Politics is big business. Anywhere between Rs 55,000 crore and Rs 60,000 crore is estimated to have been spent on the Lok Sabha election in 2019 (according to this report), more than money spent anywhere on any election. The thing is, about 15-20% of this ‘camouflaged spending’ is estimated to have been by Congress — which comes to a minimum of Rs 8,250 crore.
Its MPs in the two houses of Parliament have average assets of Rs 39 crore. Its MLAs across states have an average wealth of nearly Rs 22 crore. And the party’s assets have grown 9% a year in the past two decades. The problem, then, is not that Congress does not have enough to spend but that it is being outspent by BJP.
That is evident.
What is not immediately clear is exactly why there is always a sense of financial crisis lurking in the air around the party (or is at least reported to be so) and why funding seems hard to come by. So, we break down the party’s declared statements to understand how the structure of political financing has turned business-like over the years.
How does Congress allocate its money?
The party’s constitution lays down the rules for financial management.
Any adult Indian citizen can become a member of the party by filling up a form and paying Rs 10 for a five-year ‘subscription’.
The money collected through these subscriptions is allocated like this:
- the national committee gets 10%
- state committees, 25%
- district committees, 25%
- subordinate committees, 40%
Anyone who has been a member for at least three years can be elected as a delegate or office-bearer of a Congress committee. The money to be deposited while joining:
- a district committee is Rs 500
- a state committee is Rs 1,000
- the national committee is Rs 3,000
Every member has to subscribe to the party’s periodical, Congress Sandesh, and every delegate (right up to MPs) has to subscribe to National Herald on Sunday or Sunday Navjivan.
Elected representatives are supposed to contribute more — delegates chip in during special drives, income tax-paying members pay Rs 1,000 a year, and all elected representatives give the party a month’s salary every year.
These contributions, barring those from national committee members and MPs, go to a party fund which sets aside:
- 50% for the central election fund
- 25% for the national committee
- 12.5% for state committees
- 12.5% for district committees
What do financial declarations by Congress show?
We will do two sets of analysis — one comparing two non-election years, and another comparing two Lok Sabha election years.
For the first, we look at the party’s audited reports for 2015 and 2021.
- In 2015, the largest source of income was the collection from coupons and sale of publications — Rs 168 crore of the Rs 262 crore it got that year (64%).
- By 2021, the collection from coupons and publications was still a significant Rs 135 crore (though lower than what it made six years before that). But the largest source of income was now grants and donations, which accounted for Rs 348 crore of the total Rs 540 crore it got (again, 64%).
The introduction of electoral bonds in 2018 had, evidently, changed how money would flow in — as it did for all major parties. This is how the composition of donations changed.
And how was the money being spent?
- In 2015, the party’s largest expense was on administrative costs — about Rs 77 crore of the Rs 193 crore total (39%).
- In 2021, most of its money was being spent on elections — Rs 280 crore out of Rs 400 crore (70%).
Of its administrative costs, significant cuts were made in how much it spent on meetings. In 2015, Congress spent over Rs 17 crore on meetings and another Rs 5 crore on the 125th year celebrations. By 2021, the cost of meetings had come down to Rs 4 crore and the celebration expenses were less than Rs 4 lakh.
Conveyance expenses went from Rs 1.9 crore to just over Rs 14 lakh. Constituency office expenses were cut from over Rs 2 crore to Rs 48 lakh. And that opaque category, ‘miscellaneous expenses’, shrunk from Rs 11 crore to less than Rs 3 crore.
Now, Congress started spending more on publicity and social media (which are counted as administrative costs when not specifically election-related). In 2021, its expenditure on publicity was 2.2 times that of the expense in 2015, and that on social media was up 3.5 times.
The party also brought down its financial costs. In 2015, the drain on resources by loan repayments was significant — interest payments amounted to almost Rs 29 crore. By 2021, this was down to Rs 15 lakh.
It did tighten its belt.
Similar trends can be observed in Lok Sabha election years as well — in 2019, we see a more cautious Congress than the one in 2014.
- In 2014, Congress had secured loans of over Rs 326 crore.
- In 2019, the secured loans amounted to Rs 1.7 crore.
It had taken quite a bit of time for Congress to control the drain brought on by its borrowing between 2013 and 2016, but it had brought down finance costs from about Rs 38 crore in 2014 to Rs 26 lakh in 2019.
- It spent Rs 582 crore on elections in 2014.
- That shot up to Rs 864 crore by 2019.
Nearly half that money (Rs 405 crore) in 2019 was spent on publicity. Another Rs 11 crore were spent from the administrative budget on publicity and Rs 4 crore on social media. A significant Rs 5.7 crore went into prepoll surveys.
Its income followed the expected pattern — greater share of contributions and shrinking share of coupon and publication sales. But a telling number is that of the money made from membership fees and subscriptions — it managed Rs 6.7 crore in 2014, which went down to Rs 5.3 crore in 2019.
While the party’s finances have been shaky, its elected members have largely been rich, according to data from the Association for Democratic Reforms.
The average asset value of Rs 39 crore for Congress MPs ranges from Rs 660 crore (Nakul Nath, Kamal Nath’s son) to Rs 11 lakh (Ramya Haridas, who represents Alathur) — but the party has six billionaire MPs (third highest after BJP, and TRS and YSRCP who are tied for the second position).
Its MLAs have, on an average, more wealth than those from BJP (Rs 21 crore for Congress MLAs and Rs 11 crore for BJP MLAs). We could put that down to base effect — BJP’s larger number brings down the average — but the Congress list of over 700 MLAs is not an insignificant base either.
