The provision for government grants for election expenditures of political parties announced by Finance Minister Prakash C Lohani in his budget speech has been tried out in many countries. It is a novel idea for Nepal, and worth exploring.

An unregulated political process produces two types of corruption: kickbacks and influence peddling by big business.
The purpose of the public funding for polls should be to root out the cause of bribery by making elections affordable. The influence of big businesses is curtailed by putting limitations on the contribution amount.

In many developed countries, spending caps are put on parties and/or candidates. Strong watchdogs, stiff penalties and public education are the prerequisites for its successful implementation. Trouble is, Nepal lacks many of these safeguards.

Many developed countries have succeeded in rooting out the first type of corruption: kickbacks and bribery. But, they are still struggling to stop influence-peddling by big business. Even though the parties and the candidates may legally abide by the spending law, big businesses will pour in money to help out candidates and parties through independent television, radio ads and other medium. Many European countries have put strict rules in place on campaign-related activities. In the US, such restrictions are seen by some as an attack on liberty and free expression.

In France public opinion polls are not published during the week of the election. In Britain and other European countries there are limitations in television and radio campaign ads. But because of the influence of soft monies, campaign spending in the United States is many folds higher than in Europe. Consequently, European campaigns are much shorter than US ones.

The economic incentive in Nepal has encouraged both intra- and inter-party struggles: parties clamour to grab power, aging party bosses cling on to party chairmanships, intra-party competition is stifled, rival leaderships are expelled, nepotism gets promoted in party hierarchy, nomination not election becomes the norm in forming important party committees, candidates are fielded undemocratically through nomination process. Public confidence in the political process tends to wane. Despite some superficial electoral reforms that are rarely enforced, many developing countries like India, Bangladesh and scores of African nations suffer from this disease, and Nepal is no exception.

Mexico with its strict enforcement mechanism, total transparency, and various electoral reforms (spending limits, disclosure rules, legal consequences of fines and prison terms in case of violations) has successfully implemented a form of public financing provision. The country saw a new party in power after decades of one party rule when Vicente Fox got elected in 2000. Malaysia, on the other hand, still regulates campaign exercises and state resources in favour of the dominant party.

In theory, public funding of election frees politicians from fund raising pressure, reduces corruption, encourages transparency in public projects, and gives them more time to concentrate on the welfare of the general public. Many proponents of public funding of election expenditures have used this argument, and Lohani's budget highlights that provision. In practice, however, things may not quite go according to plan.

The massive taxing apparatus instituted to fund this program has not seen any public debate, and such sweeping reforms should come from a representative parliament. After all, it involves a huge resource allocation coming out of the people's taxes that could have been spent on other pressing needs such as education, roads, communication, and health. Public funding of elections can, and should, be an important part of the constitutional debate.

Given the 12-year record of parliamentary parties, the public should get something in return before handing them over a chunk of their taxes to fund their election expenditures. For starters, they can come forward and offer to lead the negotiation team to solve the Maoist problem, or show other progressive solutions to get the country out of the current rut like pushing for a mixed proportional representation election, regionally decentralised devolutionary government, mechanisms to lower frequent house dissolutions, separation of power between the prime minister and the party bosses, or the direct election of the prime minister.

The political parties should start showing that they have turned a new leaf before the people's money goes to them. The country cannot afford another round of killing.

Other than that, Lohani's proposal is sound, and it should help make Nepali democracy more liberal. Here are some suggestions for fine-tuning the arrangement:

1 Private individuals are at present barred from donating, and this may constitute a violation of basic freedoms, especially in light of the fact that the business houses have been allowed to 'influence' legislations through sizable donations. A capped private donation should be allowed.

2 At Rs 5 million, the political contribution ceiling for businesses is too high. A spending cap must be strictly enforced. Businesses should not be allowed to contribute more than 5 percent of their net profit.

3 An election trust fund can be created in advance with a fixed amount of money and the voting percentage decides the allocation. There should also be a minimum voting percentage for each constituency to qualify for such funds (5 percent) as in the US presidential election. Independent candidates should also have an access to such funds.

4 The amount should be approved by a two-third majority in parliament prior to election. This allows smaller parties to band together and oppose self-serving perks by those who control the House.

5 In return, the parties should undertaken certain commitments to national welfare, like not forcing countrywide closures which is a violation of basic civic rights, turning schools into Zones of Peace to free them from organised political activities.

6 Names of the donors and the amount should be made public every year,
especially before elections.

7 Violators should be fined and/or imprisoned. An independent non-partisan institution like the Election Commission should have complete authority to audit, monitor, and prosecute.

8 The parties must undertake to adhere to democratic principles while running their internal affairs.

Under the current environment, state funding for elections will not deter under-the-table 'donations'. There is no monitoring mechanism worth its name to make it work, and certification by a CPA firm is not enough. Second, many parties are undemocratically run private clubs, and it would be immoral to use tax monies to fund these operations until they reform themselves and allow a fresh crop of young leaders to rise up.

Until then, Lohani may be better off thinking about using that money to uplift the education status of some of the thousands who can\'t afford expensive private schools. With a ten percentage estimated increase in upcoming election counts of 15 million voters, an education trust fund of Rs 300 million (at the proposed Rs 20 per voter) can be created to fund 25,000 poor students for one year of undergraduate education at the rate of Rs 3,000 per student in a non-profit private school or any other public schools of their choice. Using these vouchers, 5,000 students in each region can stimulate healthy competition among the public and the private institutions. A larger voucher scheme can help bright but disadvantaged children to level the playing field.

It may be a better investment for now to spend the money on education rather than on financing nefarious political parties and their undemocratic leaders with tax- payers' money.

Alok K Bohara, PhD, is professor of economics at the University of New Mexico. bohara@unm.edu