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In search of a new sugar daddy

By M D Riti in Bangalore
March 22, 2004 15:27 IST
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Who will pay? That is the big question bothering all political parties, small or big, as elections draw near in Karnataka.

Until recently, the answer to this question was quite clear. The single largest financier of elections in Karnataka has always been the liquor lobby, known locally as hendada doregalu (liquor barons), though no one ever admitted it.

This time, though, things have changed, and quite dramatically at that. For starters, the two big spenders have jumped into the fray themselves. We refer, of course, to Vijay Mallya, 48, chairman of the UB Group, and L Sri Hari Khoday, 66, managing director of the Khoday Group.

Mallya is now national working president of the Janata Party, while Khoday has just launched his own political outfit, the Devaraj Urs Samyukta Paksha (or United Party, named for the late Karnataka chief minister of the 1970s). This party, Khoday promises, will promote the cause of the backward classes.

These two industrialists, who together hold a sizeable share of the liquor market, were generally known to be big spenders in election campaigns. Politicians freely used their helicopters and cars, planned poll expenditure based on their contributions, and generally saw them as sugar daddies.

But now with these two in the fray, it is likely they will spend most of their money on their own campaigns, their favoured candidates, and their respective parties, in that order.

That leaves a motley collection of the other arrack contractors, distillers and liquor manufacturers. Foremost among them is, of course, Adikeshavalu, the man whom many powerful politicians, including some former prime ministers, rely on for advice and other more tangible forms of support.

But Adikeshavalu, who, like Khoday and Mallya, also lives in the heart of Bangalore, points out that the liquor business today is mostly controlled by the state government and so the liquor lobby may not be too inclined to spend big money in the forthcoming election.

How did that happen? The process was actually initiated more than a decade ago by the late Congress chief minister Veerendra Patil, stalled by his successor Sarekoppa Bangarappa, and finally implemented in a fairly watertight manner by Bangarappa's successor M Veerappa Moily.

What the revised policy has done is to stop the business of 'seconds' liquor, or liquor that had evaded excise duty. The government now earns an estimated additional Rs 700 crore (Rs 7 billion).

The distilleries are understandably annoyed, and unlikely to fund the political parties whom they hold responsible for this squeeze. "Earlier, we made huge profits and were willing to share them," said one liquor manufacturer who wished to remain unnamed. "Now we don't, so we have no money to spread around."

The small, regional parties are the worst hit by this situation, as the Bharatiya Janata Party and the Congress have their bags full, given that the Congress has been ruling in Bangalore for five years and the BJP in New Delhi.

Mallya, Khoday and the rest of the liquor manufacturers are certain to offer some funds to the big parties, as they are aware that their outfits are unlikely to come to power. Still, the contributions may be much smaller this time.

So, now, political parties have been forced to look for other new interest groups. Naturally, the information technology industry has become the target of most parties canvassing for funds.

A clear indication of this came in Deputy Prime Minister L K Advani's statement when he visited Bangalore on his Bharat Uday Yatra last week. He spoke a lot about the greatness of the IT industry, gave it credit for putting Karnataka on the world map, and said he had taken great pains to visit Infosys and meet chairman N R Narayana Murthy. "I was so impressed by everything that I saw there," Advani said.

Whether this section of industry is willing to invest in politics remains a moot question. If they do become political funders, as they are in the United States, the move would certainly help clean up politics in the state, because IT industry contributions are usually tax-paid and transparent, and would, in turn, force the recipients to be equally transparent about the manner in which they spend them.

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M D Riti in Bangalore