GS Paper 2
Syllabus: Elections in India
Source: TH
Context: The Chief Justice of India, D.Y. Chandrachud, recently led a Constitution Bench in reserving judgment on the electoral bonds scheme’s validity. The debate revolves around transparency in election funding and whether elections should be state-funded.
What is State Funding of Elections?
State funding of elections refers to the financial support provided by the government to political parties and candidates to facilitate the electoral process.
Key Objectives:
- Enhancing transparency and accountability.
- Reducing the influence of private and corporate donors.
- Creating a fair and level playing field for political entities.
- Encouraging democratic practices within political parties.
- Minimizing the role of black money in election campaigns.
Examples:
- Norway: Norway has a robust state funding system, with approximately 74% of total election expenses covered by the government. Parties receive funds based on their performance in previous elections.
- Germany: Germany provides public funding to political parties based on their performance in elections. Additionally, citizens can voluntarily contribute a percentage of their income tax to a political party of their choice.
- Other countries where such a practice is prevalent are Canada, France, and Brazil
Various views on State financing:
- Indrajit Gupta Committee (1998): Supported state funding for a fair political landscape, especially benefiting smaller parties.
- Recommended state funds exclusively for recognized national and State parties.
- Proposed funding in the form of free facilities for parties and candidates.
- Law Commission Report (1999): Advocated state funding as ‘desirable’ on the condition of parties refraining from external funding.
- National Commission to Review the Working of the Constitution (2000): Did not endorse state funding but highlighted the necessity of a robust regulatory framework for political parties before considering state funding.
- 2nd ARC: Recommended partial state funding for the purpose of reducing “illegitimate and unnecessary funding” of elections expenses.
- ECI’s Perspective on Election Funding: The Election Commission of India (ECI) asserts its inability to restrict candidates’ expenditures beyond state-provided limits.
| Current Methods of Funding in India | |
| 1. Individual Persons | Political parties can legally receive donations from individuals as per Section 29B of the Representation of the People Act (RPA). |
| 2. Indirect State Funding | This encompasses non-direct funding methods, such as free media access, public venue access for rallies, and subsidized or free transportation. India regulates these methods. |
| 3. Corporate Funding | Corporate donations are governed by the Companies Act of 2013 in India. |
| 4. Electoral Trusts | Non-profit entities in India were created to systematically collect voluntary contributions from individuals or domestic companies. |
The Need for State Funding of Elections:
- Transparency Issues: Current funding lacks transparency, with a significant portion coming from undisclosed sources, including electoral bonds that withhold donor details, violating transparency principles.
- Political parties resist transparency under the Right to Information.
- Corruption and Crony Capitalism: Existing funding, involving ‘unknown donors’ like large corporations, fosters corporate lobbying, crony capitalism, and institutionalized political corruption.
- Fairness Concerns: Wealthier candidates and parties having access to substantial financial resources create an uneven playing field
- Violations of Laws and Guidelines: Non-disclosure of funding sources contradicts guidelines from the Election Commission of India (ECI), rulings of the Central Information Commission (CIC), and the Supreme Court’s decision in the PUCL vs Union of India case.
Challenges in the Implementation of State Funding of Elections:
| Challenges | Description |
| Fiscal Challenge | State-sponsored electoral funding may exacerbate the rising fiscal deficit, straining government finances |
| Funds Diversion | State-funded elections could divert resources from crucial social sectors like Health, Education, and Skill Development |
| Operational Challenges | Establishing consensus on criteria for fund distribution among political parties and candidates poses a significant operational challenge. |
| Misuse of State Funding | There’s a risk of misuse as frivolous political parties might emerge solely to receive state subsidies, diverting funds from political office and development work. |
| Regulatory Hurdles | The Election Commission of India (ECI) opposes state funding, citing limitations in prohibiting or checking candidates’ expenditures beyond state provisions. |
| Limited Benefits | Intra-party democracy deficits may limit the benefits of state funding of elections. |
Suggestions for state funding:
- National Electoral Fund: T.S. Krishnamurthy proposed allowing contributions from all donors, with funds distributed based on election results or agreed-upon principles.
- Audit of Party Accounts: Venkatachaliah Committee’s (2002) recommendations for strict regulatory frameworks in auditing and disclosing party income and expenditure to curb undisclosed funding.
- Expenditure Caps: Enforce expenditure limits for political parties, and implement the Law Commission of India’s recommendation to cap anonymous donations.
Conclusion:
Implementing state funding of elections for transparency is a worthy goal, contingent on devising a fair fund distribution procedure with major political parties’ consensus. There is a need for parties to function democratically and be accountable for public funding. Also, there is a critical requirement for complete transparency in election spending if public funding is implemented.
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