State Funding of Elections

Why in news?

The Prime Minister wants a debate on transparency in political funding, as part of the drive to clean up black money.

How black money plays a role in elections?

• Indian elections cost huge sums of money.
• These money   can hardly come from retail contributions of political-party sympathisers. It has to come from big corporate houses.
• But, contributions from corporate houses are largely from undeclared income and, hence, the contribution is not recorded.

Why transparency in political funding is needed?

• This is a prerequisite for any sustained and effective cure for black money.
• As long as India’s politics is systemically dependent on unaccounted money for its finances, there can be no decisive political will to eradicate black money.
• Political parties spend huge amounts in election years but report income that is only a fraction of what they spend. When the bulk of their spending is financed by unaccounted income, it compromises the integrity of governance, corrupts the civil service, promotes crony capitalism and makes managing the government a decisive core competence of entrepreneurship.
• All this will change only if the sources of political funding are made fully transparent.

What is state funding?

• The idea of state funding of elections is a concept designed to reduce corruption by funding elections with government money as opposed to individual campaign contributions.
• Many recommend that state funding of elections can be the best way to achieve transparency in political funding.
• It is also believed that state funding is a natural and necessary cost of democracy. It brings new and growing parties in par with the established parties, thus ensuring fair elections.
• If parties and candidates are financed with only private funds, economical inequalities in the society might translate into political inequalities in government.

Is the state funding a good idea?

• In theory, State funding would provide a level playing field for political parties and cut out money power from the equation, but in practice, things may not work out so linearly. India collects only about 16% of GDP as a tax.
• The state expenditure on many essential public goods such as primary health care and public health engineering is very small.
• Given this situation, the public resources have to be channe  led towards and not diverted from such essential services, and that too to finance something that already gets abundantly financed.
• Further, the state funding of elections will not prevent parties from lobbying and getting undisclosed supplementary private funding, with associated implications.
• Therefore State funding is not the solution to the opaque funding of politics in India.

What is the solution?

• In India, the main reason for the prevalence of black money in election spending is the unrealistically low limits set by the Election Commission of India on campaign spending by political parties and candidates. More realistic campaign spending limits should be set.
• Part-public funding of election campaigns is a practice in some countries. e.g United States and Britain. We could have our own version.
• The strict monitoring of expenditure by political parties and their functionaries at every level, starting with the panchayat, polling booth area and municipal ward should be done.
• Every party should disclose its expenditure every month at every level.
• This should be open to challenge by rival parties, media, etc.
• The Election Commission could determine the actual expenditure and ask the parties to show the source of income.
• Parties will have to collect money in the open.
• These steps will ensure transparency.

Category: Mains| GS-II| Transparency

Source: The Economic Times

Author: Shankar IAS Academy Chennai. Best Civil Service Academy in Chennai