How much does your Lutyens MP cost you?

The Times of India, December 18, 2011

As the Lok Sabha braces for its critical debate on the Lokpal bill next Tuesday, ponder the price our parliamentarians exact. Start with accommodation. Most MPs live in or around Lutyens Delhi. Estimated real estate value? It’s Rs 300-700 crore, depending on the size of the bungalow. Ministers- and we have 77, including ministers of state – obviously get the biggest plots. Many of our 543 LS and 250 Rajya Sabha MPs are multimillionaires and perfectly capable of owning their homes, saving the exchequer a tidy sum.

At Rs 6 lakh a year, MPs’ salaries are modest – justifiably so, given the declining number of days Parliament functions – but the perks of office compensate. American senators earn a generous annual salary of $1,74,000 (Rs 94 lakh) but are entitled to relatively modest perks and live in homes that cost a fraction of Indian MPs’ bungalows. British MPs receive an annual salary of ?65,000 (Rs 54 lakh). Singapore’s largely technocratic legislators command among the world’s highest salaries for public servants (S$2,25,000 per year – Rs 93 lakh) but again, like their American and British counterparts, enjoy relatively few perks.

In India, the term “perks of office” has assumed ominous connotations. Becoming an MP is expensive. According to the Election Commission (EC), a winning MP spends an average of Rs 7-10 crore on a Lok Sabha election and a successful MLA Rs 2-3 crore on a state assembly election.

The audited balance sheets of the major political parties show total annual incomes ranging between Rs 496 crore (Congress ) and Rs 220 crore (BJP). At the lower end of the EC’s estimate of Rs 7 crore per winning Lok Sabha candidate, the Congress and the BJP, each with around 400 contesting candidates (excluding seats reserved for coalition partners), would therefore need to spend at least Rs 2,800 crore in a general election year. Add to that the administrative cost of running mammoth political organisations with an average cycle of six state assembly elections a year. Clearly, large mainstream political parties like the Congress and the BJP need to muster well over Rs 5,000 crore each annually. That’s a huge gap – over Rs 4,000 crore a year – between the declared revenue in the audited balance sheets of the principal parties and their actual annual expenditure.

How is this gap funded? First, through cash donations from large, medium and small companies. Second, bribes from public-private partnership (PPP) projects (airports and national highways among others), large civic works (the Commonwealth Games, for example) and natural resource allocations (2G spectrum,mines, land). Third, kickbacks from myriad government procurements (including defence ordnance purchases).

All of this points to one conclusion: a broken electoral system. Politicians need far too much money to fight elections . Their parties are forced to fund them with ill-gotten black money. Once elected, MPs pay back their parties’ benefactors the only way they can- by engaging in corrupt practice themselves.

It is a vicious cycle. To break it, Prime Minister Manmohan Singh, UPA chairperson Sonia Gandhi and Congress general secretary Rahul Gandhi have all at different times in recent months suggested state funding of elections. Examine the idea: suppose the state (i.e., the taxpayer) funds 543 MPs in the 2014 Lok Sabha election at a realistic minimum of Rs 1 crore per MP. That would mean more than doubling the current limit the EC imposes on MPs’ electoral expenditure (Rs 40 lakh). Even if this was done, and assuming just five candidates on average from EC-registered parties would contest every Lok Sabha seat, the state would have to fund over 2,700 candidates, allocating a separate state-funded budget of more than Rs 2,700 crore.

Would it solve the problem? Of course it wouldn’t . Corrupt candidates would simply add the state’s Rs 1 crore fund to the cash their parties spend on them anyway (an average of Rs 7 crore per winning candidate). The toxic corporate-political nexus – and the post-election quid pro quo – would continue. Honest, independent candidates relying only on state funding still wouldn’t stand a chance.

The real solution lies in introducing legislation to give the EC regulatory powers to monitor party expenditure at every level- district, state and central. Today political parties are exempt from paying tax, immune from financial oversight and unregulated except for the brief period before and during an election when the EC’s model code of conduct kicks in.

Empowering the EC to audit electoral expenses on a continuous basis, with punitive powers to de-register and de-recognise erring political parties, is the best way to cauterise political corruption at its root. MPs (rightly) demand tough regulatory oversight for every profession but resist meaningful financial oversight over political parties. The price Indians pay for thatin terms of unbridled corruption and Lutyens wastefulness – is a price we should no longer be willing to pay.

The writer is an author and Chairman of a media group

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