State Funding of Elections in India: Objectives, Benefits and Challenges

State funding of elections aims to eliminate candidates’ reliance on vested interests, ensuring clean and fair elections. Various government reports have recommended partial state funding to promote transparency and reduce the influence of money in politics. As the world’s largest democracy, India needs a fair electoral funding system to maintain the integrity of its democratic process.

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State Funding of Elections in India

Objectives, Historical Context, and Regulatory Framework

• • Definition: Using state resources to financially support political parties, ensuring a level playing field.
  • Objective: To eliminate the need for candidates to rely on vested interests, ensuring clean elections.
  • Goal: Promote fair and transparent electoral funding to maintain integrity in the democratic process.

• Historical Recommendations: Various government reports have explored state funding of elections:

• • • Indrajit Gupta Committee (1998): Recommended partial state funding.
    • Law Commission Report (1999): Supported partial state funding.
    • National Commission to Review the Working of the Constitution (2001): No recommendation for state funding.
    • Second Administrative Reforms Commission (2008): Advocated for partial state funding.

• Electoral Funding in India

• • Largest Democracy: India conducts the largest elections globally, necessitating a fair electoral funding system.
  • Current Funding Mechanism: Electoral Bond Scheme (2018) was recently struck down by the Supreme Court for lack of transparency.
  • Supreme Court Verdict (2024): Restored the pre-electoral bonds funding system, highlighting the need for alternative funding methods.
  • Current Provisions: Tax exemptions under section 13A of the Income Tax Act and free airtime for national and state parties on public broadcasters.

• Regulatory Framework: The regulatory framework governing election funding includes laws such as the Representation of the People Act, 1951, and the Income Tax Act, 1961. 

• The Election Commission of India (ECI) plays a crucial role in overseeing compliance with these laws.

Benefits of the State Funding of Elections

Issues  of State Funding Elections

Key Reports and Committees

Suggestions

• Need of annual auditing: The CAG should conduct yearly auditing which will help to eliminate black money and secure the donors identities. 
• Implementation of 2nd ARC Report: To reduce “illegitimate and wasteful funding” of election costs, this report suggested partial state funding of elections.
• Demand of Regulatory body: The election expenditure incurred by the parties and candidates should be examined by the proper regulatory body.
• Changes should be made in mode of contributions: The limit of Rs. 2000 on cash contributions presents a chance for the infiltration of illicit funds into elections. 
  • This should be completely stopped. Even payments of Rs. 2000 should be made through bonds or online.
• Creation of National  Election Fund: The idea of a National  Election Fund, had been given by former chief election commissioner T.S. Krishnamurthy, which shall also be taken into account, which allows contributions from all donors.

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Conclusion

The state funding for elections  is a complex and dynamic aspect of electoral systems, and it is subject to ongoing scrutiny and reforms to maintain the integrity of democratic processes. 

• The regulations aim to strike a balance between allowing political participation and preventing corruption or undue influence in the electoral process. 
• Limiting the use of black money in elections helps to conduct free and fair elections until all aspects of State finance have been addressed.

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