State Funding of Elections

State Funding of Elections

News: Recently, The CJI D.Y. Chandrachud, led a Constitution Bench in reserving judgment on the electoral bonds scheme’s validity. The topic revolves around transparency in funding of elections and whether elections should be state-funded.

What is state funding of elections?
• It refers to mechanism where the government provides funds to political parties and candidates to contest elections.

What are the advantages of state funding of elections?
• It promotes transparency in electoral funding
• It adds legitimacy and fairness to electoral process
• Reduces criminalization of politics
• It may encourage government to take citizen centric decisions as the influence of corporate donation will fade.
• 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. State funding of elections will ensure laws and guidelines set by constitutional bodies will be followed.

What are the challenges in enforcing state funding of elections?
• 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.
• State-funded elections could divert resources from crucial social sectors like Health, Education, and Skill Development.
• Reaching a consensus on, the criteria to be used for distribution of the funds amongst political parties and candidates, will be a potential operational challenge.
• There’s a risk of misuse as frivolous political parties might emerge solely to receive state subsidies, diverting funds from political office and development work.
• The 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.

Way Forward
State funding of elections involves its own set of challenges that can be looked into in the long term. However, in the meanwhile we can look to implement suggested reforms as follows.
• T.S. Krishnamurthy proposed to set up a National Electoral Fund which will allow contributions from all donors, with funds distributed based on election results or agreed-upon principles.
• 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.
• We can look to 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).
• The 255th report of the Law Commission of India’s recommendation on capping the anonymous donations must be implemented.

Value addition

• Indrajit Gupta Committee on State Funding of Elections (1998): Recommended partial state Funding.
• Second Administrative Reforms Commission (2008): Recommended partial state funding for the purpose of reducing “illegitimate and unnecessary funding” of elections expenses.
• National Commission to Review the Working of the Constitution (2000): Did not endorse state funding but highlighted the necessity of a robust regulatory framework for political parties before considering state funding.
• Germany: Germany provides public funding to political parties based on their performance in elections. Additionally, citizens can voluntarily contribute a percentage of their income tax to a political party of their choice. 
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