How a little crowdfunding for election campaigns can create a huge impact

Experts say such funding of political campaigns is more transparent than electoral bonds and bereft of any vested corporate interest

At the last count there are over 50 candidates for the Lok Sabha elections 2019 who are using crowdfunding to finance their campaign. This is peanuts compared to even the first phase of the elections where there were 1,279 candidates. But their crowdfunding methods have garnered them disproportionate attention compared to their purse, which is quite something in a crowded field of candidates.

It is also something since the Indian elections, this time, are on course to becoming the most expensive exercise in voters choice in the world. Milan Vaishnav, senior fellow and director of the South Asia Program at the Carnegie Endowment for International Peace has estimated that the 2014 edition cost about $5 billion (about Rs 35,000 crore). This years edition will easily surpass that, he claims. In this context the aggregate budget of those crowdfunding their elections would not even be half a per cent of this total.

But despite those achievements, crowdfunding is not new. Rather as Abhay Kumar Dubey, professor at the Delhi based Centre for Study of Developing Societies, notes, it has been around since the first general elections in 1952 and was quite vigorous till the early seventies. “It fell off there after as corporate money entered the elections in a big way,” he says.

New or not, crowdfunded candidates like Mohammad Salim of CPI(M), Atishi Marlena of AAP and Kanhaiya Kumar of CPI have also set off a debate about the role of money in the general elections. The debate has spiked as the Supreme Court is hearing a petition challenging the introduction of electoral bonds to finance political parties. Electoral bonds were introduced in Budget 2017-18.  

Those challenging the bonds, led by electoral watch dog, Association for Democratic Reforms, have argued that the bonds encourage anonymous funding that promotes opacity which in turn makes it easy for black money to cushion dominant political parties, especially those in power. As Vaishnav’s numbers show, money plays a big role in Indian elections and can influence outcomes as the per capita annual income of the Indian voter at less than $2000 makes it financially easy to swing her preference.

Crowdfunding therefore sits at the polar opposite of electoral bonds. Bilal Zaidi, co-founder of ourdemocracy.in, India’s most prominent online fund raising platform that hosts politicians too, says they do not allow any one person to contribute more than Rs 10 lakh to a candidate. The person is also identified to ensure transparency. Zaidi says he understands why left leaning political forums are against any corporate funding of political parties, “but of course there is a role for interest groups to contribute so long as they do so transparently”.

This is difficult for listed companies to do, says Ravi Sundar Muthukrishan, former professor at IIM Lucknow, now Head-Institutional Equity Research at Elara Capital. “Shareholders will punish a company, no matter how big, if its political loyalty is made open. They are comfortable with a donation shown on the balance sheet, as long as it remains anonymous,” he adds. He agrees that political funding through bonds or through trusts is a tricky territory in corporate governance. Electoral bonds allow this smokescreen, which crowdfunding will not.

Dubey says because there is a clear linkage between why a company funds a political party he is against any such financing. “They will finance to support their interest and this goes against the basis of democracy and the larger political will. The alternatives like crowdfunding and state financing of elections should be encouraged,” he explains. As of now there are limits set by the Election Commission on how much money can be raised by the crowdfunding route. No candidate can raise more than Rs 70 lakh and no foreign money can be attracted at all. Zaidi says this is the reason their platform scores. It has set a firewall against foreign money for political donations. There are about 15 well known crowdfunding platforms on the net in India, mostly non-political.

But whether as a revival of forgotten practice, or as a novelty, can crowdfunding attract more candidates in India’s crowded election calendar. Has the 2019 elections made the route attractive enough, going ahead? C Raj Kumar, Founding Vice Chancellor of OP Jindal Global University, is sure it would. “Crowdfunding cannot alone make the playing field level in an elections, but I do certainly feel the scope is going to expand”. According to him, some of the ways this could happen is for the Commission to publicise the option of crowdfunding to voters. “They have done very successful campaigns like voter awareness so this too should be possible,” he says.