Need for transparent political funding: S Y Quraishi on electoral bonds: No going back to square one

Source: The post need for transparent political funding has been created, based on the article “S Y Quraishi on electoral bonds: No going back to square one”published in “ Indian express” on 15th March 2024.

UPSC Syllabus Topic: GS Paper 2 Governance – Important aspects of governance, transparency and accountability.

News: The article discusses the Supreme Court’s decision to declare India’s electoral bonds scheme unconstitutional. It focuses on the need for transparent political funding and suggests alternatives.

What are the concerns about political donations in India?

Pre-Electoral Bonds

Opacity in Donations: Prior to 2018, political funding was primarily in cash and lacked transparency. Only donations over Rs 20,000 were reported to the Election Commission and eligible for income tax rebates.

Concerns of Corruption: Cash-based donations raised suspicions of corruption and influenced government decisions.

Electoral Bonds

Increased Secrecy: Introduction of electoral bonds led to a total lack of transparency about donors and recipients.

No Accountability: The identities of both donors and recipients were kept secret, heightening concerns over quid pro quo arrangements.

Legal Challenges: The Supreme Court’s ruling against the scheme highlighted the urgent need for reform in political funding for democracy’s integrity.

For more information on Issues in Electoral Funding in India read here

What are the proposed solutions for transparent political financing?

State Funding of Political Parties: A proposal of Rs 100 for every vote a party receives, aiming to eliminate corporate influence. However, it raises questions about funding new parties or independents.

For information on state funding read here

National Election Fund: Establishing a fund where corporates and private entities can contribute with tax concessions. This aims to reduce corporate fears of harassment from political parties. The concern here is ensuring equitable distribution among parties.

Independent Auditing: Political party accounts should be audited by independent auditors, not in-house auditors, to ensure accountability.

Public Funding Mechanism: A suggestion for the public to fund the democratic process through means like a small cess on petrol.

Transparency in Electoral Trusts: Addressing the lack of transparency in existing electoral trusts, which are supposed to provide a layer of separation between firms and political parties.

For more information on Electoral Trust  read here

How do other countries handle political financing?

According to the International Institute for Democracy and Electoral Assistance’s 2012 study ‘Political Finance Regulations Around the World’:

State Funding Based on Votes: Out of 180 countries, 71 provide state funds to political parties based on the number of votes they secure.

European Adoption: This system is prevalent in 86% of European countries.

African Utilization: 71% of African countries use this funding method.

Americas’ Implementation: It’s adopted by 63% of countries in the Americas.

Asian Practice: 58% of Asian countries follow this approach.

Potential in India: Given the widespread global usage and India’s association with the institute, this system could be feasible in India.

Question for practice:

Discuss the potential solutions proposed for transparent political financing in India, considering the concerns raised about political donations and the international practices.