Of late, there is a forward popular on WhatsApp groups. It is the story of a Panchayat where everything is run, on the face of it, ideally. Not only are roads well built, but welfare programmes are implemented faultlessly. The Panchayat has a surplus of funds and uses them now to deliver even private services, such as supermarkets at prices far lower than that of the open market.

In the WhatsApp forward, the Panchayat has elected to its body, people without political affiliations. From all aspects, this Panchayat represents a stellar example of how a local government system can succeed far better than a state-run system; a great advertisement for the inherent strength of decentralised public governance as envisaged under the 73rd and 74th amendments to the Constitution.

A corollary to this forward is another series of events. Apparently, the Panchayat is being harassed by political parties, and disillusioned by their response, the prime mover, a corporate entity running a business that employs large numbers of people in the Panchayat and its vicinity, plans to discontinue its support to the Panchayat.

These social media posts usually end with a condemnation of our selfish and venal politics, and concludes that we, the people of India, are far better off without any politics or politicians. 

A closer look at this situation reveals nuanced layers of other dynamics. As is usually the case, there is more to it than meets the eye! Other than the squeaky clean social media story of right minded people being harassed by an evil government. 

What has happened is that a corporate entity that contributes a great deal to the economic development of the Panchayat has pumped in plenty of its CSR funds into the Panchayat. They seem to have entered into an arrangement with the local voters, promising to them that they would pump in their CSR funds, if they vote for independents who were informally endorsed by the company. Once this team of independents got elected, they have been running the Panchayat with zero corruption. The quality of services improve and the Panchayat is blessed with a financial surplus. 

The cynical may call this corporate bribery of the entire population. However, this manner of corporate capture of local governments is common all across the world. To my mind there are no clear rights or wrongs here. I often argue with my colleagues that I am OK with this approach. After all it’s a win-win situation for all. The people are getting excellent local services and a government of high integrity.

Yet, there is no escaping the fact that if one thinks about the implications at a larger scale it makes you wonder. Today, with huge inequality in India, more than 10 per cent of the country’s wealth is concentrated in the hands of just one per cent of the population. The net worth of some of our richest billionaires is more than the budgets of many states. What happens if they tire of investing in electoral bonds and pumping their money into the leaky buckets of political parties?

It is not far-fetched to think of what might happen if a billionaire or two start a political party, make an open offer of an investment of Rs. 50,000 crore into, say, a large metropolitan city as a deposit plus assure payment of taxes of Rs. 10,000 crores every year on the condition that we the people elect to power ‘independents’ sponsored by them. Let us say that they do win power and they execute development projects without corruption and with lots of participatory planning. Would we be comfortable? Would political parties be comfortable?

I asked this question of some who are in politics and here is a thought provoking response.

There is no arguing with the fact that without corruption, a Panchayat’s resources would go much farther than now. Yet, CSR money from a powerful corporate entity is like margin money put in by a businessperson when investing in a business. Evidently, this practice to provide public services is not acceptable because it is just another technique to buy votes and subvert democracy. Legally, however, nothing prevents a corporate from setting up a political party and using the company’s political donations (which, unlike donations for charity, are totally tax-free without any limits!) to campaign for its candidates.

Just imagine what would happen if rich corporates indulged in such ‘direct’ subversion of democracy instead of the indirect subversion they are doing today by donating to political parties in return for policies that further their interests!

Panchayat works should therefore be undertaken only with legally raised resources, like all other panchayats. Putting all panchayats on the same footing, using budgets approved by an elected local body by using legally collected taxes from all residents to improve local public services is the only acceptable solution. There should be no additions to this budget from any corporate institution as donations, since that could be used as an inducement to influence people’s decisions. Using CSR money for doing what government should itself be doing is unacceptable. 

As a corollary, all large companies should pay property and other taxes levied by the local body under which they fall just like other residents. The reality today is that they avoid these payments and negotiate with the local bodies to give them unwarranted concessions. The bargaining platform can be quite skewed when a local body deals with one large company. There is scope for blackmail and intimidation on both sides too. 

That is how those who run good politics think.

What do you feel?

T.R. Raghunandan is an Advisor at Accountability Initiative.

The opinion is that of the author and does not represent an institutional stand.