Election Funding in India
Healthy competition between political parties is a prerequisite for a vibrant democracy. At the same time, all these parties need funds to function and to campaign. But as these parties are not revenue earning enterprises, where do such funds come from? How are they spent? And should we care how they are spent? Of course, we should care! Let’s see how.
Political parties funding in India
Pre-independence and also for a brief period after independence, political parties in India raised funds openly and legally from corporate donors and small contributions from members. However, in 1968, PM Indira Gandhi banned corporate donations for political parties and the official reason was to prevent large business groups from exercising undue influence on politics however, its speculated that it was done to curb the growing influence of free market oriented Swatantra Party (founded by C Rajagopalachari and NG Ranga). Anyhow, corporate funding was banned without being substituted by alternative legal sources, for example state funding.
This posed a particularly peculiar problem if you think about it. Political parties are officially not in the money making business. That they need funds is clear with the cadre mobilization needs across the country. Apart from the institutional funding, their other sources are of course the voluntary donations from public, which though might be large in numbers but in general, meagre in quantum. Inevitably, the demand for funds required to run parties and fight elections was addressed by shaking down corporate donors for unaccounted “black” money.
There in a deft move, the desire to solve one potential explicit problem eventually created a multi-headed secretive beast which has led to multiple multi-crore scams. Corporate donors were of course willing to contribute funds in exchange for licences and permits. Even now, governments still control key aspects of resource allocation (for instance, spectrum and land) and ultimately such allocation is beyond the eyes of public scrutiny and is generally unaccounted for (of course, not every scam gets audio tapes of intense lobbying!). In the bargain of resources, ruling parties get their dues from agreeable corporate players.
Election funding in India
In 1974, Parliament overturned a ruling of Supreme Court of India which had said that party election expenditures were to be counted towards candidates’ expenditures, by amending the Representation of the People Act, effectively removing the ceiling on election expenses.
In 1985, corporate contributions to political parties were re-legalised
In 1996:
o Campaign period was reduced from 21 to 14 days
o Expenditure ceilings was marginally increased
o Provided parties with air time on government electronic media
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