Congress facing financial crisis ahead of 2019 Lok Sabha elections

The Congress party is facing a financial crisis that could undermine its ability to wrest power from Bharatiya Janata Party in 2019.

For the past five months, Congress leadership has stopped sending the funds required to run its offices in various states, party officials with knowledge of the matter said, asking not to be identified as they were not authorized to speak to the media. To overcome the crisis, Congress has urged members to step up contributions and asked officials to cut expenses, they said.

Led by Rahul Gandhi, the party’s steady flow of money from industrialists has all but dried up, leaving a cash crunch so serious that it’s been forced to crowd-fund for a candidate.

“We don’t have money," said Divya Spandana, who leads the Congress Party’s social media department. Compared with the BJP, she said her party is not getting much funding via electoral bonds -- a new method for cash donation to political parties -- which may force Congress to opt for more online crowd sourcing to raise money.

Modi’s string of electoral wins engineered along with his key aide and party president Amit Shah have decimated the space once occupied by the Congress Party. At last count, BJP rules with its allies in 20 states, several of them wrested from the grand old party, and Modi remains the most popular leader ahead of next year’s federal elections. Congress now controls just two big states, down from 15 in 2013.

Big business has steadily migrated away from the Congress, said Milan Vaishnav, a senior fellow for South Asia at the Carnegie Endowment for International Peace in Washington, D.C. "Headed into 2019, the BJP has a decisive fundraising advantage, not least because the Congress and other key regional parties are seen as less business-friendly."

Congress spokesman Randeep Singh Surjewala declined to comment.

Congress earned one-fourth of the funds than BJP in the financial year ended March 2017. The BJP declared an income of Rs 10.34 billion during this period, an increase of 81 per cent from a year ago, according to Association for Democratic Reforms. Congress, in comparison, received Rs 2.25 billion, a drop of 14 per cent from previous year.

An endless wait for a flight ticket due to lack of funds meant a senior leader couldn’t reach an eastern state on time to supervise elections earlier this year. The party’s campaign paled into comparison to the BJP’s in Tripura, Nagaland and Meghalaya polls, an official said, noting it was one of the reasons it had failed to gain power in those states. The curbs extend beyond travel to allowances for serving tea to guests at party offices.

The BJP spent double that of Congress and is way ahead in attracting corporate donations. The Hindu nationalist party received donations of 7.05 billion rupees from 2,987 corporates during the four years to March 2016, while Congress got Rs 1.98 billion from 167 business houses, according to ADR.

During the 2014 general elections, the BJP collected Rs 5.88 billion, while Congress took Rs 3.50 billion, said ADR, citing expenditure submitted by parties to Election Commission of India.

The shortages were affecting both election campaigning and organisational mobility, said one senior Congress official, noting they were working to overcome the crisis and had put strict curbs on spending.

Without campaign funds, Congress will face considerable hardship going into 2019, said Jagdeep Chhokar, founder and trustee of the Association for Democratic Reforms. “A party that does not have money will be at a disadvantage in Indian elections.”

Political funding in India has long lacked transparency and undocumented cash — known as black money — is regularly used to fund campaigns.

"It is very unfortunate but money in large quantities is used— I should say abused — in Indian elections," said Chhokar. “Parties use accounted and unaccounted money — a political party can legally spend any amount of money on elections. There is no limit."

While the BJP has already moved into its newly-built, swanky, high-walled headquarters in New Delhi, the new office of the Congress party is still under construction due to a lack of funds, said the party leader.

As Congress lost state after state, its funding crisis worsened, because ruling parties in states were relied upon to become cash cows for their respective national parties.

But there’s a chance Congress may lure corporates back if they sense the BJP is not certain to win, said Ajoy Bose, a Delhi-based author and political analyst.

"The 2019 election will see a very rich party and a powerful government spending many resources on a hi-fi campaign, whereas Congress and other parties will run a simple, down-to-earth campaign."