State Funding of Election- Explained Pointwise

Introduction

State funding of election can address the issue of ‘Lack of Transparency in election funding’. The Lack of transparency in election funding is the central issue, on which the electoral bond scheme of the Government of India has been challenged.

What is state funding of Elections?

State Funding of elections- It is an election funding mechanism, where the government gives funds to political parties or candidates for contesting elections.

Committees formed for state funding of elections and their recommendations

What is the need for State Funding of Election?

1. Lack of Transparency in electoral funding- Large proportion of electoral funding comes from unknown sources. The electoral bonds, also, do not disclose the donors details to the public. This violates the basic transparency principles, as the electorate has a right to know whether the funds are being raised through legitimate means.

2. Corruption and Crony capitalism- The current system of funding by ‘unknown donors’ which include large corporate houses has led to corporate lobbying, crony capitalism and has institutionalised political corruption.

3. Lack of Fairness- Supreme court, in Kanwar Lal Gupta v Amar Nath Chawla case, observed that access to large financial resources translates into electoral advantage. Richer candidates and parties have a greater chance of winning elections, which distorts the level playing field.

4. Contravention of Laws and guidelines- The non-disclosure of sources of electoral funding goes against the ECI guidelines, Central Information Commission’s (CIC) rulings and SC’s ruling in the PUCL vs Union of India case. The political parties have refused to submit themselves to the transparency that comes with Right to Information.

What will be the advantages of State Funding of Election?

1. Transparency in electoral funding- The state funding of elections fulfils the citizen’s right to know about the election funding and expenditure. This enhances the transparency of the electoral process.

2. Fairness of the electoral process- The state sponsored elections will ensure all political parties and candidates are at equal footing. This will ensure fairness of the electoral process.

3. Reduction in criminalisation of Politics- According to Vohra committee, the criminalisation of politics has been a result of the donation of criminal proceeds to political parties. The state funding of elections to political parties will reduce the criminalisation of politics.

4. Encourage citizen centric decisions- The funding of elections by the state will break the corporate-political nexus. It will encourage the government of the day to take citizen-centric decisions and ensure good governance.

5. Increased accountability- Use of public money will make the political parties more accountable to the public, as it will improve the party-public relations and break the politico-corporate nexus.

What are the challenges in the implementation of state funding of election?

1. Fiscal Challenge- The government is grappling with the rising fiscal deficit. Putting further strain on the government exchequer, by state sponsored electoral funding, will worsen the fiscal health of the government. State funded election will pose a serious challenge to our FRBM targets.

2. Funds Diversion- The funding of elections by the state will lead to diversion of government funds from social sector which need immediate attention like Health, Education and Skill Development. Funds being diverted to finance elections will hinder state welfare programs and the development of the weaker sections.

3. Operational challenges- Building a concensus on, the criteria to be used for distribution of the funds amongst political parties and candidates, will be a huge operational challenge.

4. Risk of Misuse of state sponsored electoral funding- State funds for elections can be misused as many frivolous political parties may crop up to receive state subsidies, rather than running for political office and engage in development work.

5. Regulatory hurdles- ECI has opposed state funding of elections on the ground that it would not be able to prohibit or check candidates’ expenditure, over and above which is provided for by the state.

6. Limited benefits due to lack of intra-party democracy- The benefits of state funding of election will be limited due to lack of intra-party democracy.

7. Can promote extremism in elections- According to a study, the state funding of election using ‘democracy vouchers’ method tried in Seattle resulted in election of more extremist candidates.
(Democracy voucher method- Under this system, the government distributes a certain number of vouchers worth a certain amount to eligible voters. The voters can use these vouchers to donate to the candidate of their choice. While the voucher is publicly funded, the decision to allocate the money is taken by individual voters.)

Conclusion and way forward

There are 34 countries in the world where state funding of elections is available in some form or the other. The highest proportion of state funding is in Norway, which is about 74% of the total expenses on the election. But there are different models of state funding. In some countries, only parties get the fund and the candidates do not.

The implementation of state funding of election, is a desirable goal to introduce transparency in electoral funding. However, we need to devise a proper procedure for distribution of funds, with the consensus of all major political parties. In the meantime, we can implement some major suggested reforms of election funding-

1. Explore setting up of National Electoral Fund- The idea of National Electoral Fund, put forth by former chief election commissioner T.S. Krishnamurthy, can be explored as an alternative to state funding of election. This fund would allow contributions from all donors. The money will then go to the parties according to the results of the elections or any other principle that all parties would agree upon.

2. Audit of accounts of political parties- Venkatachaliah Committee Report (2002) which has recommended strict regulatory frameworks for auditing and disclosure of party income and expenditure must be implemented to check for undisclosed funding.

3. Capping the expenditures of the political parties and the Donations – India must implement expenditure limits of political parties like UK. (In the UK, a political party is not allowed to spend more than £30,000 per seat contested by that party).
Also, The 255th report of the Law Commission of India’s recommendation of capping the anonymous donations must be implemented.

These measures if implemented will serve our requirements of ensuring transparency in electoral funding till a consensus is reached on state funding of elections.