India's national election in April appears set to rival US in spending

Struggling national economy seems set for boost with the BJP building up a massive war chest

PUBLISHED : Monday, 10 March, 2014, 9:55pm
UPDATED : Tuesday, 11 March, 2014, 4:25am

Indian politicians are expected to spend close to US$5 billion on campaigning for elections next month - second only to the most expensive US presidential campaign - in a splurge that could give the floundering economy a boost.

The campaign costs, which can include cash stuffed in envelopes as well as multi-million-dollar advertising campaigns, has been estimated at 300 billion rupees (HK$38 billion) by the Centre for Media Studies, which tracks spending.

That is triple what the centre said was spent on electioneering in the most recent national poll in 2009 - partly a reflection of heavy campaigning 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.

The campaign spending for this election could lift the economy, which has been heading for its longest slump since the 1980s. Economists have forecast a second year of growth below 5 per cent in the financial year ending this month.

Candidate and party funding in India is murky 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 had 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.

India's projected campaign spending is rivalled only by the US$7 billion spent by candidates, parties and support groups in the 2012 United States presidential race, the world's most expensive, according to data provided by the US election commission.

Spending on previous Indian elections has benefited a wide range of businesses, from media groups and advertisers that rake in campaign-advertising revenues to consumer-based firms that capitalise indirectly on the overall jump in spending, such as motorbike manufacturers and brewers.

India's advertising industry expects to see a US$800 million injection during the election season, according to an outlook by the country's largest local agency, Madison Media. That should benefit media firms, such as DB Corp, which owns the high-circulation Hindi language daily Dainik Bhaskar.

Much of India's campaign spending will remain in its thriving black economy.

Rules allow candidates to spend 7 million rupees 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.

Indian politicians regularly bribe voters with cash payouts or alcohol 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 past three years, election authorities seized from politicians about US$32.6 million in the form of concealed cash, some if it hidden in helicopters, milk trucks and even funeral vans, a former election commissioner said.

The dates for the month-long election starting on April 7 were announced last week, with polls staggered to help security forces prevent polling-booth fraud.

Despite evidence of vote-buying, India's elections are now largely seen as free and fair on polling day.

However, chief election commissioner V.S. Sampath said last Wednesday 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 Bharatiya Janata Party, or BJP, got off to an early start in campaigning, pushing into the south where it is weak and has avoided spending money in the past. Modi's BJP-led coalition has a strong lead over the ruling Congress party in opinion polls, but it is unlikely to win an outright majority.

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.

Indian judges told to reach verdict on lawmakers' cases quickly

India's top court has told judges they must reach verdicts within one year in cases of lawmakers accused of grave crimes, in an attempt to reduce the number who win re-election while on trial.

Lawmakers can run in elections while being tried, but cannot hold public office once they are convicted of offences such as corruption, rape or murder.

India's notoriously slow legal system has allowed many politicians accused of serious graft to be re-elected.

The Supreme Court ruled yesterday that lower courts should expedite trials so politicians are quickly acquitted or disqualified.

It said that judges would have to explain any delays.

Nationwide elections begin early next month. India's Congress party-led government faces anger over a slew of corruption scandals that auditors say has cost the country billions of US dollars.

Associated Press