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AIR spotlight summary on “Reforms in funding to Political Parties”.



AIR spotlight summary on “Reforms in funding to Political Parties”.


The government has embarked on a new exercise to stop corruption in the political funding which a bane of Indian electoral system. Nearly 70% to 80% of the funds to the political parties are never reported and they are collected from unknown sources. The government has decided to bring in greater transparency in funding of political parties. These include capping cash funding by a single anonymous donor to 2000 from the earlier limit of 20,000 and proposing electoral bonds. This demand for capping cash funding by an anonymous donor was also made by the Election Commission recently. This is a step in the right direction, which does not solve the problem completely but partially.

Transparency in Political Funding

  • This is the first time the government has acknowledged that there is non-transparency of political funding. Transparent method of political funding is vital for the system of free and fair elections and even after 70 years of independence the country has not been able to evolve transparent funding to political parties.
  • Like we expect the vegetable vendor and the auto driver to accept payments digitally the same should be followed by political parties. The corruption in political funding is against the moral and ethical principles.

Supreme Court Guidelines on Electoral Reforms

  • Supreme Court had raised the issue of Irresponsible promises made by the political parties in the manifestos. Supreme Court directed the Election Commission to call the political parties and discuss a way out. The guidelines that there should be responsible promises in the manifesto were included in the Model Code of Conduct.
  • In 2002 Supreme Court had said that every candidate while filing his nomination papers has to file an affidavit giving the details of his financial assets and also regarding the criminal cases pending against him. Most of the electoral reforms have come through the Supreme Court which is a sign of judicial activism.   

Further Steps in Electoral Reforms

  • The next step could be that every rupee donated to political parties should be accounted through digital transactions.
  • State funding of elections have been discussed several times and several committees have recommended and the most talked about committee is the Indrajit Gupta Committee of 1999. It said the state funding to elections will be feasible when there is internal democracy with the political parties. The report pitched for the need to devise appropriate framework for regulation of political parties before state funding of elections is attempted.
  • There should be state funding of political parties based on their performance not state funding of elections. Say for every vote the political party is given Rs 100, so that the total amount will be more than the money the political parties have raised through corruption and dubious means.
  • Donating to a National Electoral Fund and the details of the donors will be kept secret. By donating to the National Electoral Fund, it will be like donating to the nation and not to any political party. From this fund the money can be distributed to the political parties based on their performance and the percentage of votes they obtain so that there will be complete transparency. There can be tax benefit for those who donate to the fund.

Concerns / Challenges

  • This move of reducing the limit to Rs 2000 will raise the paper work for the political parties to claim that the funds are from the unknown sources. The political parties may convert the huge funds they receive into single donations of Rs 1990 which leads to more paper work. Therefore it does not solve the problem entirely.
  • The state funding of elections is difficult to monitor because for the Vidhan Sabha elections the limit is 28 Lakhs but the political parties spend in crores. The 28 Lakh provided by the state will go subsidised with the black money used by the political parties.
  • The government has proposed ‘electoral bonds’ where identity of the donor will not be known to the receiver. This can be counterproductive because the details of the donor will not be secret from the government and the government will be privy to the information. So it is like the government control over the political parties.