Issue 7: Politics as Unusual

In our polarised eyes, either the entire arena of politics has degraded beyond redemption, or chosen leaders (and ideologies) stand taller than Gods. I suggest a way to cut through this space.

*Inspired by a recent conversation with my ex-roommate, Rishabh.

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If there were some urgent course-corrections you could suggest to improve the trajectory of Indian politics, and by extension the Indian people, where would you strike a hammer first?

That’s a silly, yet interesting question.

Silly, because the entrenched institutional power structures (e.g. paperwork in courts, corruptible legislators and public servants) that surround ordinary citizens are too strongly consolidated to be influenced by impractical armchair-critiquing in 2021.

Interesting, because once you commit to accepting the existence of one, an underlying scarcity of available resources to stage an intervention; two, a difficulty in facilitating transformative + feasible behavioural change in Indians; and three, a failure to correctly allocate incentives to cushion the disruptive, long-term societal shifts in our participatory democracy from rural to urban life [across the last 75 years]— it becomes unavoidable in the impact possible solutions can have on the planet.

This piece has a focused objective: to quickly pinpoint what, in my view, deserves the most proactive efforts to rethink in modern Indian politics. By targeting its (a) source (political funding) and (b) existence (reservations) in a direct, time-bound manner, this country can re-introduce genuine accountability into its DNA.

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Suggestion (a)— Hit where it hurts, the money

What gives politics its teeth, its legs (or power if we’re tired of metaphors)? This question gets its answers from 2 further questions. How does politics get its strength? And from where does it derive its strength?

The answer to the first question (how?) is money. Money has fundamentally and drastically changed the way politics appeals to people since 1991. Through the opening up of our markets, entire generations were suddenly a recipient of an influx of bubble capital, giving them the ability to control the flow of resources from there on by establishing linkages. Leaders organised their popularity amongst starving masses on the basis of being a pathway to material comforts. Today, gifts of money buy everything from votes to judges, banks to temples; the appetite for social media campaigns has bought us all.

Political funding is democracy’s best joke. Any democratic process is supposed to be characterised by transparency, security, feedback and accountability; yet, these features are usually applied to everything but politics. The punchline is that the entry and exit of money in and out of political parties is a gaping black hole, made blacker by the round of regulations in 2017, which have discouraged cash donations by legitimising ‘electoral bonds’ as an apparent way to remove corruption. These are monetary instruments (to the tune of Rs. 1000, Rs.10000 and so on till Rs. 1 crore) that people, whether individually or as registered groups, can buy from the SBI during specific months of the year. Political parties can then encash these bonds directly to their registered accounts. The irony is that—

1) Neither the donor nor the party has to reveal from whom the donation comes, making it anonymous and beyond public scrutiny¹;
2) A cap to restrict corporate funding to 7.5% of their net average profits was removed;
3) A requirement to reveal political donations in the corporates’ annual profit & loss statements was removed;
4) A requirement that any corporate entity needs to have at least existed for more than 3 years was removed;
5) Due to the bonds being sold by the SBI and it being under no obligation to disclose sources, there is a conflict of interest in that a government entity holds all information regarding donations, which provides the ruling party with a sly advantage.

India, an openly opaque society

A report by the Association for Democratic Reforms² that studied tax returns filed with the Election Commission of India (ECI) by the seven national political parties in 2018-19 states that a landmark 67% of political funding to India’s seven national political parties came from essentially untraceable sources (electoral bonds, coupons, contributions from meetings etc.), of which “the income of BJP forms more than 1.5 times the aggregate of income from unknown sources declared by the other 5 National Parties (Rs 900.94 cr)”. So what has been done is to essentially move from a cash-based opaque-to-all donation-mechanism to a legitimised instrument-based opaque-to-opposition donation-mechanism.

The only regulation that is somewhat enforceable is that of political expenditure, where under the Representation of the People Act, 1951, certain limits for political expenditure during elections are to be adhered to under oath, mostly during the interval between getting nominated by a party and winning the election, and are updated by the government from time-to-time on the advice of the ECI. Anyhow, these limits are an additional joke, as following them would never win any party a single election³.

The most obvious result of not having transparent political funding is that citizens’ aspirations are gradually overtaken by profit-seeking lobbies influencing the government/legislature to devalue any democratic agenda in favour of continued monetary support, a cycle of anti-poverty that reinforces poverty.


The Solution— Make input (and to the extent possible, output) finances transparent by law. Ah, idealism.. That needs, to be perfectly honest, a citizen-led democratic-revolutionary movement to hold the political establishment responsible, because the simple fact is that every political party in existence abuses election expenditure limits and discloses very little information as to its monetary receipts. This weakening of our democracy to unchecked finance has continued unabated across the world, and will not cease until politics opens up.

