Ex-Constituent Assembly (CA) member Khimlal Devkota says he decided not to contest the 2017 parliamentary election from his party, CPN (Maoist Center), as he simply didn’t have enough money to finance his campaign.  

“I couldn’t sell my honesty just to put together money to contest a seat. I would have had to offer money, first, to get candidacy, then to buy electoral votes,” says Devkota, recalling his decision. “If I was elected, I would perhaps have had to buy a ministerial birth too."

Devkota says he would then have had no choice but to try to recoup not just his electoral expenses but also make some more money for the next election.

Also in 2017, vice-chairperson of the then CPN-UML Yubaraj Gyawali was another leader who relinquished a party offer for a direct election seat under the First-Past-The-Post system. “I didn’t have a contractor, a businessman or a smuggler to finance my campaign,” Gyawali had at the time told his party comrades when queried on his choice.

The situation doesn’t seem to have changed much in three years. Aspirants for representation in the federal lower house are already worried about their electoral finances even though the election announced for April-May is mired in doubt.

A lawmaker in the recently dissolved parliament, who is now with the Nepal Communist Party Dahal-Nepal faction, said he is in a dilemma over whether to contest the next election.

Due to neck-to-neck competition against his Nepali Congress (NC) rival, he had spent over Rs 10 million in the 2017 federal election. When donations from well-wishers and party cadres proved inadequate to cover his expenses, he borrowed from businesspersons.

“KP Oli dissolved the parliament and called for a midterm election even before I had paid back my loans that were due from the last election,” he says, requesting not to be named considering the sensitivity of the matter.

A legislator earns around Rs 70,000 a month in salary, plus allowances. But, according to the outgoing MP, almost all their salary is spent on travel, food, donations to various clubs and campaigns as well as in party levies. 

Up, up and away

Election-related expenses of both the state and the election candidates have skyrocketed over the past decade. The Election Commission spent Rs 2.75 billion on the 1999 general election. In comparison, the upcoming election of the federal House of Representatives is expected to cost the commission around Rs 10 billion.

Compared to 1999, the EC’s expenses increased by over two-fold to Rs 7.6 billion in 2008 when the country held the first Constituent Assembly elections following a decade of insurgency and transition. The expenses reached Rs 11.25 billion in 2013 and Rs 20 billion in 2017, including the money spent on security management, according to electoral records, including one obtained from the Office of the Auditor General.

With expenses increasing in successive election campaigns, spending caps on candidates have also been changing. In the 2017 election, the election body fixed the cap at Rs 2.5 million for a FPTP candidate. But real campaign spending would have been as much as Rs 10 million for some candidates, says Devkota.

The candidate spending threshold was Rs 65,000 in 1991 when the country witnessed its first democratic election following the abolition of the single-party Panchayat system. The EC allowed candidates to spend up to Rs 500,000 in 2008 and Rs 1 million in 2013. Coming to 2017, the threshold was Rs 2.5 million, which was considered absurdly high.

“Elections in Nepal are becoming more and more expensive, with election-related expenses of both state and party candidates increasing at rates higher than market inflation,” says former Chief Election Commissioner Neel Kantha Upreti while talking to APEX. This poses a challenge for the sustainability of democracy in a poor country like Nepal”.

Missing paper trail

Although the state’s election spending is transparent enough, the splurge of political parties has never been so. Government expenses on the election body and security management should follow certain rules of procurement and maintain transparency. But the commission has been facing public criticism for not following public procurement process while spending during elections.

Spending on ballot boxes, ballot papers, voter education, procurement and transport as well as on allowances and incentives for staff and security personnel is done via government channels, and such expenses are transparent to an extent.

For example, the government allocated Rs 10 billion each for the Election Commission and the Ministry of Home in election expenses in the 2017’s national budget. The EC ended up using less money than had been allocated.

But the money spent by political parties during the election never became public. Nepal’s election law has a mandatory provision whereby political parties have to submit details of their election expenses to the commission right after the polls. But many political parties and candidates fail to do so, even after the commission’s repeated warnings.

Candidates seldom disclose their actual election expenses before the election body. “Expenses from candidates are opaque all the times. They are ready to spend any sum to win. But we never hear of a candidate ever breaching the commission’s expense threshold,” says Upreti, the former CEC.

Proportional proposal

According to experts, various measures can be taken to minimize the state’s election cost. Starting with the 2013 CA elections, the EC asked the political parties to use banking channels for all campaign-related businesses. The commission also made it mandatory for donors to the parties and candidates to use banks.

Unfortunately, the new provisions were openly flouted. “After the 2013 elections, we tried to trace the source of funding for candidates as well as areas of their expenditures. Our plan back then could prove useful in studying ways to minimize election expenses,” Upreti says.

The EC had also proposed state funding to cover political parties’ expenses, but lawmakers rejected the proposal as “impractical”.

Similarly, the commission had proposed that candidates make public their property as well as the property of their family members while fielding their candidacy, but the parliament turned down this proposal as well.

“These measures could have helped make the expenses of candidates transparent and minimized election costs,” Upreti says.

According to him, legal changes are a must to minimize election costs as well as expenses of candidates. Monitoring should be strengthened and voter education on values and importance of democratic process be carried out as a long-term solution.

Electronic voting systems could also cut costs after a one-time investment on Electronic Voting Machines. But neither political parties nor the commission seems to have much faith in these machines.

“Costly elections are barriers to our goal of prosperity, and they promote corruption. We have no option to minimizing the election cost if we are to protect our democracy,” Upreti says.

Seconding the proposal of some political parties for a fully proportional representation (PR) election system, Upreti says the current mixed-election system needs to be changed. “PR elections should be promoted so that all voters cast their ballots for the parties, not individuals. That will help minimize election expenses of candidates,” he adds.

Although research on political parties’ expenses is scant, a 2017 study conducted by a civil society group with the support of the International Foundation for Electoral System suggested the majority of candidates in Kathmandu valley had exceeded the threshold of Rs 2.5 million in parliamentary elections that year. The research report says some candidates spent as much as 136 percent more than the threshold. Interestingly, the study also concluded that the candidates who exceeded the threshold received more votes than those spending less.

According to Upreti, a rule of thumb is that state expenses make for just 25 percent of all electoral costs, with the remaining 75 percent is spent by candidates and political parties.

Where is the money?

Political parties and candidates get campaign money mainly from the business community in donations and loans. Parties pile pressure on industries, corporate houses and businesses for donations during elections. They also receive money from contractors, party cadres and Nepali expats.

Economists say an election could have a positive impact on the economy as it helps channel money from informal to formal economy. An election also increases mobility of money and bank loans. Hotels, restaurants and liquor businesses get a boost. However, an election always results in inflation.

The Ministry of Finance is struggling to put together the money for the upcoming election as no such election had been planned during the budget-making process for the current fiscal. With state coffers short in cash, the government has been appealing for donations to buy Covid-19 vaccines.

Now, the finance ministry is mulling whether to transfer budget from various projects or to introduce a supplementary budget in order to finance the scheduled election. The state’s expenses alone are expected to cross Rs 20 billion in the upcoming parliamentary election, whenever it is held. Adding the expenses of candidates and parties, the total electoral cost could exceed Rs 100 billion.

The per-voter state spending in the upcoming polls will be around Rs 1,000, with the EC expecting at least 14 million to cast their ballots. The corresponding figure for 1991 election was Rs 71, which then increased to Rs 203 in 1999, Rs 425 in 2008 and Rs 913 in 2017, according to the Office of the Auditor General.