Problems in State Funding of Elections in India

State funding of elections has been suggested in the past in response to the high cost of elections and as a measure against corruption in the electoral process. Many of the government panels on electoral reforms have expressed their ideas on the issue, however, complete state funding of elections is impossible.

Before we look into the issue, let’s have a look at various reports and suggestions. The key reports on state funding of elections are as follows:

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)
  • Law Commission of India Report on Electoral Reforms (2015)
Indrajit Gupta Committee on State Funding of Elections (1998)

This committee endorsed Partial state funding of elections with some limitations given below.

  • State funds should be given only to national and state parties allotted a symbol and not to independent candidates.
  • 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 state funding depends upon the economic condition of the country. At the time of report (1998) the economic situation of the country only suited partial and not full state funding of elections.
  • Thus, as per this committee, only partial state funding was possible given the economic conditions of the country at that time.

The Indrajit Gupta Committee had envisaged a phased introduction of public funding, given the economic conditions of the country in 1998, beginning with in-kind state subsidies (and no cash) such as rent-free office space, free telephone facilities, electoral rolls’ copies, loudspeakers, specified quantities of fuel, food packets, and airtime (both on state and private media). Gradually, the Committee envisioned a transition to full state funding, along with monetary provision via the creation of a central-governed Election Fund, whose funding would be provided by the Centre and the states together. However, the Committee excluded independent candidates from the benefits of state funding and required parties to submit audited accounts and tax returns to avail the benefits.

Law Commission Report on Reform of the Electoral Laws (1999)
  • Total state funding of elections is “desirable” so long as political parties are prohibited from taking funds from other sources.
  • The Commission concurred with the Indrajit Gupta Committee’s stand on partial funding.
  • Appropriate regulatory framework be put in place with regard to political parties (provisions ensuring internal democracy, internal structures and maintenance of accounts, their auditing and submission to Election Commission) before state funding of elections is attempted.
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.
Second Administrative Reforms Commission (2008)
  • Recommended partial state funding of elections for the purpose of reducing “illegitimate and unnecessary funding” of elections expenses.
Law Commission of India Report on Electoral Reforms (2015)

In its report submitted in March 2015, the Law Commission did not consider a system of complete state funding of elections or matching grants to be feasible, given the current conditions of the country. Instead, it supported the existing system of indirect in-kind subsidies, with section 78B of the RPA being possibly amended in the future to expand these subsidies.

Experience of State Funding in other countries

The long standing democracies of Germany, Austria, France, Denmark, Israel, Norway, Netherlands, Italy, Canada, USA (for Presidential elections), Japan, Spain, Australia and South Korea had introduced and operated systems of comprehensive or partial State funding of Elections over the past three decades. The experience over a period of time in some of the countries like Italy, Finland, Spain, Austria and Israel did not show that the public funding had reduced the election expenditure of political parties. The principal point against the State subvention to political parties was that a political party was a free association of citizens for political purposes and it should be able to demonstrate its independent viability including its financial viability.

Key Issues and Arguments

Complete State Funding is not feasible

State Funding of elections depends on economic condition of the country. Currently, India’s economy does not suit to state complete funding.

Which may be more successful? Total or Partial state funding?

Most of the committees have suggested that India should go for partial state funding.  However, State funding may succeed only when it is total and not partial, because there is no guarantee that even after it was introduced, rich parties and candidates would not pump black money into campaigns to boost their chances of victory. Partial funding leaves scope for the party to use its funds for campaigns of individual candidates would fail to prevent the use of black money.

Is state funding panacea?

No. The State funding may not be the solution to the problems faced in the electoral process and it is necessary to adopt other measures, irrespective of whether State funding is provided or not.

Which is better – Cash or Kind in state funding?

State funding in cash is not a good idea. However, as Tarkunde committee suggested earlier, certain facilities be made available to every constituency at government expense like giving printed cards with the registered number of voters and the polling booths where they may cast their vote, making available school rooms and halls for meetings, sending one communication to each voter free of postage and so on.

State Funding and Inner Party Democracy

State funding of elections makes little sense as long as inner-party democracy is missing in key political parties. A strong Lokpal has to be in place to ensure that corruption is reported and redressed. This will instil fear among prospective candidates who will no longer see their election as a money-making opportunity.

Opinion: Should India Make efforts towards State Funding of Elections

State funds should be utilized for the welfare and common good of the people and not for the benefit of a few following political pursuits. Without favorable economy and without key reforms in other areas such as decriminalization of politics; introduction of inner party democracy; electoral finance reform; transparency and audit mechanisms; and stricter implementation of anti-corruption laws, there is no point moving towards state funding of elections.

In the absence of such reforms, state funding would also result in increased capacity of the political parties to spend on election campaigns making the elections even more costly.  It would even encourage the mushrooming growth of parties as such grants would be a great incentive for even non-serious and frivolous organizations to call themselves as political outfits.

From various experiences, it is clear that the State funding has neither cleaned the corruption, nor freed the political parties of their financial burden. With mounting expenditure on the Central and State Governments, State funding would be an additional financial burden on them.

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  • Laxminarayan Kanungo

    Political parties funding comes from 3Cs: Criminals, Corporate houses or Contractors with promises of favours in return. To cleanse the system we need ‘State Funding of Elections’ besides stringent measures like more number of courts to deal with violation in election rules. Out of 180 countries, 71 nations have the facility of giving state funds based on votes obtained. This includes 86% countries of Europe, 71% of Africa, 63% of the Americas and 58% of Asia. (Source: IDEA, 2012)