Ban on iron ore exports may take big bucks out of poll

Karnataka’s May 5 assembly elections is expected to see a big dip in the use of money power.

Written by Johnson T A | Published:March 31, 2013 1:20 am

The run-up to Karnataka’s May 5 assembly elections is expected to see a big dip in the use of money power,particularly of the unaccounted variety.

A 2010 ban on iron ore exports from the state,imposed in the wake of rampant illegal mining,has changed the landscape for funding,leaving only the flourishing real estate sector capable of funding poll fortunes.

This shift of money power from iron ore mining in Bellary district to the real estate sector in Bangalore will be a key change in the poll dynamic from what was seen in the 2008 elections.

“Money as such will not have the scale of influence like in 2008,” said Bellary iron ore mining businessman and Congress MLA Santhosh Lad. “I would not like to comment on which industries will provide resources. Overall,the spend will be less and not to the extent to influence the elections. In individual constituencies with prestige battles,you can expect expenditure to be heady.”

According to Lad,the 2013 elections will be more about people’s aspirations,caste equations and development rather than funds that slush around.

With the liquor and the education lobbies,which were once key sources of election funds,lacking the resources to be pan-Karnataka players like the mining sector in 2008,the general impression is that the May polls will witness a return to a more normal path.

The real estate sector which threw up the most number of multi-millionaires in 2008 — such as G Prasad Reddy of the BJP with declared wealth of Rs 213 crore — is expected to be the key money spinner,but again without the pan-Karnataka influence of the iron ore sector.

“With the mining industry in the doldrums,it is probably only the real estate industry that can wield influence in terms of financing parties. There will be many candidates with real estate funding but their influence will be limited,” said the businessman-son of a veteran state Congress politician.

While the real estate sector has been at the forefront of electoral funding in Karnataka since 2002,elections in the state started seeing a different dynamic after 2004 when iron ore exports from Bellary began booming in the light of Chinese consumption for the 2008 Beijing Olympics.

The influence of the iron ore mining industry on elections reached its peak in 2008 when the Reddy brothers of Bellary,mining businessmen-turned-politicians affiliated with the BJP,pumped in cash to ensure victories in as many as 23 seats in central and north Karnataka.

When the BJP emerged as the single largest party in 2008 but fell three short of the simple majority mark of 113,it was the Reddys who initially bought over independents and financed defections from the Congress and the JD(S) to help the BJP settle at a comfortable 118 seats.

Investigations by the anti-corruption ombudsman Lokayukta in 2009-10,however,found the existence of a rampant illegal iron ore mining racket in Bellary with iron ore worth over Rs 2,000 crore being illegally exported between 2008 and 2010. In July 2010,iron ore mining in Bellary was banned and in September 2011,G Janardhan Reddy was arrested by the CBI.

“Money will play a substantial role in this elections. Let us have no doubt about that. Whether it will play a role in the outcome is the question,” said leader of JD(S) in the legislative council,M C Nanaiah. Real estate businessmen are seeking tickets to contest the polls and are,in return,offering to fund campaigns in neighbouring constituencies,he said.

According to Nanaiah,the average spend in an urban assembly constituency at present is Rs 5 crore while in rural areas it is in the range of Rs 50 lakh to Rs 1 crore. “A substantial section of voters has been led into a situation where they expect inducements. Like caste will play a role,money will have its part. But governance issues will have their effect too,” said the former minister for law and parliamentary affairs.

That big money is needed to win elections was admitted by Congress leader and aspirant to the chief minister’s post,Siddaramaiah,during a recent discussion on political honesty. The 64-year-old leader of the OBC Kuruba or shepherd community said contributions from the public helped him win a 2006 bypoll when he quit the JD(S) to join the Congress and the opposition,he claimed,spent Rs 60 crore to defeat him.

“Under such circumstances,what should I do? I confess money played a central role in my victory. I received money from all around,including a shepherd who sold a flock of 100 sheep,to fund me. Most people anticipated something in return,” Siddaramaiah said.

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