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Opaque political financing could cost democracy dear

GS Paper 2

Syllabus: Role of political finance in the politics of India


Source: TH

 Direction: This is an editorial article. This article helps to understand the linkage between political finance and political competition.



  • In India, the discussion over political financing is mostly focused on its impact on political competition
  • This is evident in the political debate over the introduction of electoral bonds, which are viewed as either a tool for political cleansing or a means for legitimising institutionalised corruption.


Political finance is an important determinant of political competition, impacting it at the:

  • Institutional (between ruling and Opposition parties) level: The degree of transparency in political funding influences the effectiveness of institutional safeguards.
    • For example, the inherent opacity of electoral bonds renders the power of the Election Commission of India (ECI) irrelevant in terms of ensuring a level playing field.
  • Organisational (within a party) level: The degree to which political funding is centralised inside a party impact whether power is drawn from organisational structures or individuals.
  • Ideological (the role of ideas) level: When political financing is based on a narrow concentration of economic capital, the ideological foundations of political competition erode severely.


How does political finance impact political competition today?

  • Electoral bonds: For example,
    • Undue advantage of the ruling party. For example, BJP in 2019-20 got over 75% of the total electoral bonds sold.
    • Disadvantageous to regional parties. As a reply to an RTI, out of the ₹5,851 crores of electoral bonds sold in 2018-19, 80% of the bonds were redeemed in Delhi.
    • Thus, it reverses the concept of transparency and openness, significantly tilting the channel of electoral bonds toward the ruling party.
  • Centralisation of power: The concentration of political power appears to be even more commanding at the moment. For example,
    • The central government commands unquestionable authority over States.
    • Also, the Union government possesses the autonomy to bring in measures such as demonetisation and Goods and Services Tax (GST).


Way ahead: Independent institutions (such as the ECI and the Supreme Court of India) step in to provide institutional safeguards, otherwise reforms like electoral bonds may result in a democratic decline.


Insta Links:

Should elections be state-funded?


Mains Links:

Q. Trace the changes witnessed in political funding with the introduction of the electoral bond scheme. Critically analyse the potential of electoral bonds in fulfilling the goal of transparency in political fundraising. (250 words)