The recent Bihar elections and other developments have once more turned the spotlight on the question of state funding of elections. The blatant use of money power and muscle power has raised the question of how elections can be made ‘free and fair’.

The call for “free and fair elections” and state funding is not new. Even the former Election Commissioner T.S Krishnamurthy has pointed out that:

“It is common perception that the vicious role of money power is the single largest source of corruption in the electoral process especially because of the scope for political patronage due to increasing economic activities of governments. The increasing cost of elections and the loopholes in the law are sufficient inducements for the flow of money into the polls, surreptitiously and illegally, and in many cases from undesirable sources. The result is that the politicians look at the electoral contests not as a ballot field but as a battlefield where bullets and wallets dominate more than any other consideration”.

Problems with the present system of financing elections

In June 1998, the NDA government headed by the BJP, constituted a multi-party parliamentary committee under the chairmanship of Indrajit Gupta of the Communist Party of India (CPI) to look into the question of state funding of elections. The other members of the committee were Somnath Chatterjee of the Communist Party of India(Marxist), Manmohan Singh of the Congress(I), Madhukar Sarpotdar of the Shiv Sena, Vijay Kumar Malhotra of the BJP, Sedapatti R. Muthiah of the All India Anna Dravida Munnetra Kazhagam (AIADMK) and Digvijay Singh of the Samata Party.

After holding extensive discussions with political parties across the country, the committee made out a strong case for state funding of political parties “because they performed a vital public function to sustain democracy”. It further recommended that such funding should be confined to parties recognised as national parties or state parties by the Election Commission, and to candidates fielded by such parties. In other words, a clear line of demarcation was drawn between a privileged political caste and all other candidates, thereby making the already uneven field even more uneven in favour of the privileged few.

While members of the committee believed that the ideal situation was total state funding of recognised national and state parties for elections, a broad consensus favoured partial funding in view of budgetary constraints, and recommended that the state meet some essential expenses of such political parties during election campaigns and provide them administrative support during the period between elections.

According to the committee, the aim should be to discourage political parties from seeking any external funding (except a nominal membership fee) to run their affairs, carry out political programmes and conduct election campaigns. The committee noted that “as election campaigns required huge amounts of money and the costs of routine political activity between elections are also substantial, political parties have become overly dependent on private contributions, often acquired through questionable means and usually on the basis of a quid pro quo. Business houses and entrepreneurs contribute funds to political parties and seek to influence government decisions through them”.

The committee left it to the Government and Parliament to decide whether there should be any ban on donations by companies and corporate bodies for political purposes, as there was disagreement among the members. While Indrajit Gupta, Somnath Chatterjee and Sedapatti Muthiah recommended such a ban, others opposed it. The committee could not reach a consensus on whether the election expenses of political parties and other associations and individuals should be included in the accounts of election expenses of candidates.

Present electoral rules do not have any way of limiting private contributions to party candidates. According to Explanation(1) to Section 77(1) of the Representation of the People Act, 1951, any expenditure incurred in connection with the election of a candidate by a political party or by any other association or body of persons or by any individual (other than the candidate or his election agent) shall not be deemed to be expenditure incurred or authorised by the candidate for the purpose of determining the ceiling on expenses to be incurred by the candidate. There is limit only on the individual expenditure of the candidate, upto Rs 25 lakhs for a parliamentary constituency and Rs 10 lakhs for an assembly constituency in the larger states such as Tamil Nadu.

The Dinesh Goswami Committee on electoral reforms (1990) had suggested that the explanation be deleted as it would provide an escape route to a candidate to accept donations from big enterprises. The committee also referred to the apparent contradiction between this explanation and Section 171H of the Indian Penal Code (IPC), which prohibits any campaign expenditure by political parties or any other body of associations or individuals without an authorisation from the candidate and makes any violation of this a penal offence.

 Under the present rules, there is a ceiling fixed for the expenses that can be incurred by an individual candidate in connection with his election from the date of nomination. Under the Representation of the People Act, incurring of expenditure in excess of the prescribed ceiling is a corrupt practice, which may lead to setting aside the election of the elected candidate if he is proved to have spent money in excess of the limit. However, this has to be established in the competent court (High Courts or the Supreme Court) through an election petition. This is not an easy exercise considering that transparency in spending is not one of the requirements of the law. The problem is compounded by the fact that there is a time limit of 45 days to file an election petition after the declaration of the result. To unearth enough material to prove overspending within the prescribed time limit would often prove too much even for the most resourceful person. This deficiency is accentuated by the absence of ceiling in respect of election expenditure by political parties.

As part of its commitment to electoral reforms, the present UPA government has also promised that “it will initiate steps to introduce state funding of elections as early as possible” in the Common Minimum Programme.

In actual practice, today, state funding of a privileged set of parties in India is mainly through the provision of air time and TV time in state-owned media for the recognized parties at the national and state level. Election expenditures, which run into crores of money, are met by such parties through direct and underhand contributions from corporations and through regular cuts in major contracts, as illustrated in the famous Tehelka case.

In essence, present debate on funding of elections revolves around two options: i) that elections should be completely state funded through the state meeting all the expenditures of political parties during elections and providing them with administrative support in between elections and ii) that all election expenditures of political parties should be met through private collections, from members, associations, corporations, etc. This is old wine in a new bottle.

Why not new wine in a new bottle?

