Time to expand the Electoral Trust instrument to support Political Action Committee (PAC) style organizations for India

In the USA, a political action committee (PAC) is an organization that pools election campaign / political campaign funds from members and donates these funds to campaigns to support or oppose candidates. A PAC may have specific political agenda / objectives and may be bi-partisan or partisan in its goals. They are regulated by a specific legislation and has to maintain specific and regulatory transparency in its conduct. The PACs exert significant influence on the candidates both as they fund election campaigns but also in mobilizing voters (members) , volunteers and workers for the campaigns.

In India, political and election funding has been mostly non-transparent, private deals between large corporates, wealthy individuals and public figures who have used / misused black money to outspend small parties, independent candidates and use the power of the hidden money trail for both election victories and political agendas. The UPA govt had introduced the Electoral trust for corporates and individuals to pool funds and donate to parties. In the aftermath of the IAC movement and the focus on transparent political funding, the present NDA govt brought a new electoral funding instruments — the electoral bond, which has ironically become the preferred channel for anonymous, non-transparent donations to political parties by big corporates and individuals.

Public and transparent crowd-funding of political parties and candidates has been largely absent in India. People have preferred to make cash donations privately, in the hope of exchanging favors if an when candidates / parties get elected or build enough muscle for officers to take note.

The one significant exception has been the success of Aam Aadmi Party (AAP) in Delhi in crowd-funding its electoral budgets. In many senses, AAP is the first US-style PAC in India. It provided a vision for the members (donors) to donate; it transparently published all donations; it clearly laid out criterion for selection of candidates; it deployed funds towards election campaigns; it used emails, social media campaigns, fund-raiser dinner / lunch events and even corporate donations just like any US PAC would. A majority of the contributions were from professionals spread over the world, who were inspired by the promise of new-age politics. Many of the donors would have donated money to a political party or engaged in politics for the first time in their lives.

The key difference in a PAC and a political party such as AAP, is in a PAC’s ability to withstand democratic pressures / voter pressures and maintain its political change / reform agenda. A political party must always be sensitive of voter ire and many elements of the party may become a prey to tactical deviations from the reform agenda. Winnability criterion may further dilute the “cause” and parties can slide on the slope of favoring candidates who have higher money, muscle of social capital over those who may be better skilled or talented due to intellectual or political talent but lack in other key areas (for example, professionals may lack social capital as they have focused on their professional roles than building social capital; political activists from poor backgrounds may lack capital resources and honest social workers may lack both money and volunteer teams).

A PAC can bypass all of these pressures and focus on the stated objectives. If the objective is to support professional, educated and eminent people to parliament, it can do so by shortlisting the best people from all ideologies and support them with campaign funds, election know-how, teams for election machinery, tools and canvassing thru its large member network. If its objective is to identify young and upcoming leaders it can do so across party lines. If the objective is to put more women in leadership positions it can pursue its goals independently of any party constraints (Emily’s list is a powerful PAC promoting women representation in USA).

Clearly then, a PAC is more flexible and perhaps more powerful a platform to push an agenda for professionals to pursue political change they want to see. Then why don’t we have multiple PACs in the country?

The challenge is in the way the Electoral Trust is defined. An Electoral Trust can only donate funds to a political party. So a deserving candidate, howsoever good, gets excluded. Clearly the political parties that came up with the legislation wanted to protect their “hold” over the political processes. Secondly, the regulatory framework for a Electoral Trust is too weak to support PAC-like operations. Consider this:

  1. The trust can only spend up to Rs. 5 lacs for its own expenses in 1st year and Rs. 3 lacs from 2nd year onwards. This limits the formation of trust to big players with deep pockets who may start Electoral Trust and another “leverage” over political parties. It is well known that it takes nearly 30–45% “cost” to raise funds for a NGO/Social Cause. Crowd-funding campaigns are expensive — digital marketing, social media costs, cost of meetings, paid events is / will be much higher than Rs. 5 lacs limit.
  2. The trust can ONLY donate to political parties. Now in our system, the political parties already have excessive control / power over their MLAs/MPs thru the “whip” and defection laws. This means even if PACs supported good candidates, the candidates could not introduce bills / support bills as per the PACs agenda. Party agenda is supreme (and usually short term oriented)
  3. The trust HAS to spend 95% of the funds collected in the same year by giving it away to parties (some carry over is allowed). Why? The objective of the PAC may be to collect funds thru a 5-year term and deploy the same against the top 10–20 candidates who are aligned to its vision.
  4. The trust can not pay for political campaigns, volunteers, advertisements and other ‘expenses”. It MUST give funds only to political parties. Now parties may not deploy the funds meant for ‘Candidate A” endorsed by the PAC and may spend it sub-optimally. Instead, giving the flexibility to the PAC to spend as it deems fit on the campaign will utilize professional skills that its members/donors have towards more effective campaigns.

What is needed is an extension of the Electoral Trust instrument to make it more PAC friendly. Define the regulatory framework under which it must operate. Let is find its members aligned to its published ideology. Let it raise funds. Establish administrative teams. Make its books transparent as needed so the people at large can see the political ideology and tactics it supports.

Let millions of our middle class, who are typically squeezed out from the political process find their voice thru their preferred PAC. Let the power and wisdom of the crowd find and fund candidates and talent we want to see in our legislative houses.

Its time to make our democracy stronger. Its time to change. Agree ?



Innovator. Entrepreneur. Mentor. Investor. Learner. Love technology, sports, arts and literature. Strive to be fair. http://t.co/UFEkCAnU

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Arvind Jha

Innovator. Entrepreneur. Mentor. Investor. Learner. Love technology, sports, arts and literature. Strive to be fair. http://t.co/UFEkCAnU