On Fixing the Issues with India’s Electoral Funding

Source: This post on Fixing the Issues with India’s Election Funding has been created based on the article “How to Fix India’s Election Funding” published in “Times of India” on 17^th February 2024.

UPSC Syllabus Topic: GS Paper 2 Indian Polity – Salient features of the Representation of People’s Act.

News: The article discusses the concerns raised over corporate donations. It also suggests reforms with respect to electoral funding in order to ensure the integrity of India’s elections.

A detailed article on the Electoral Bonds Scheme Verdict can be read here.

Background:

The Supreme Court recently struck down the electoral bonds scheme. This has brought to attention the framework regulating corporate contributions to political parties.

What was the rationale behind electoral funding by corporates?

Rising Expenditure for Fighting Elections: The rising electoral expenditure could not be met through individual contributions. Hence, the government proposed Companies Act be amended to provide the mechanism and a limit (Rs. 25,000) for companies to donate.

After a brief ban, corporate donations were again allowed in 1985.

What were the concerns raised over corporate donations?

Corporate donations for electoral funding could lead to:

1. Control over Corporates: The government could force a business house into donating to a party.
2. Unethical Favours and Corruption: Businesses may seek advantages for themselves by donating to the ruling party in the hope of compensation in the future. This will corrupt political life and negatively affect India’s democracy.

What should be the way forward?

Regulating electoral finance requires rethinking on the following issues:

1) Repeal Expenditure Limits: India has a limit on how much a candidate can spend on poll campaigns. However, there is a lack of effective enforcement mechanisms for ensuring adherence.
ECI and National Commission to Review the Working of the Constitution (NCRWC) have held that these expenditure limits are hardly followed and should be repealed.

2) Build a Donor Database: A living database of political contributions should be developed. This will bring transparency regarding a party’s support and lead to better-informed electorate.

3) Information in User-Friendly Format: Currently, parties do not share information about donations they receive in a machine-readable format, but in the form of scanned PDF files. This makes it difficult to analyse.

4) Empowering Election Commission (ECI):

1. Infusion of Resources: ECI’s institutional budget is roughly only Rs. 300 crore, with which it has to conduct free and fair elections for the world’s largest democracy.
2. Independent Secretariat: For officers to be insulated from political pressure and state interference, ECI should have an independent secretariat. It would allow it to control its personnel’s recruitment and service conditions better.
3. Expenditure of ECI to be ‘Charged’: A way to strengthen ECI’s independence is to ensure its expenditure is “charged”. It would give it parity with Supreme Court, CAG and UPSC.
   Note: Charged expenditure are those on which no voting takes place for the amount involved in these expenditures for their withdrawal from the Consolidated Fund of India.

According to the author, transparency of political donations and an independent election commission are key to ensure integrity of India’s elections.

Question for practice:

What are the concerns raised over corporate donations to political parties? What steps should be taken to tackle these concerns?