Sounds too impractical? Even if you pass a requisite law, there’ll remain lingering doubts concerning who has access to financial documents, and who can further retroactively modify money routes. Fortunately, technology by way of finance and art has come to our aid. The premise is this: using openly distributed ledger tracking via blockchains to make political funding traceable, non-anonymous and auditable by citizens like you and I, or independent institutions. Does this sound too impractical now? Let me explain in (as far as possible) layman terms.

Cryptocurrencies are digital currencies with no empowered central financial authority in control of its operations, most famously exemplified by bitcoins. They are served by a technology called blockchain, that authorises peer-to-peer (P2P) transactions made in them by the means of 2 keys, a public and a private key; the private key can be used only by its owner to securely authorise taking part in a trade, while the public key allows anyone to confirm that the trade has taken place. These transactions can be conducted electronically from anywhere in the world, without requiring a 3rd party trust-establishing regulator. All this is achieved due to a robust Peer-2-Peer network of ‘miners’ (incentive: we can think of them as gatekeeping individuals who earn rewards in the currency by ensuring that a transaction is authentic) that keeps chaining ‘blocks’ of transactions together by adding a new timestamp-hash (e.g. ‘2c5d36be54’, say, which corresponds to a particular transaction) to all previous blocks’ timestamp-hashes— which acts as a public ‘khata’ of verified trade records existing across multiple computers. If I, the evil genius or a rotund government official, try to unilaterally change a certain block in the chain, all subsequent hashes will be affected, and the miners will flock to an alternate chain to build further on it, canceling my efforts. The longer the chain extends, the more certain we are about the integrity of the transactions within it.

An infographic with the basics

Sidenote: [The world of art and content creation is also experiencing a shift with the introduction of NFTs, or nonfungible tokens⁴ (virtual cryptologic certificates attesting to any content’s authenticity), that gives a buyer encrypted ownership over a specific work. The valuation of the token can be freely determined through auctions, or used to re-establish genuine artist-consumer relationships by giving the attached art a mechanism to enshrine its unique properties. Also, any information the token possesses cannot be duplicated, which gives an iota of power back to creators who can trigger royalty payments as the token gets further exchanged in the future. Whether it’ll bear fruition and democratise the way we consume art (Kings of Leon, the rock band, have just released their newest record in NFT formats⁵) in the way cassettes, CDs, P2P piracy and streaming had, only time can tell.]


Countries like Brazil, Sweden and the USA have already started experimenting with and regulating the newly emerging crypto-market; some have been allowing politicians to accept donations in such currencies provided the donors have declared requisite details, while others have even gone so far as to suggest creating their own national cryptocurrencies.

The downside is that donations in cryptocurrency have been cautioned against, due to the potential for laundered-/terrorist- financing that can erode the currency’s potential value, not to mention the fact that there isn’t any approved legal international framework yet that validates its usage to buy cross-country products and services. If there’s a failure after massive fluctuations in valuation (which have been known to occur), there’s no sense of where the buck would stop.

The proposal I’m raising would be take this risk out of the picture. A significant departure in what I’m suggesting is that we do not need to allow donations in currently available cryptocurrencies, or even perhaps use this technology’s traditional financial/currency functionalities (open as it is to volatility and anonymity).

Instead, here’s the suggested intervention to be codified into law— (a) either using the open ledger technology already in existence to usher in transparency in political donations using prevalent digital currency exchanges (GPay etc.), or (b) creating a new national cryptocurrency strictly fixed to the rupee and tied to its usage only within the political funding ecosystem. Both would involve an overhaul of the political funding platform; interested entities will have to verify identity, tag their presence to a registered bank account with background detail checks, declare the asset value with which it is entering and exiting the platform, and tie each transaction to the transparent ledger ecosystem I have already discussed (atleast during elections).

The first [(a)] is a far easier exercise, to simply mandate every debit and credit entry to be publicly available for audit by anyone with a public key and who passes basic identity verification requirements. This could also be the work of authorised oversight groups, which because of their multiplicity cannot be composed of single-party ideologues.

The second [(b)] is more audacious, yet befitting a country as full of vibrancy and contradictions as ours. Let us legislate a virtual currency that is fixed to the value of the rupee, for restricted usage in funding political parties, called “Ambedcoin”⁶ (say, to give users some positive behavioural iconography in these ‘Digital India’ times), that only has value in storage/exchange and none outside the platform. At the commencement of the platform, political parties can open their accounts on it, to be followed by individuals and groups seeking to donate— with the rupees they transfer from a registered bank account converted to equivalent Ambedcoins. Donors will undergo ECI/equivalent-body verification, and if found operating separate accounts be debarred from the platform. Political parties will subsequently encash the Ambedcoins they have a need for to their accounts, at which point they will need to select a category out of a list of some common reasons for expenditure (holding public meetings, food expenditure, election rallies etc.). The idea is to crack open political financing, while simultaneously giving a subtle nudge to outfits that represent citizens to provide a public display of political expenditure tagged to genuine ends, comparable with other parties. The responsible independent body can monitor both ends of this spectrum, and modify extant rules as required.