Its chief ministers have average assets of Rs 22 crore, a sliver less than BJP’s average of Rs 23 crore.
How did political finance get this big?
In its first few decades since 1885, when it was set up, Congress depended on voluntary contributions to keep things running. Historian SR Mehrotra outlined these early years — the party started as a “private gathering of friends”, 72 of them, who came as volunteers and met for three days without a constitution.
Over time, some loose rules were laid down. The gathering would be in a different town each year. That town would organise a ‘reception committee’ of the province’s “leading citizens”.
There was no regular membership, but the number of delegates who attended these annual meetings kept increasing. Initially, the cost of their stay and food was borne by the reception committee. The surging numbers, however, meant the committee couldn’t keep up.
So, in 1888, Congress decided that every delegate would pay a fee of Rs 10.
In 1902, that was raised to Rs 20.
In 1912, it was reduced to Rs 10 again.
Meanwhile, Congress had drafted its own constitution and decided that the reception committee would only have people who pledged, in writing, their affiliation with the party’s ideas and paid a minimum contribution of Rs 25. The reception committee was also responsible for raising funds, all from voluntary contributions — from daily wage workers to entrepreneurs.
With this scale, the cost of holding each session was also increasing — from Rs 30,000 in 1886 to more than Rs 3 lakh by 1920. Even then, Mehrotra wrote, “The financial position of the Congress was never very sound.”
For a long time, membership fee was four annas — forgone intermittently for a khadi-wearing clause (this clause is still in place). When India became independent, primary members had to pay Re 1 a year. This money was sometimes difficult to collect and was reduced to four annas again in 1952.
Till Independence, business houses did contribute to and supported demands made by Congress. Seth Jamnalal Bajaj gave Rs 2 lakh to help non-cooperating lawyers, Godrej gave Rs 3 lakh, cotton broker Seth Anandilal Poddar gave Rs 2 lakh, and so on, historian Gopal Krishna wrote. The largest share of these donations, unsurprisingly, came from Bombay.
But interests of business houses were scattered and, so, their involvement was limited. As the oft-quoted paper by Stanley Kochanek, ‘Briefcase Politics in India’ says of pre-Independence India,
“Finance provided some leverage but it could not be translated into automatic influence. Business was incapable of acting in a unified manner and ideological crosscurrents within the Congress provided competing visions of India’s post- independence economic future.”
When India became independent, corporate donations were still allowed. For most, it meant signing out cheques to all parties.
But in 1969, Indira Gandhi banned company donations to political parties. The stated purpose was to remove the influence of the corporate sector in politics but analysts attributed the decision, at least partly, to the rising popularity of the right-wing Swatantra Party.
The year-long government under Charan Singh proposed another way to fund elections — that the state sponsor them, exclusively — but the proposal was rejected.
Corporate donations were allowed again from 1985, when Rajiv Gandhi reintroduced the provision with a 5% of average net profit cap on each company’s donations. The cap was raised to 7.5% in 2013 and removed completely in 2017.
How much does money predict victory?
Consider the 2004 Lok Sabha election, long before digital outreach became indispensable to election planning. The general expectation at the time was that BJP would retain power, the exit polls suggested the possibility of a hung verdict, and the actual results swung in favour of Congress.
The income declared by Congress had gone from 1.6 times that of BJP in 2001 to more than double by this point. And the value of its assets had grown from being 34% less than BJP’s in 2001 to 1.3 times that of BJP by 2004.
At the national and state levels, Congress spent less than BJP on the Lok Sabha election that year — about Rs 25 crore less. But the rest of the expenditure was recorded differently by the two parties — BJP declared its district-level expenditure (close to Rs 12 crore) while Congress declared it spent the money on individual candidates (about Rs 60 crore). In any case, Congress outspent BJP by about Rs 22.8 crore overall.
The next election where the party in power lost was the one in 2014. A year before that was the first time in a decade that BJP’s income surpassed that of Congress — BJP got Rs 75 crore more than Congress in 2013-14. But it spent much less that year (Congress spent Rs 300 crore more than BJP) and went all out in the election year — spending nearly Rs 150 crore more than Congress in 2014-15.
This is not to say that there is a causal relationship between money and victory — if that were the case, regional players and independents would often not win. But people do need to know what relationships are being nurtured.
The Law Commission report of 1999 had said pretty much the same:
“There is a feeling among the people that some political parties are getting unfair advantage in the elections because of their having larger financial sources … Indeed, most business houses already know where their interest lies and they make their contributions, accordingly, to that political party which is likely to advance their interest more.”
That Law Commission report had cited KK Venugopal, then a Supreme Court lawyer, who had said that “good persons were not able to contest” because of the power that money wielded. (Though he argues now that the privacy of an individual who contributes money is more important, an argument still being made in the electoral bonds case — even though 94% of electoral bonds purchased were in the denomination of Rs 1 crore.)
Beyond this, there is nothing new to say about political finance. We know how lobbying works. We know a candidate’s expenditure ceiling can be circumvented by someone else doing the spending. We know that electoral bonds and electoral trusts add a layer of obscurity Indian politics has never seen before. In a way, it is an unfair leveller. Everyone has access to the same opacity.
But spending money alone may not lead someone to victory.
In 2018, when Congress won three of the five state elections — Chhattisgarh, Madhya Pradesh and Rajasthan — its state units had not outspent BJP. But the Congress state units received way more money than — or nearly the same as — BJP’s state units did. (We won’t compare the finances of the central units of Congress and BJP because their state-wise spending breakdown is not clear.)
Is the money a party gets a better indicator then? In the complex networks of influence and power, the flow of money into a party might tell us which way support is accumulating — before we officially know.
