidate shall open a separate bank account for election expenditure. This account shall be opened at least one day before the date on which the candidate files his/her nomination papers before the Returning Officer. The account number of this bank account shall be communicated by the candidate in writing to the Returning Officer. All election expenditure shall be made by the candidate only from this account. All money to be spent on electioneering shall be deposited in this account, irrespective of the source of funding. A certified copy of the account statement of this bank account shall be given by the candidate to the District Election Officer along with the statement of account of expenditure maintained by him/her. If a candidate is contesting election from more than one constituency, he is required to maintain and lodge a separate account of his election expenditure in respect of each such constituency.

The concept of expenditure sensitive constituencies has also been newly introduced. On the basis of past history, profile of the constituency and other developments, the Chief Electoral Officers have been directed to identify the constituencies which are prone to high expenditure and corrupt practices. The candidates have also been directed to furnish affidavits along with nomination paper indicating the following details as well (1) PAN of candidate, spouse and dependents (2) movable and immovable assets, purchase price and development cost of immovable property, approximate current market price of asset (3) liabilities (government dues, loans from banks, financial institutions etc.)

Expenditure Observers and Micro observers

In most of the elections held in 2009 and 2010, there was only one kind of observer – general cum expenditure, rolled into one. Bihar assembly elections saw a radical change in the mechanism of monitoring election expenditure through the reintroduction of the concept of expenditure observers with a view to keep a strict vigil on surreptitious and discursive ways of spending money to influence voters. Expenditure observers are appointed under Section 20B of the RP Act 1951. Expenditure micro observers are appointed by the expenditure observer from a list of Central government employees provided by the District Election Officer. Ideally there should be at least one expenditure micro observer per candidate. Video surveillance teams, video viewing teams, expenditure monitoring cell and complaint monitoring system are all parts of the new mechanism to monitor election expenditure. It is stipulated that the expenditure register shall be produced before the expenditure observer for inspection at least three times during the campaign period by the candidate or his election agent. This schedule shall be given wide publicity through the press.

Legal and illegal election expenditure

Election expenditure can be broadly classified into categories:-
  1. expenditure permissible under law (public meetings, vehicles, banners, posters etc)

  2. expenditure not permitted by law (money, liquor etc distributed to voters with intent to influence voting)
The aim of expenditure monitoring is therefore two fold. As regards the first category, it must be ensured that the expenditure is truthfully reported. For instance, as regards rallies, the candidates are required to submit an expenditure plan along with the application for permission. As regards vehicles, details of all vehicles used for election campaign (including two wheelers and cycle rickshaws) are required to be furnished by the candidate. If a vehicle is found being used for campaigning and its details have not been furnished to the authorities, it shall be considered unauthorized campaigning for the candidate and will attract Section 171 H of the IPC and the expenditure on this vehicle will be added while considering the election expenses of the candidate. As regards the second category, the Election Commission of India envisages that the system must be robust enough to catch such expenditure as well. It must not only be included in the account of election expenditure, but also action must be taken against the errants vide the relevant legal provisions (which may range from lodging of FIR to filing of complaints before the competent magistrate). These illegal items of expenditure include
  1. appointing booth wise agents to purchase floating votes

  2. donations to clubs to influence its members

  3. rented crowds for party meetings

  4. presence of candidates in mass weddings and feasts where gifts are given on their behalf

  5. issue of cash coupons and coupons for free purchase of TV, bike etc.
The above list is illustrative and by no means exhaustive.

Seizure of undisclosed cash

Gratification of voters is generally done out of undisclosed income. Any undisclosed cash can be seized under the Income Tax Act (Sec 132). If it is out of illegal foreign exchange, the Enforcement Directorate can seize. If it is suspected to be for bribery, police authorities can seize it. Carrying cash is not illegal under any law and is not anathema to regular business. But it can be seized if its end use is suspected to be for an illegal purpose. As the Hon’ble Supreme Court ruled in Rajendran Chingaravelu vs R.K. Mishra (Civil Appeal No 7914 of 2009), “any bonafide measures taken in public interest and to provide public safety or to prevent circulation of black money cannot be objected as interference with the personal liberty or freedom of a citizen…. The carrying of a huge sum itself gives rise to a legitimate suspicion, the intelligence officers are therefore entitled to satisfy themselves not only that the money is from a legitimate source, but also that such a large amount is being carried for a legitimate purpose.”

In fact, the Hon’ble Courts have contributed to election reforms by encouraging the Election Commission to innovate where there are no legal sign posts to indicate the jurisdiction and the limits thereof (J.M. Lyngdoh). As the Hon’ble Supreme Court observed in Mohinder Singh Gill vs Chief Election Commissioner (1978) ISSC 405 “Once the appointment is made by the President, the Election Commission remains insulated from extraneous influences and that cannot be achieved unless it has an amplitude of powers in the conduct of the elections – of course in accordance with existing laws. But where these are absent, and yet a situation has to be tackled, the CEC has not to fold his hands and pray to god for dwine inspiration to enable him to exercise his functions and to perform his duties or to look to any external authority for the grant of powers to deal with the situation. He must lawfully exercise his power independently in all matters relating to the conduct of elections.”

