ECI not in Favour of State Political Fundings for Polls | 04 Mar 2020

Why in News

Recently, the Minister of State for Finance has informed Lok Sabha that the Election Commission of India (ECI) is not in favour of state funding of elections.

• The state funding of elections was recommended by the Indrajit Gupta Committee in 1998.

ECI’s View

• The ECI has stated that it would not be able to prohibit or check candidates’ expenditure or expenditure by others over and above that which is provided for by the state.
• It has also mentioned that for addressing the real issues with political fundings, there need to be changes in following elements of election funding process :
  
  • Receipts of funds by political parties.
  • The manner in which received funds are spent by the political parties.
  • Complete transparency in the political funding process.
• The scrutiny over the above aspects will help to bring better transparency in political funding.

Recommendations on State Funding for Elections

• Indrajit Gupta Committee (1998)
  
  • The Indrajit Gupta Committee had suggested that state funding would ensure a level playing field for poorer political parties and argued that such a move would be in public interest.
  • It had also recommended that state funds should only be given to recognised national and State parties.
    
    • ECI allows airtime to recognised national and State parties for campaigning on state media.
  • It had recommended that funding should be given in the form of free facilities provided to these parties and their candidates.
• Law Commission Report (1999)
  
  • It had stated that a state funding of elections is ‘desirable’ provided that political parties are prohibited from taking funds from other sources.
• National Commission to Review the Working of the Constitution (2000)
  
  • It did not support state funding of elections but mentioned that the appropriate framework for the regulation of political parties would need to be implemented before state funding is considered.

Recent Steps Taken by the Government

• The government has amended the Income Tax Act and limited anonymous cash donations to Rs 2,000 to discourage cash transactions and bring in transparency in the source of funding of political parties.
• The ‘Electoral Bond Scheme’ was introduced in 2018 to establish a transparent political funding system in the country, with a well-established audit trail.
  
  • An electoral bond is a bearer instrument like a Promissory Note.
  • It can be purchased by any citizen of India or a body incorporated in India to donate to the political party of their choice. Donor’s name is not mentioned on the bond.
  • These bonds can be used for making donations to the political parties registered under Section 29A of the Representation of the People Act, 1951 and which have secured not less than one per cent of the votes polled in the last general election to the House of the People or a Legislative Assembly.

Current Scenario of Political Funding

• Political Funding implies the methods that political parties use to raise funds to finance their campaign and routine activities.
• Methods of Political Funding in India:
  
  • Individual Persons: Section 29B of RPA allows political parties to receive donations from individual persons.
  • Indirect State Funding: It includes methods except direct funding, like free access to media, free access to public places for rallies, free or subsidized transport facilities. It is allowed in India in a regulated manner.
  • Corporate Funding: In India, donations by corporate bodies are governed by the Companies Act, 2013.
  • Electoral Trusts: A non-profit company created in India for orderly receipt of voluntary contributions from any person like an individual or a domestic company.

Issues with Political Funding

• One of the biggest disadvantages of corporate funding is the use of fake companies to route black money.
• Influence of people and companies over political parties to which they provide funds.
• There are various gaps in Indian rules, the benefit of which political parties take to avoid any kind of reporting.
• Hidden sources of funding lead to more spending of funds in election campaigns, thus impacting the economy of the country.

Source: TH