Answer

Introduction

“Political funding in India is neither fair nor transparent” refers to a system where the “power of the purse” often outweighs the “power of the vote.” The lack of a level playing field arises from the disproportionate access to resources by ruling parties and the persistence of anonymous donations that mask potential quid pro quo arrangements.

Body

Supreme Court Observations (2024-25)

• Right to Information: The Court ruled that the Electoral Bond Scheme (EBS) was unconstitutional as it violated the voters’ right to information under Article 19(1)(a).
• Test of Proportionality: The Bench observed that curbing black money (the stated goal) did not justify complete donor anonymity, as less restrictive methods were available.
  Eg: The Court’s view that the scheme was a “double-edged sword” favoring the government with donor data while hiding it from the public.
• Corporate Nexus Concerns: The Court struck down amendments allowing unlimited corporate funding, noting that corporate donations are often “business transactions” for policy favors.
  Eg: SC’s observation that removing the 7.5% profit cap for donations paved the way for “crony capitalism.”
• Privacy vs. Transparency: The Court clarified that while political affiliation is private, the right to informational privacy does not extend to large-scale funding aimed at influencing policy.
  

ADR Data Findings

• Dominance of Unknown Sources: ADR data reveals that a significant majority of political income still comes from sources whose identities are not disclosed to the public.
  Eg:  ADR report stating nearly 60% of funds for national parties in recent years came from “unknown sources.”
• Skewed Distribution Patterns: Data indicates an extreme concentration of wealth, with the ruling party receiving the lion’s share of all declared corporate and bond-based funding.
• Rise in Bond Reliance: Before being scrapped, electoral bonds became the primary vehicle for “unknown” income, further centralizing funds toward dominant parties.
  Eg: Over 82% of unknown income for national parties in 2022-23 was derived specifically from electoral bonds.
• Corporate Sector Influence: ADR reports confirm that nearly 90% of declared donations to national parties are sourced from the corporate/business sector rather than individuals.
  Eg: In 2023-24, corporate donors contributed ₹2,262 crore to national parties, with one party receiving 91% of that sum.

Required Structural Reforms

• Complete Disclosure Mandate: Amend the Representation of the People Act (RPA), 1951 to mandate the disclosure of all donations, removing the current ₹20,000 anonymity threshold.
• State Funding (In-kind): Implement the Indrajit Gupta Committee (1998) recommendations for partial state funding to reduce dependency on private corporations.
• Audit by CAG-empanelled Agencies: Political party accounts should be audited by independent auditors approved by the Comptroller and Auditor General to ensure veracity.
  Eg: The Law Commission has long advocated for “independent and rigorous” auditing of party finances.
• Capping Party Expenditure: While candidate spending is capped, there is no limit on party-level spending; a statutory ceiling is required to ensure a level playing field.
• ECI Deregistration Power: Grant the Election Commission the legal authority to deregister “paper parties” that exist solely for money laundering or tax evasion.
• Digital-Only Funding Trail: Mandate that all political contributions and expenditures occur through digital or traceable banking channels to eliminate the “cash-economy” in politics.
  Eg: The potential of a “Centralized Digital Repository” for real-time tracking of political fund flows.
• RTI Coverage for Parties: Bringing political parties under the Right to Information (RTI) Act as “public authorities” to ensure direct accountability to citizens.
  Eg: Despite a 2013 CIC ruling, political parties have collectively resisted being categorized as public authorities.

Conclusion

A level playing field requires moving beyond mere “legality” to “ethical transparency.” By implementing state funding and independent audits, India can decouple policy-making from political financing. This will ensure that elections are a competition of “ideas and performance” rather than a lopsided battle of “financial muscle,” strengthening the core of Indian democracy.

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