Such suggestions to clean up the Augean stables of Indian elections do not carry conviction among the Indian public. It is clear as crystal that every recognized political party requires crores of money to win an election, which it can never hope to collect from its members. They have to depend on “contributions” from business houses in India and the foreign multinationals. Or rather, turning this on its head, it is the business houses and multinationals which back political parties by offering them huge contributions and cuts in business deals precisely to get their contracts through, and to get government policies aligned to suit their interests. The CBI enquiry in the Tehelka case of Bangaru Laxman and Jaya Jaitley, former presidents of BJP and Samata Party respectively, or the yet unresolved Bofors scandal involving the Congress establishment in a corrupt defence deal, are cases in point. Jiski lathi, uski bhains! (The one who has the baton controls the bull). Those business houses which fund the candidates of recognised parties make those who are elected serve them their interests. No amount of tightening of laws have really curbed this menace. In fact, such laws to curb election expenditures have only further criminalized politics and further alienated the people from decision making in the political process.

There is, however, a way out. If instead of the state funding political parties, it funds the political process, in which candidates are not selected by political parties but by the people, then money power can be put to an end and elections can be really free and fair. Political parties should be funded solely by its members and not by the state treasury, business houses, associations or even the unions. The raison d’etre of a political party should be to educate the people about the political process, to organise and assist them in governance and decision-making. The role of political parties should be to empower the people and not to marginalize them in the name of representing them. If the role of political parties is restricted to this then there would be no need for them to build reserves in their Swiss bank accounts to meet election expenses. An ordinary citizen would be able to participate in elections—he doesn’t have to be a film star.

In spite of its glaring inadequacies, the electoral process in India is claimed to be the pinnacle of democratic participation. The Representation of the People Act has been amended scores of times, with the avowed purpose of addressing criminalisation, corruption and use of unbridled money power in elections. But each amendment to the Act and the electoral rules has only strengthened party domination over the electoral process and distanced people further from governance. So long as they meet certain eligibility requirements, political parties can not only select candidates but dictate the entire electoral process including reservation, delimitation, allocation of symbols, allocation of media time and so on.

The Representation of People Act is a legislation that enables privileged political parties, and not all members of society, to participate in governance. The law entrenches the selection of candidates by political parties by providing privileges for the national and regional recognized parties. It further entrenches the writ of the high command by specifying clauses restricting the right of elected representatives to act on their own conscience in the legislature or withdraw from their party.

Selection of candidates and the right to recall are important rights of the electors that should be guaranteed in any electoral law. Without these rights, people do not have any control over their representatives and cannot recall them if they do not fulfill their mandate. People can be deemed to be truly enfranchised only when the electoral law clearly specifies mechanisms for selection of candidates by the people and control over those they have elected, including the right to recall.

Once the right to select and elect candidates of their choice is with the people, it is only the next logical step to demand that the state should fund not individual political parties, but the electoral process that enables people to select, elect and recall their candidates. The Representation of the People Act should then empower non-partisan constituency committees, established by an electoral commission, to ensure that this is possible.

Constituencies should be delimited in such a way that a person living in every village, mohalla or a residential colony should be able to know and access the candidate that he proposes for selection. The non-partisan committee in every constituency will be responsible for making all information about the candidate available to every elector in the constituency. Everyone should be free to participate in this process, whether it be workers in a factory, peasants in a village or a group of villages, students in a college, tribal communities living in a remote area or the hills people. The committee will organize debates where prospective candidates will present their credentials and their intent. Even political parties can propose their candidates, but these will be treated no more or no less privileged than others. From among those proposed for candidature, the people of the constituency can select the most qualified 3 or 4 candidates for the final election.

The election process can be a simple one. The electoral commission, through the constituency committee, will ensure equal opportunity for all candidates to present their views, irrespective of whether they are party nominated candidates or candidates nominated by different people’s organisations or directly by people at a mass meeting of the constituency committee. No candidate or their party will be allowed to spend any money on propaganda. The state will bear all election expenditures. The distribution of liquor and biryani to the men and saris to the women on poll day by political parties canvassing their support will be totally eliminated.

The present Representation of the People Act concentrates power in the hands of political parties financed by big moneyed interests. It “recognizes” a handful of national and regional parties and gives them special privileges. The Election Commission allots symbols to recognized political parties which they use as a monopoly right to dominate the electoral process.

One purpose of the election symbol was to enable even illiterate people to recognize the candidate of their choice. But in the party dominated electoral process, recognized parties marginalize other smaller parties and independent candidates through the monopoly of symbols. As Dr M.S. Gill, ex-Chief Election Commissioner explains the significance of election symbols in Indian elections, in an interview to Frontline:

“In India, under the Election Symbols (Reservation and Allotment) Order, the political system works by the recognition of the Commission. The BJP has an exclusive symbol, the Congress(I) has one… every party has a distinctive symbol, and if that is taken away, you have seen the consequences. Without the symbol, the party is dead”.

The method of constituency committees being in charge of the process of selection, election and recall, can eliminate the use of monopoly symbols by “recognized” parties.

This proposal, which would use public funds to finance the electoral process rather than political parties, would go a long way towards eliminating undue influence in the political and electoral process.


All people have a right to participate in the decision-making process and in governing the country. As long as people hand over their right to representatives of political parties, over whom they do not have any control, they will remain marginalized. Their participation will be limited to casting their vote once in 5 years.

The present electoral laws favour the party-dominated electoral process, and the privileged position of a handful of so-called recognized parties who act as special interest groups for big business houses or other wealthy sections of the population. This law should be amended to make way for a people-dominated electoral process. State funding of the electoral process and the prevention of funding of political parties by vested interests are some essential steps in this direction.

by S. Raghavan

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