THE BLOG
07/18/2014 01:17 pm ET Updated Jul 21, 2014

Indian Elections: 3 Things International Progressives Should Understand

Last week India concluded the largest exercise in the history of democracy, with over 550 million votes cast. And as John Oliver hilariously pointed out, we Westerners mostly don't seem to know what to make of it.

No matter where you live, India demands not to be overlooked. It's home to one-sixth of humanity, which is more than enough argument by itself. But its fate is also inextricably bound up with ours. As Martin Luther King famously said: "The destiny of the United States is tied up with destiny of India." It's not just true of the US, but of the whole world. And never more so than today.

So as a frequent visitor and admiring observer of India, I want to highlight three points of importance to Western progressives like me who are trying to decipher the implications of last week's landmark elections. They are:

  1. The staggering role of money and the corporate players behind it.
  2. The surprising gap between power and support in the election results.
  3. The far-happier-than-it-seems story of the anti-corruption "Aam Admi" party.

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1) The global tsunami of corporate-funded mega-campaigns has officially reached India's shores.

Election costs this cycle tripled from 2009, with estimates ranging between $5 billion and $6.6 billion (USD equivalent). That makes these the second most cash-saturated elections in world history, behind only the US presidential cycle in 2012. When you take purchasing power parity into account, these 2014 Indian elections are the most expensive anywhere, ever. By a lot.

The BJP's advertising budget alone was reportedly over $800 million. Just staggering.

This year the individual spending cap for candidates was raised to an all time high of Rs 70 Lakh (about $119,000). But this still accounts for a tiny fraction of total election spending. The vast majority flows through the political parties who have no spending caps. These donations are mostly untraceable due to blaring loopholes in the disclosure laws. For example, no party is required to disclose the source of donations under Rs 20,000 (about $330 USD). This allows virtually unlimited donations to go unreported if they are simply counted as multiple instances of smaller donations that each fall under the Rs 20,000 mark.

The only real constraint on this practice is amassing and sneakily transferring the sheer volume of necessary cash bundles. The quantity is so great that economists have to estimate it by looking at indirect factors, like drops in cement purchases when the heavily-regulated construction industry starts routing all its spare cash towards election spending, (rather than cement). It's akin to astronomers measuring the size of a large planet that cannot be directly observed through the effects of its gravitational pull.

As a result of all the loopholes, over 85 percent of the major parties' income flows from "unnamed" sources.

So where is all of this money coming from? What we do know is that at least 14 of India's largest industrial conglomerates are now taking advantage of newly created tax-deductible "Electoral Trusts" to funnel large contributions into the elections.

Others are giving enormous in-kind contributions. For example, almost every day this year, Narendra Modi reportedly flew back and forth to election rallies around the country in a private jet, courtesy of The Adani Group, a major international coal and energy conglomerate. These flights costs an estimated $5,000 USD per hour.

What do all these major donors want in return? Whatever it is, they certainly think Modi is going to deliver. The Sensex, India's stock market, closed at an all-time high following the election results.

A lot of that surge is fueled by foreign investors. Deutsche Bank, for example, declared this "historic verdict" justified a dramatic upswing in their India market investments. Deutsche also happens to be a major investment partner with the Adani Group in various global coal extraction projects. (Including the highly controversial Abbot's Point project in Australia.) Adani's surging stock value is openly pegged not to its lackluster business fundamentals, but to its tight relationship with the new prime minister. No wonder Deutsche Bank thinks business will soon be booming in India.

This is just one connection of hundreds in the growing industrial-political complex that increasingly knows no national borders.

None of this is to suggest the Congress-led government wasn't subject to similar forces. Just that as the price tag of winning elections goes up, so does the pay-off demanded by those who bear the price.

Whatever happens next will affect us all.

~~~

II) A huge victory, but with less support than you might think.

Consider the following: The BJP just scored the largest Lok Sabha (parliament) majority in 30 years, going from 116 to 282 seats. The magic number needed to form government is 172. The big question was whether the BJP could possibly reach that alone. They crushed it.

However, despite winning 51 percent of the seats, the BJP only received 31 percent of the popular vote. This is the single lowest vote-share of any single party that won a parliamentary majority in Indian history. And it's nearly the lowest vote share of any coalition government in Indian history.

This speaks to an incredibly well-targeted, organized and executed election campaign by the BJP, for which they deserve full credit. But it's scary to consider the implications of an evolving political realization that a broad-based, inclusive constituency may not be as critical as huge war-chests and smart targeting to secure a parliamentary majority.

Indeed, the number of Muslims elected to the Lok Sabha just fell to a 50-year low. The BJP only nominated five Muslim candidates, none of whom won. And Muslim voters appear to have stayed away from the BJP in record numbers.

This is particularly concerning if the lesson it teaches the BJP is that India's 178 million Muslims are simply not necessary to their electoral equation. Losing that electoral check could unleash some of the uglier aspects of the communal tendency.