Keeping in tune with the spirit of these observations, the following actions have been ordered by the Election Commission of India:-
  1. Flying squads placed in such a way that important roads are kept under constant vigil with instructions that unexplained cash of Rs. 1 lakh and above suspected for bribery of voters should be seized

  2. Investigation Directorates to keep surveillance teams at major railway stations, airports, hotels etc.

  3. Key financial brokers, pawn brokers, cash couriers etc to be kept under surveillance

  4. Banks directed to report suspicious cash withdrawals above Rs. 1 lakh.

  5. Hotels asked to report scan reports indicating huge cash being carried by the guest.

  6. Any suspicious deposit of cash in the account of Self Help Groups or non governmental organisations will be monitored so that this route is not misutilised for delivering cash to the voters

  7. Taking note of the fact that in schemes like MNREGS, workers could be paid over and above their fixed wage as bribe, the ECI ordered that disbursement of wages under government schemes should be done strictly by government officials. No party functionary should be present on such occasions.
Benchmarks for expenditure assessment

The District Election Officer shall notify the rates of various items of election expenditure for his district within three days of the announcement of the election. These rates should include hiring charges of loudspeaker, construction of podium/pandal of standard sizes, cloth banner, posters etc. If a candidate feels that the rates notified are not reasonable, he may apply to the District Election Officer in writing within 24 hours of the notification and the District Election Officer shall consider every such application within 24 hours of having received it and pass an appropriate order on it.

Shadow Expenditure Register

A shadow expenditure register shall be maintained by accounting teams for each candidate in the same format in which the expenditure register is maintained by the candidate. It is open to the public as well as candidates. Any discrepancy between the register maintained by the candidate and the shadow expenditure register shall be brought to the notice of the candidate at the time of inspection. The notices so issued and replies received if any shall be duly considered by the District Election Officer in forming his opinion about the truthfulness of the account of expenditure submitted by the candidate after the declaration of result.

Shadow Expenditure Register

Explanation 1 of section 77(1) of the RP Act 1951 declares that

“The expenditure incurred by leaders of the political party on account of travel by air or by other means of transport for propagating programme of the political party shall not be deemed to be the expenditure in connection with the election incurred or authorized by a candidate of that political party or his election agent for the purpose of this subsection.”

Explanation 2 clarifies that the expression leaders of political party means

“Where such political party is a recognized political party, such persons not exceeding 40 in number and
Where such political party is other than a recognized political party such persons not exceeding 20 in number
Whose names have been communicated to the Election Commission and the Chief Electoral Officers of the states by the political party to be leaders for the purpose of such election within a period of seven days from the date of notification….”

If such intimation is not received from the party within the stipulated time, expenditure on travel of such leaders will also be shown to be the candidate’s expenditure. The Hon’ble Supreme Court of India in its judgement in Kanwar Lal Gupta vs Amar Nath Chawla has held that expenditure incurred by the political party which can be identified with the election of a given candidate as distinguished from expenditure on general party propaganda would be liable to be added to the expenditure of that candidate as being impliedly authorized by the candidate. “If a candidate were to be subject to the limitation of the ceiling but the political party sponsoring him or his friends and supporters were to be free to spend as much as they like in connection with his election, the object of imposing a ceiling would be completely frustrated and the beneficent provision enacted in the interest of purity and genuineness of the democratic process would be wholly emasculated.”

In this connection, it may also be noted that the validity of explanation 1 to section 77 was challenged in P. Nalla Thampy Terah v. Union of India. A constitutional bench in the case observed that the petitioner was not unjustified in criticizing the provisions contained in explanation 1 as diluting the principle of free and fair elections. In C. Narayanswamy v C.K. Jaffer Sherief, the Supreme Court observed that “as the law stands in India today, anybody including a smuggler, criminal or any other antisocial element may spend any amount over the election of any candidate in whom such person is interested.” In Gajanan Bapat v Dattaji Meghe, the Supreme Court held that the practice followed by political parties of not maintaining any accounts of its candidates defeats the purpose of explanation 1 to S.77(1) of R.P. Act. Explanation 1 to Section 77 was also at the centre of the issue in the case of Common Cause v Union of India.

The legal position when the leader of a political party covered under explanation 2 to section 77(1) happens to be himself a candidate has been clarified by the Election Commission:-

“When he goes out of his constituency to other constituencies or comes back to his own constituency from other constituencies as a star campaigner, expenditure on his travel from his constituency to others and back would fall within the exempted category. Once he reaches his constituency and travels within his own constituency, expenditure on such travel would be liable to be accounted for by him in his election expenditure.”

