The Election Commission (EC) is not in favour of state funding of elections as it will not be able to prohibit or check candidates’ own expenditure over and above provided for by states, the Lok Sabha was informed on March 2.

In a written reply, MoS (Finance) Anurag Thakur said the EC’s view is that for addressing real issues, there have to be radical changes in the provisions regarding receipts of funds by political parties and the manner in which such funds are spent by them so as to provide for complete transparency in the matter.

“The EC has informed the government that it is not in favour of state funding as it will not be able to prohibit or check candidates own expenditure or expenditure by others over and above that which is provided for by the state,” the minister said.

Thakur further said that in order to discourage cash transactions and bring in transparency in the sources of funding of political parties, the government has amended the Income Tax Act and limited anonymous cash donations to Rs 2,000.

The government introduced the electoral bond scheme to establish a transparent political funding system in the country with a well-established audit trail.

What is state funding of elections?

The government gives funds to candidates for contesting elections. Its main purpose is to make it unnecessary for contestants to raise funds from the powerful so that they can remain clean.

The Indrajit Gupta Committee on State Funding of Elections (1998) backed the idea of state funding of elections on principle, stating that “The committee see full justification constitutional, legal as well as on ground of public interest, for grant of state subvention to political parties, so as to establish such conditions where even the parties with modest financial resources may be able to compete with those who have superior financial resources.”

However, it added two limitations.

1. Such funds could not be doled out to independent candidates, and only to national and state parties having granted a symbol and proven their popularity among the electorate.

2. In the short term, state funding may be given only in kind, in the form of certain facilities to the recognised political parties and their candidates. However, despite strongly backing full state funding of elections principle, it stated that only partial state funding would be possible in the short term given the prevailing economic conditions.

The 1999 report of the Law Commission concurred with the Indrajit Gupta Committee, stating that “it is desirable that total state funding be introduced, but on the condition that political parties are barred from raising funds from any other source”.

It also agreed with the Indrajit Gupta Committee that only partial state funding was possible at the present time given the economic conditions of the country.

Additionally, it strongly recommended that the appropriate regulatory framework be put in place with regard to political parties (provisions ensuring internal  democracy, internal structures and maintenance of accounts, their auditing and submission to the EC) before state funding of elections is attempted.

The report ‘Ethics in Governance’ of the Second Administrative Reforms Commission also recommended that “a system for partial state funding should be introduced to reduce the scope of illegitimate and unnecessary funding of expenditure for elections”.

The National Commission to Review the Working of the Constitution, 2001, did not comment on the desirability of state funding of elections, but reiterated the point of the Law Commission that the appropriate framework for regulation of political parties would need to be implemented before proposals for state funding are considered.

The Election Commission’s view is that for addressing real issues, there have to be radical changes in the provisions regarding receipts of funds by political parties and the manner in which such funds are spent by them so as to provide for complete transparency in the matter.

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