Money in mattresses

If you’ve wondered why India’s politicians don’t instinctively favour policies that help create wealth, the secret is now out: few of them invest in the stock market.

The mandatory asset declarations made by election candidates show that the vast majority have invested their money in land, jewellery or fixed-return instruments. It can be argued that, as politicians in charge of making decisions that could favour the corporate sector, they should not be holding any shares at all — BJP MP Kirit Somaiya, who runs the Investors Grievance Forum, could justify not having any company shares since his organisation is always attacking one company or the other, and so doesn’t want to be accused of bias.

The way out, favoured by politicians in developed countries like the US, is to invest in mutual funds, over whose investment decisions politicians have no control.

Well, in the lists that are out so far, few politicians have invested in mutual funds either — Deputy Prime Minister L K Advani seems to be an exception. Former industries minister Manohar Joshi certainly hasn’t any portfolio investments in either shares or debentures — his investments, apart from the ones in jewellery and real estate, appear to be in his own Hotel Airport Kohinoor and Anagha Hotels.

In this he compares with Chandrababu Naidu, the bulk of whose wealth lies in the shares that his wife holds in a family firm. Opposition leader Sonia Gandhi, being part of the old guard, hardly has any investments in shares, and son Rahul has very limited holdings as well, with most of his cash held in bank accounts abroad.

Maharashtra’s former chief minister Sharad Pawar is an exception, for around a third of his wealth is in the form of investments in company shares. It’s perhaps no surprise that Baramati, Pawar’s borough, is a modern economic miracle, with its vineyards, food processing industries, sugar mills, modern farming practices, and the like.

While the asset disclosures are welcome, they’re incomplete. For one, while they include the assets of spouses, they need to include those of family members living with the politicians as well. At various points in time, for instance, allegations are made of children of several politicians amassing money in their parent’s names. Now, if the assets of such children/relatives were also declared, this would be a step forward.

It will be argued that the children of politicians are independent and it is unfair to declare their incomes as well. That’s a fair point, but the privacy argument breaks down in the case of offspring who live with their politician parents and who frequently chip in as political aides/keepers of the purse.

A clause, for the politicians as well as their children, that asks them to declare their assets five years ago (equal to a Lok Sabha term) would be another welcome addition to the exercise. It is, after all, meaningless to have these declarations unless something further can be done with them — once the public knows, for instance, how much a minister’s wealth has gone up during the last five years, it can then probe deeper into its causes. Presumably the politician would be amenable to such an examination.

Another aspect that makes the declarations less than fully meaningful is that the valuations are usually based on the purchase prices. By no stretch of the imagination can Sonia Gandhi’s Delhi farm, for instance, be worth Rs 2.19 lakh today, or Rahul Gandhi’s Mehrauli farm house just Rs 9.80 lakh.

Declarations of wealth are a great step forward, but they need to be made more meaningful.