$4.9bn to be spent on poll campaigning

March 10, 2014 - 10:00:31 am
NEW DELHI: Politicians are expected to spend around $5bn on campaigning for elections next month in a splurge that could give the country’s floundering economy a temporary boost.

The campaign spend, which can include cash stuffed in envelopes as well as multi-million-dollar ad campaigns, has been estimated at Rs300bn ($4.9bn) by the Centre for Media Studies, which tracks spending.

That is triple the expenditure the centre said was spent on electioneering in the last national poll in 2009 — partly a reflection of a high-octane campaign by pro-business opposition candidate for prime minister, Narendra Modi, who started nationwide rallies and advertising last year. “They started much before, and they are also focusing on states where they are traditionally not strong. They are leaving no area untouched,” said N Bhaskara Rao, chairman of the Centre for Media Studies.

Candidate and party funding in India is opaque and the source of much of the spending is hard to ascertain, but the Centre for Media Studies and other transparency advocates say the main contenders have built up large war chests. “This election spending largesse will help to boost Indian consumption expenditure over the second quarter of 2014, but this will be a temporary spike,” said Rajiv Biswas, the Asia-Pacific chief economist at IHS Global Insight.

Spending on previous Indian elections have benefited a wide range of businesses, from media groups and advertisers that rake in campaign-ad revenues to consumer-based firms that capitalise indirectly on the overall jump in spending, such as motor-bike manufacturers and brewers like United Spirits.

Much of India’s campaign spend will remain in its thriving black economy. Rules allow candidates to spend Rs7m ($114,000) on campaigns for a parliament seat but the real cost of winning is about 10 times that, thanks to spending on rallies, fuel and media campaigns that often include payments for coverage.

Politicians regularly bribe voters with cash payouts to secure their support. Recent state elections have seen innovations such as getting money to voters via mobile phone credit and envelopes of cash delivered in morning papers.

In the last three years, election authorities seized from politicians a total of about $32.65m in the form of concealed cash, some if it stashed in helicopters, milk trucks and even funeral vans, a former election commissioner said.

Chief Election Commissioner V S Sampath said on Wednesday that he was worried about “money power” — heavy spending and the use of illegal funds to influence the outcome. The Centre for Media Studies’ spending projections are based on analyses of rising costs in local and state elections in the past five years. It also surveys voters on prevalence of bribes.

Narendra Modi’s BJP got off to an early start in campaigning, pushing into the south where the BJP is weak and has avoided spending money in the past. 

Some of Modi’s fundraising is led by a seven-member team, including Deepak Kanth, a former investment banker previously with Citibank in London. This team has organised an online fund-raising drive in India and is also targeting donations from wealthy Indians living in Hong Kong and Singapore. 

This team has only raised $4m, a party source said, but shows how far Modi is casting his net for campaign funds.