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GS 2: Important aspects of governance, transparency and accountability.



While the success of democracy in a complex and large country with widespread poverty and illiteracy has earned India global respect and applause, the country’s democratic process is besotted with corruption, and lack of transparency and accountability. The most worrisome trend is the growing role of money in India’s electoral democracy. Arguably, the 16th Lok Sabha Election was the second most-expensive election after the 2012 US presidential elections.

As elections become more expensive, the burden of generating more finances increases for both parties and candidates. Given that the ways and means to raise small contributions are more difficult and their transactional costs still very high in India, the role of “interested money” from corporates has taken prominence. Indeed, in India, most of the big political parties are liberally funded by corporate houses. For instance, among the known sources of donation, private business or corporate contribution accounts for a staggering 89 percent of total donations.

While cronyism and corruption have had an adverse impact on the quality of democracy and nature of governance in the country, the growing role of money has negatively affected competition at the level of candidature within parties. Due to the increasing need for money, most candidates chosen by parties are individuals who can finance themselves and do not need to rely on party funds for campaigning. This has led to the rise of wealthy candidates — and in certain cases, even criminals — contesting elections.


A brief history of State funding of elections

Public financing of elections and parties (and in some cases, candidates) is a recent development in most democracies, although the concept is over a century old. Incidentally, the Latin American countries were the first to introduce state subsidies for political parties. It was Uruguay that introduced state subsidies in 1920s, which was later borrowed by Costa Rica and Argentina. Now, more than seven Latin American democracies have state funding. Germany introduced state funding in the 1950s, a model that has now been copied by many democracies including the UK and France.

Understanding state funding of elections

This means that government gives funds to political parties or candidates for contesting elections. Its main purpose is to make it unnecessary for contestants to take money from powerful moneyed interests so that they can remain clean. In some countries, state funding is extended to meeting some specific forms of spending by political parties, not confined to electioneering alone. Countries keep changing laws relating to state funding depending on experience and financial condition


Direct and indirect public funding

Direct public funding is given to political parties and/or candidates in the form of money – usually as bank transfers but at times in cash or cheque. Indirect public funding is when resources with a monetary value is provided by the Government to political parties and/or candidates.


Committees on state funding of elections

A few government reports have looked at state funding of elections in the past, including:

  • Indrajit Gupta Committee on State Funding of Elections (1998)
  • Law Commission Report on Reform of the Electoral Laws (1999)
  • National Commission to Review the Working of the Constitution (2001)
  • Second Administrative Reforms Commission (2008)

The Indrajit Gupta Committee (1998) endorsed state funding of elections, seeing “full justification constitutional, legal as well as on ground of public  interest” in order to establish a fair playing field for parties with less money. The Committee recommended two limitations to state funding. Firstly, that state funds should be given only to national and state parties allotted a symbol and not to independent candidates. Secondly, that in the short-term state funding should only be given in kind, in the form of certain facilities to the recognised political parties and their candidates.

The 1999 Law Commission of India report concluded that total state funding of elections is “desirable” so long as political parties are prohibited from taking funds from other sources. “Ethics in Governance”, a report of the Second Administrative Reforms Commission (2008) also recommended partial state funding of elections for the purpose of reducing “illegitimate and unnecessary funding” of elections expenses. The National Commission to Review the Working of the Constitution, 2001, did not endorse state funding of elections but concurred with the 1999 Law Commission report that the appropriate framework for regulation of political parties would need to be implemented before state funding is considered.

Cons of state funding of elections

  • When introduced, public funding is often unpopular among the public. Public resources are scarce and needed for everything from schools and hospitals to roads and salaries for staff. To many people, using public funds to give to political parties and candidates would be far down their list of priorities.
  • The decision to allocate public funds to parties and candidates is most often taken in the national legislature (or in some cases in the Government). This means that the political parties and candidates who will collect the money, also take the decision.
  • If all or a substantial amount of the party income comes directly from the State rather than from voluntary sources, political parties risk losing their independence and become organs of the State, thereby losing their ties to the civil society.
  • When political parties and candidates do not depend on their supporters or members neither for monetary contributions (membership, donations) nor for voluntary labour, they might be less likely to involve them in party decisions or consult their opinions on policy issues.


Way forward

The government should consider state funding of political parties contesting elections. But such funding should be limited to parties recognised as ‘national’ or ‘State’ by the Election Commission of India, and to candidates directly fielded by such recognised parties.

Budgetary constraints could come in the way. Therefore, a good start could be made with partial funding — that is, with the state taking care of certain expenditures of the recognised parties. The aim should be to discourage political parties from seeking external funding (except through a nominal membership fee) to run their affairs, carry out their programmes and contest elections.

A separate Election Fund with an annual contribution of some Rs 600 crore by the Centre and a matching amount by all States put together should be created. Only those parties which have submitted their income tax returns up to the previous financial year could avail of state funding.


Previous Year Questions

  1. National Human Rights Commission (NHRC) in India can be most effective when its tasks are adequately supported by other mechanisms that ensure the accountability of a government. In light of the above observation assess the role of NHRC as an effective complement to the judiciary and the judiciary and other institutions in promoting and protecting human rights standards. (2014)
  2. In the integrity index of Transparency International, India stands very low. Discuss briefly the legal, political, social and cultural factors that have caused the decline of public morality in India. (2016)
  3. To enhance the quality of democracy of India the Election Commission of India has proposed electoral reforms in 2016. What are the suggested reforms and how far are they significant to make democracy successful?   (2017)
  4. Do you think that Constitution of India does not accept principle of strict separation of powers rather it is based on the principle of 'checks and balance’? Explain. (2019)
  5. Implementation of Information and Communication Technology (ICT) based Projects/Programmes usually suffers in terms of certain vital factors. Identify these factors, and suggest measures for their effective implementation. (2019)
  6. ‘In the context of neo-liberal paradigm of development planning, multi-level planning is expected to make operations cost-effective and remove many implementation blockages.’ Discuss. (2019)