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Just legalise betting on elections!

By Devangshu Datta
May 09, 2019 11:29 IST
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'Legalised election betting would drive black money and satta operators out of business while creating a more level and transparent playing field for politics,' argues Devangshu Datta.

Voters wait to cast their vote at a polling station in Ranchi, May 6, 2019. Photograph: PTI Photo

IMAGE: Voters wait to cast their vote at a polling station in Ranchi, May 6, 2019. Photograph: PTI Photo

One major problem with India being an electoral democracy is that it is a hugely expensive process.

Quite apart from what the Election Commission claims it spends, it co-opts many bureaucrats from all cadres.

Those babus being pulled off their normal tasks imposes large indirect costs.

In addition to what the EC spends, and the opportunity costs imposed, there's the whole dirty business of campaign funding and spending.

There are the large sums officially spent by political parties (and rich Independent candidates).

There are vastly larger 'off-book' truckloads of cash spent on hiring goons, handing out illegal inducements to voters, etc.

Every businessman I know complains bitterly about politicians forcing them to cough up large sums, both under-the-table in cash and in cheque contributions as well as 'soft contributions' like the use of vehicles, for every election.


The BJP, to its credit, introduced sweeping changes, which made it easier for political parties to raise large sums while making it impossible for voters to figure out the identity of political donors.

Earlier, it was illegal to source funding from overseas corporate entities, and all corporate contributions were limited to a percentage of historical profits recorded by the donor.

The contributions had to be mentioned upfront, both in the corporate balance sheet as well as the accounts submitted by the party.

Anonymous cash donations were limited to Rs 20,000 at one go.

In practice, this just meant political parties issued multiple receipts for larger cash donations.

This system was by no means perfect, but it did mean some degree of transparency.

If a company appeared to be unduly favoured by a political party, and the said company had donated to the party in question, there was a smoking gun in the form of circumstantial links.

An overseas entity could not directly influence an election by pumping money in.

Moreover, since the donor had to have a track record of profitability, it wasn't that easy to set up a shell company and anonymously funnel political contributions through that.

The BJP made it entirely legal for an overseas entity to pump money into an Indian election.

The linkage to profitability was also removed, making it easy to set up shell companies solely for the purpose of making large political contributions.

Finally, in a masterstroke, the election bond was conceptualised to give donors strong assurances of anonymity, thus sparing them the scrutiny of voters.

This makes it a lot easier for the ruling dispensation to hand out favours to corporates and to receive concrete pecuniary benefits in return without leaving a direct paper trail.

In tandem, the BJP also made one of those ridiculously theatrical moves.

It lowered the limit for anonymous cash contributions to Rs 2,000.

This just meant political parties issued more receipts when they accepted cash donations.

Although electoral bonds have been challenged in the Supreme Court, it's unlikely that any political party will really want to reintroduce transparency to fund-raising.

Most politicians are gamblers: They spend vast sums in the hope of winning elections.

The current system vastly improves the prospects of raising funds for winners, and most politicians will gamble on being able to win rather than cut off sources of potential lucre.

But purely as a theoretical exercise, consider a system where political parties are funded by government largesse.

Such systems exist in most democratic nations -- in fact, India is the big exception to the rule.

In some places, public funding occurs side-by-side with direct contributions to the party or the individual candidate (funding may be matched to direct contributions as in the USA).

This reduces scope for cronyism.

The extra burden on the exchequer can be easily met.

Many billions are bet illegally in the satta market on election outcomes.

Just legalise betting on elections, and skim 33% tax off the top.

That's how lotteries are taxed.

Legalised election betting would truly be a masterstroke.

It would drive black money and satta operators out of business while creating a more level and transparent playing field for politics.

This is, of course, why it will never happen.

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