What are the benefits of using this technology? Other than being a medium of exchange that could sooner or later dominate the future, I’ll quote a report by Burcher, a political finance expert (2019)⁷—

• Cryptocurrencies’ immutability means that transaction records cannot be tampered with, which offers an important layer of security that cash transactions, for example, lack. These records can help oversight agencies follow the trail of resources and donors behind political campaigns.

• Cryptocurrencies’ increased transparency, when they are designed with an open ledger and allow the identity of people involved in the transactions to be verified, could facilitate oversight.

The reason I’m asking for such steep changes is this— does any educated individual just want the party with the most financial clout to get voted to power, and then use the existing ecosystem to keep itself (and its supporters) the richest for 5 years if not decades, instead of being a collective that to some extent represents the will of a certain ideology willing to have a fair battle for supremacy?

Isn’t enacting all this worth the trouble?

It’s important to have a lot of debate and consultation within society and between the political apparatus and civil rights groups for the creation of regulations and guidelines that establish to what degree oversight over this system satisfies all concerned parties, ensuring every monetary resource entering and exiting is clean, access universal, and democracy hopefully more delinked from money.

Finally, we can size up this reform better using the framework of scarcity, behavioural change & incentives. The scarce resources to be redirected towards setting up of a commission/agency along multi-stakeholder PPP lines to enable these suggestions (in consultation with the RBI and the ECI) will necessarily include a digi-security and fintech team to develop an indigenous open-source accountability architecture, supported by a panel of independent observers that could study the legal restrictions on political funding worldwide and design potential limits on funding from a single/joint account, minimum donation amounts that won’t require supervision, backdoors the ECI can possess, etc. This should also enable the ECI to conduct elections in both a rules-based AND financially sensitised polity. Thus, the long-term benefits should outweigh present adjustment costs by any Cost-Benefit Analysis conducted externally. Hopefully, we would synthesise a cutting-edge platform that inspires democracies, similar to how our Constitution used to once upon a time..

This way of enacting a landmark transformation in political funding will automatically decentralise questions of ethics in monitoring the relationship between wealth and decision-making.

The incentive structure of the proposed solution will keep parties and public groups in competition with each other. Unless one can control over 50% of the total CPU power in the system, manipulating blockchains is impossible due to the need to then go and undo previous transaction blocks one-by-one and redo the chain⁸. And plus, an incentive would then arise to ‘show’ the public how political funding is being used for the benefit of society, which creates a competitive positive externality.


Of course, expected & immense resistance would emerge from one, bureaucrats, who’d stand to lose an unregulated source of income that the status quo preserves; two, politicians, who would hurt financially for the first time after the onset of a reform in 75+ years; three, political parties, who would have to really put their ideologies to the test without the incredible support that their thousands of untraced crores provide right under the eyes of us all. A legal argument against the idea perhaps would be that it goes to some degree against the right to privacy of political candidates (if not parties) when elections aren’t being held, who would claim that they only seek to be representatives of the people and aren’t public officials; an argument that deserves to be quashed on grounds of how dissociated politics has become from any form of idealism or self-sacrifice— which it must regain. This entire ecosystem of cyclical corruption, frankly, can only be ably and systematically combated by such a shot-in-the-arm public enfranchisement. By letting information flow, making the ECI absolutely independent, giving the ECI powers to investigate questionable sources, and making deposits and withdrawals of money from accounts visible to the general public in its use for political activity, light could ultimately emerge through a long boarded-up window.

If we can’t do good for ourselves, we’ve got to create institutions that hold us to our own capacity to be better than filth.

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I hope to write about the second point I raised above soon, which would consist of making the system of reserving entrance/promotion entitlements for the historically underserved and socially + educationally backward groups of people⁹ —
(a) accountable, by
(b) enforcing time-bound reductions in % proportion reservations across successive intervals,
(c) reshaping reservation politics towards affirmative action politics, and
(d) creating a new social narrative that can counter the all-party ideological march towards supporting divided votebanks by providing sops, which by its very sustainability can never go beyond entry-level access and only add to inter- & intra-group frictions.

Obviously, this will cause far more political upheaval than the 1st suggestion, but still does need urgent, frank, brave ideating among every strata of citizenry.

1. https://www.idea.int/sites/default/files/publications/cryptocurrrencies-and-political-finance.pdf

2. https://scroll.in/latest/955666/indias-seven-national-parties-got-80-of-funds-from-unknown-sources-in-2018-19-says-report

3. https://www.downtoearth.org.in/blog/governance/the-charade-of-limits-on-election-expenditure-by-candidates-73945

4. https://www.cnet.com/news/christies-nft-auction-closes-at-69-million-as-digital-art-sets-off-a-gold-rush/

5. https://www.independent.co.uk/arts-entertainment/music/features/kings-of-leon-nft-album-art-b1815695.html

6. Somewhere between tongue in cheek and dreamland.

7. See 1.

8. https://bitcoin.org/bitcoin.pdf

9. So that they are proportionately represented and their conditions improved.