What's New

Q. While the Representation of the People Act (RPA), 1951 places limitations on election funding, there is rampant misuse of money power in election campaigns. In this context, discuss the reforms required in election funding in India.

Answer

Election funding in India is broadly governed by the laws like Representation of People Act (RPA), 1951; Conduct of Elections Rules, 1961; Foreign Contributions Regulation Act, 1976; Income Tax Act, 1961; Indian Penal Code, 1860 etc.

RPA 1951 puts following types of limitations for election funding:

• Imposes a ceiling on the election expenses of a candidate from the date of nomination to the date of the declaration of results.
• Governs the disclosure of expenditure by every candidate.
• Lays down the limits on contributions to political parties.
• Penalties for candidates such as disqualification and loss of tax exemptions for political parties and fines and imprisonment for companies.
• However, experience shows that still political parties lack transparency with regard to election funding.
• 70 percent of political funding is from unknown sources. This secrecy also results in rampant misuse of money in elections:
• The Lok Sabha, 2019 elections have been termed as the ‘most expensive election ever, anywhere’ with an estimated Rs 100 crore spent in each Lok Sabha constituency and an approximate Rs 700 spent per vote.
• The total seizure reported by the ECI at the end of elections was a whopping Rs 3475.76 crore with drugs/narcotics topping the list followed by precious metals, cash, liquor and other items or freebies.
• Between FY 2012-13 and 2018-19, donations from corporates to national parties increased by 974%.
• It has been argued that increased election spending is the root of various other issues, like criminalization of politics, use of muscle power in elections, rise of illegitimate expenditure on vote buying, etc.; thus hampering free and fair elections in the country.

Reforms are needed in election funding.

• Expenses and contribution: A cap needs to be put on expenditure by political parties through strict enforcement of Section 77 of the RPA.
• Audit: Accounts of political parties must be audited in accordance with the guidelines of the Institute of Chartered Accountants of India. This is at the heart of public supervision of political finance and requires a strict implementation.
• Penalties: The ECI’s recommendation that tax exemption be given only to those parties that have won seats in parliamentary or assemblies should be implemented.
• If a candidate does not declare his or her election expenses, Section 10A of the RPA should be amended to increase the period of his or her disqualification from three years to five years.
• Similar penalties need to be imposed on political parties for failure to lodge accounts of election expenses.
• Electoral trusts: The RPA should be amended to provide for regulating electoral trusts, which are penalized only with a mild amount on failing to submit the annual reports of contributions to the ECI despite getting tax relief on their donations to political parties.
• Preventing anonymous donations: The present law, RPA, 1951, does not stop political parties from accepting nameless donations below a certain amount. The Election Commission of India’s suggestion to make the law stricter by lowering the cap of anonymous donations still further should be implemented.
• State Funding of Elections: India can explore the option of state funding of elections to curb use of black money and provide a level playing field for parties and candidates and reduce the dependency on corporate or private money.

Transparent funding sources as well as expenditure by political parties is a must to sustain the democratic traditions of India in letter as well as in spirit. In this regard, the aforementioned measures need to be implemented in an urgent manner.