Although many Americans complain about the role of big business in funding political campaigns in the United States, the roots of the corruption and criminalization of Indian politics, ironically, lie in the outlawing of corporate contributions by then-Prime Minister Indira Gandhi in 1967, in an attempt to cripple a right-wing opposition movement by depriving it of funds.
“The ban on company donations closed the only honest, open and transparent avenue of raising funds to fight elections,” commentator Prem Shankar Jha wrote in the magazine Tehelka. “The harm it has done is beyond measure.”
At the constituency level, the only alternative was to establish a network of patronage and favor-swapping from individual donors that soon became entrenched.
At the national level, Jha argued, the ruling Congress party was soon demanding massive kickbacks from business deals, mostly defense and infrastructure contracts, to fund its central command. It is the road that led inexorably to the corruption scandals of the past few years.
A typical Indian constituency might have 1,000 villages, and the cost of campaigning is enormous.
Unrealistically low campaign-finance limits also forced candidates to raise "unaccounted" funds, said M.R. Madhavan at PRS Legislative Research.
"Who has access to unaccounted funds? Criminal elements," he said. "This forces you into bed with criminal elements."