The Ground Reality

It is estimated that about Rs. 7000 crores is spent by all major parties and candidates in Lok Sabha and State Assembly elections over a period of 5 years in India. This reality on the ground is exemplified in the words of the former CEC, James Michael Lyngdoh himself, “Every one knows the actual expenditure per candidate, even for an Assembly election, now runs into several crores. In other words, most of the candidates would seem to have committed a corrupt practice under the electoral law and the elections of the winners are apparently liable to be set aside on appeal to the High Court. Unfortunately Indian voters are wined and dined by candidates...... Travel expenses of 40 national leaders on behalf of the candidate of a national or regional party are now excluded from his election expenses. The expense on helicoptering these national leaders alone would run into crores. That this is a permissive step is confirmed by the Revenue Department’s instructions allowing donations to political parties complete tax exemption. The Representation of the People Act needs to be amended to formally enable the Election Commission to question a party whose expenses, including travel expenses on campaigning national leaders in all the contested constituencies is in excess of the funds indicated in the annual audit and to take action if necessary for the deregistration of the party.”

Quoting again from the observations of the Hon’ble Supreme Court,

“Hundreds and thousands of vehicles of various kinds are pressed onto the roads… Millions of leaflets and many millions of posts are printed and distributed or posted all over the country. Banners by lakhs are hoisted. Flags go up, walls are painted and hundreds of thousands of loudspeakers play out the loud exhortations and extravagant promises. VIPs and VVIPs come and go, some of them in helicopters and air taxis. The political parties in their quest for power spend more than one thousand crore of rupees in the General Election, yet nobody accounts for the bulk of the money so spent and there is no accountability anywhere. Nobody discloses the source of the money. There are no proper accounts and no audit. From where this money comes, nobody knows. In a democracy where rule of law prevails this type of naked display of black money by violating the mandatory provisions of law cannot be permitted.. Unless the statutory provisions meant to bring transparency in the functioning of the democracy are strictly enforced and the election funding is made transparent, the vicious circle cannot broken..”

High election expenditure, buying of votes and polling irregularities have become the norm in order to gain electoral advantage in the Westminister model. This high expenditure forces parties and politicians to extort money from a variety of sources, legitimizes corruption, encourages political recruitment of those willing to spend large amounts of ill-gotten black money, discourages public spirited citizens from contesting and leads to a cycle of corruption, greed and extortion which undermines our democracy. Political parties need funds for three activities: election campaigns, inter-election maintenance of their organizations and political activities and support of infrastructure for the parties. [Namit Oberoi].

In this scenario, a shift towards proportional representation in which a party’s representation depends on the overall percentage of votes in each state is worth considering. Such a shift will act as a disincentive to polling irregularities, as any effort of a candidate to gain unfair advantage locally may run counter to the party’s objective of maximizing its vote in a whole state (Jayaprakash Narayan). Perhaps, we also have to take a leaf out of the provisions of the German Law on Political Parties of 1967, Section V whereof creates a statutory obligation upon all political parties to maintain clear and correct accounts, have them audited and submit the same to the President of the German Bundestag. Or from the French experience where it is provided that every candidate receiving State funding shall execute a bond and furnish a bank guarantee so that in case he got less than 8% of total votes polled, he would forfeit his bond. Or from the American experience where despite high cost of electioneering all campaign financing is fully accounted for and disclosed and all expenditure is legitimate and open. It is also high time that we sit back and think about the statistics of Indian and US elections which points out that in purchasing power terms, Indian election expenses are probably five times those in the US, making our per capita expenditure higher – an absurd situation considering our low income per capita (Jayaprakash Narayan).

Conclusion

“If there is continuous community involvement in political administration punctuated by activated phases of well discussed choice of candidates by popular participation, much of unnecessary expenditure which is incurred today could be avoided. Considerable distance may not have to be travelled by candidates nor hidden skeletons in political cupboards tactically uncovered, propagandist marijuana skillfully administered nor violent demonstrations attempted. The dawn-to-dawn multiple speeches and monster rallies, the flood of posters and leaflets and the organizing of transport and other arrangements for large numbers would become otiose. Large campaign funds would not be able to influence the decision of the electors if the selection and election of candidates becomes people’s decision by discussion and not a Hobson’s choice offered by political parties” thus observed the Hon’ble Supreme Court of India.

We have miles to go before we can achieve this ideal goal. Till then, we have no way other than to follow the advice of the Chandogya Upanishad “Yadeva vidya karoti shradhaya upanishadhaha trivisham virothavathi.” It means that if we have faith and conviction and apply our knowledge with deep analytical skills, our action becomes strong and successful. The Indian Constitution does not provide for a formal referendum. But no one can prevent an informal referendum through modern electronic means (J.M. Lyngdoh). Let us therefore join our hands together to strengthen the noble efforts of the Election Commission aimed at curbing money power so that Indian democracy becomes “speaking truth to power, to make truth powerful and power truthful.”
RAJU NARAYANA SWAMY belongs to the 1991 batch of the Indian Administrative Service (IAS) and is the all India rank no 1 in the said batch. He is presently Secretary to Govt of Kerala (Youth Affairs) and Observer of the Election Commission of India for Tamil Nadu Elections.
 
REFERENCES
 
© 2007 India Law Journal   Permission and Rights | Disclaimer