~~~

III) Aam Admi Party: The rumors of their death have been greatly exaggerated.

Arguably the greatest recent experiment anywhere in moving from protest to politics is the Aam Admi Party -- the outgrowth of 2011's massive anti-corruption protests. If you read anything about them this week, it will be that they fizzled and failed. Don't believe it.

The nascent AAP, led by firebrand activist Arvind Kejiwal, stunned the nation when it won 28 seats in the Delhi Assembly elections last December, enough to form government. Kejriwal himself ran directly against three-term Delhi Chief Minister Sheila Dikshit and defeated her, earning a reputation as a "giant killer."

The AAP quickly fulfilled election promises to provide nearly 700 liters of free drinking water per day, per household, and cut electricity rates by 50 percent.

As chief minister, Kejriwal even filed a criminal inquiry into gas price fixing against Mukesh Abmani -- India's richest man who had always been considered a political untouchable.

However, the AAP's No. 1 priority was implementing the anti-corruption authority (called "Jan Lokpal") that had been the central ask of its founding protest movement. This initiative was blocked over a constitutional dispute about whether the Delhi government had the authority to take this step without permission from the national government.

Kejriwal resigned in protest, ending the first AAP administration just 49 days after it began.

Undaunted, The AAP rapidly expanded its ambitions on the national stage, hastily fielding candidates in 434 districts across every state -- more than even the BJP.

Kejriwal raised expectations to a fever pitch by choosing to run directly against Modi in the ancient holy city of Varanasi, trying to once again play the "giant killer" in what the press dubbed "The Mother of All Battles."

But when the dust settled last week, it all looked like a bust. Kejriwal lost big in Varanasi. The AAP won zero seats in their stronghold of Delhi, and only four seats nationwide (all of them from Punjab).

The press is now rapidly turning on their former darling, declaring that Kejriwal's resignation and over-ambitious national strategy has "destroyed" the party.

Kejriwal himself has acknowledged quitting government so soon was a mistake, and apologized to the people of Delhi.

Surely if the AAP had focused more resources on fewer seats they could have won more of them. Whereas the BJP's highly-crafted campaign turned 31 percent of the popular vote into 51 percent of the Lok Sabha seats, the AAP's scatter-shot approach turned 2 percent of the popular vote into just 0.7 percent of the seats.

But for a protest party like AAP, was getting five or 10 more opposition Lok Sabha seats a more important goal than being perceived as a truly national phenomena in less than two years from launch?

It's difficult to overstate the success of the AAP's national relationship with the press. One study found that in the crucial final days of the campaign period, Kejriwal got more prime time television mentions than Narendra Modi and a whopping six times more coverage than ruling Congress Party scion and frontman Rahul Gandhi.

This was a strategic coup. After all, 11 other minor parties won more Lok Sabha seats than the AAP, but none came anywhere close to capturing the national narrative like that.

The truly unexpected twist was in Delhi, where the AAP was most confident. The voters did not desert them: The AAP's vote share actually increased from 29 percent in last year's Assembly elections to 33 percent in this year's Lok Sabha elections -- which is more than the BJP's national vote share. But those votes were distributed such that AAP candidates came in second in all seven Delhi Lok Sabha races, winning none of them.

That distribution was surely unforeseen and very unfortunate. Because even as their support increased, the take home story for the press is that the AAP crashed and burned.

Then there's the finance gap: The AAP raised only $6,150,000 USD for their entire campaign, with an average contribution of ~$57. How do I know? Because only the AAP has adopted the practice of full, voluntary disclosure of all donations, of all sizes. It's impossible to know exactly what the BJP and Congress raised in total, but it dwarfs the AAP's haul by orders of magnitude.

This is no accident. A protest party, born of the anti-corruption movement, that files price-gauging charges against super-billionaire industrialists is hardly an appetizing purchase for those with the most to spend.

So I would argue the AAP intentionally traded big bucks and more electoral wins for a national megaphone -- which was a bold and largely shrewd move.

For the AAP the big questions now are: A) Will their megaphone still work in the aftermath of the Modi wave and their unforeseen losses in Delhi? Will they still be able to focus the public conversation? And B) What can they achieve now that Modi and the BJP have won such a commanding majority of seats to form a much more secure government than their Congress party predecessors? How much can advocacy and protest do in such times, against such so much money and hard power?

And for the whole country, perhaps the most important question now is whether the tsunami of high-dollar corporate cash saturating the Indian democracy can ever be turned back... or this the new normal, as it is becoming in so many other parts of the world?

Those of us everywhere committed to building people-power to clean up our democracies should stay closely tuned. Our destiny may very well be tied up in the answers.