A five-judge Constitution bench, headed by Chief Justice D.Y. Chandrachud, scrapped the Centre’s electoral bonds scheme of anonymous political funding calling it “unconstitutional”. 

In its judgment, the SC bench discussed the “close association between money and politics”.

The challenge to the statutory amendments and the electoral bonds scheme cannot be adjudicated in isolation without a reference to the actual impact of money on electoral politics, it said. 

Direct and indirect influence of money on electoral politics

• The law does not bar electoral financing by the public. Both corporates and individuals are permitted to contribute to political parties. The legal regime has not prescribed a cap on the financial contributions which can be received by a political party or a candidate contesting elections. 

• However, Section 77 of the Representation of the People Act, 1950 read with Rule 90 of the Conduct of Election Rules, 1961 prescribes a cap on the total expenditure which can be incurred by a candidate or their agent in connection with Parliamentary and Assembly elections between the date on which they are nominated and the date of the declaration of the result.

• The maximum limit for the expenditure in a Parliamentary constituency is between Rs 75 lakh to 95 lakh depending on the size of the state and the Union Territory.

• The maximum limit of election expenses in an Assembly constituency varies between Rs 28 lakh and 40 lakh depending on the size of the state.

• However, the law does not prescribe any limits for the expenditure by a political party. 

• Explanation 1 to Section 77 stipulates that the expenditure incurred by “leaders of a political party” on account of travel for propagating the programme of the political party shall not be deemed to be election expenditure. Thus, there is an underlying dichotomy in the legal regime. 

• The law does not regulate contributions to candidates. It only regulates contributions to political parties. However, expenditure by the candidates and not the political party is regulated. Be that as it may, the underlying understanding of the legal regime regulating electoral finance is that finance is crucial for the sustenance and progression of electoral politics.

Voting behaviour of informed and uninformed voters

• It is believed that money does not vote but people do. However, studies have revealed the direct and indirect influence of money on electoral politics.

• The primary way through which money directly influences politics is through its impact on electoral outcomes. 

• One way in which money influences electoral outcomes is through vote buying. Another way in which money influences electoral outcomes is through incurring electoral expenditure for political campaigns. Campaigns have a measurable influence on voting behavior because of the impact of television advertisements, campaign events, and personal canvassing.

• An informed voter is one who is assumed to be aware of the policy positions of the candidate or the party they represent and votes on a thorough analysis of the pros and cons of electing a candidate. 

• On the other hand, an uninformed voter is assumed to not possess knowledge of the policy positions of the candidates.

• Campaigns have an effect on the voting behaviour of both an informed and an uninformed voter. The impact of campaigns on an informed voter is supplementary because campaign activities enable an informed voter to be further informed about the policies and ideology of the political party and the candidate, and their views on specific issues. Electoral campaigns reduce the uncertainty about candidates for an informed voter. 

• For an uninformed voter, electoral campaigns play a much more persuasive role in influencing electoral behavior because campaigns throw more light on candidates.

• Political parties use innovative techniques of campaigning by going beyond the traditional methods of advertisements, door-to-door campaigning and processions to increase outreach. For example, political parties sponsor religious festivals and community fairs, organise sporting matches and literary competitions where cash awards are given. These outreach techniques leave a lasting impression on the minds of uninformed voters. 

• Thus, enhanced campaign expenditure proportionately increases campaign outreach which influences the voting behavior of voters.

Money creates entry-barriers to politics

• Money also creates entry-barriers to politics by limiting the kind of candidates and political parties which enter the electoral fray. Studies have shown that money influences the selection of candidates by political parties because parties would prefer fielding candidates who would be able to substantially self-finance their campaign without relying on the party for finance.

• In this manner, candidates who belong to socio-economically weaker sections face added barriers because of the close association of money and politics. 

• Money also excludes parties which are new to the electoral fray, and in particular, parties representing the cause of marginalised communities. 

• Political parties which do not have enough finance have had to form electoral coalitions with other established political parties who would in exchange shoulder a lion’s share of the campaign expenditure of the newly established political party extending to costs related to coalition propaganda, print and digital advertising, vehicle and equipment hire, political rallies, food transportation, and daily expenditure for party cadres. 

• The compromises which newly formed political parties have to make lead to a dilution of the ideology of the party in exchange of its political sustenance. 

• In this manner, money creates an exclusionary impact by reducing the democratic space for participation for both candidates and newer and smaller political parties. 

Judgments on influence of money on politics

• The earlier judgments of the Supreme Court have recognised the influence of money on politics. They take a critical view of the role played by big business and big money in the electoral process in India. 

• The decision in Kanwar Lal Gupta vs Amar Nath Chawla, notices that money serves as an asset for advertising and other forms of political solicitation that increases a candidate’s exposure to the public. The apex court observed that the availability of large funds allows a candidate or political party “significantly greater opportunity for the propagation of its programme” in comparison to their political rivals. 

• Such political disparity results in serious discrimination between one political party or individual and another on the basis of money power and that in turn would mean that some voters are denied an equal voice and some candidates are denied an equal chance.

• In Vatal Nagaraj vs R. Dayanand Sagar, Justice V.R. Krishna Iyer noted that candidates often evade the legal ceiling on expenditure by using big money channelled by political parties. The apex court acknowledged that large monetary inputs are “necessary evils of modern elections”, which they hoped would be eradicated sooner rather than later. 

• In P. Nalla Thampy Terah vs Union of India, a Constitution Bench of the Supreme Court was called upon to decide the validity of Explanation 1 to Section 77 of the Representation of the People Act, 1950 which allowed unlimited channelling of funds by political parties for the election of their candidates.

• While upholding the constitutional validity of the explanation, the Supreme Court noted that the petitioners were justified in criticizing the statute for “diluting the principle of free and fair elections”.

• In Common Cause (a registered society) vs Union of India, the apex court dwelt on the ostentatious use of money by political parties in elections to further the prospects of candidates set up by them.

• Justice Kuldip Singh described the role of money in the electoral process, which is relevant for contextualising the issue: “The political parties in their quest for power spend more than Rs 1,000 crore on the General Election (Parliament alone), yet nobody accounts for the bulk of money so spent and there is no accountability anywhere. Nobody discloses the source of the money. There are no proper accounts and no audit. From where does the money come from nobody knows. In a democracy where rule of law prevails, this naked display of black money, by violating the mandatory provisions of law, cannot be permitted.”

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