Democracy in Denomination

The biggest component in the election survival kit of the political parties in India is money. The coveted cash, which at all points is strictly scrutinised, often makes or breaks the elections. Keeping in mind the importance of party funding, the Election Commission of India has been entrusted to implement, monitor and execute the various policies and frameworks regarding electioneering including party and candidate spending. However the ECI works in and around the ambit and parameters set by the government in power through election reforms passed in the parliament. Now what does an electoral reform, or specifically an election funding reform, usually mean?

Electoral Funding usually refers to all the financials raised and spent by the candidates and political parties throughout the course of an election campaign. The reform part of it kicks in, when the Election Commission of India, supported by the Government of India comes out with legislations or amendments to streamline the funding process across levels, to ensure an even playing field for all parties geared to protect democracies most fundamental promise of free and fair elections. 

One of the most significant decisions in the space of election funding reforms came during the Indira Gandhi government. As she prohibited corporate donations in 1969, she was not just enacting a reform, she was arming legislation against her opponents. Instead of cleaning up politics as ‘intended’, the prohibition pushed money underground. Cash was king, and black money thrived. Then came another major reform, the 1979 decision, under the government of Chaudhary Charan Singh,  when political parties were exempted from income and wealth taxes, only if they filed annual returns including their audited accounts, and disclosed all of their donations over Rs. 10,000 and mainly, disclosed the identity of their supporters as well. With the government identifying that taxing the income of political parties further reduced their legitimate, disposable funds, making them even more dependent on undisclosed or illegal sources, which had been the case due to the ban on corporate funding to parties and other relevant measures up until then. The stated objective of the 1979 decision was to increase the flow of proper and legitimate funding for the parties to use. However, the reforms often don’t update itself with the changing economy as swiftly as needed, an example below tells us enough. 

The 1996 Supreme Court decision required political parties to submit income tax returns which was suggested in 1979, making it 17 years after the requirement became law. Rules were on the books, but enforcement has been based on political whims alone. Now, consider the 2008-2009 financial returns of two national political parties: Congress had recorded Rs. 4,970 million total revenues, but traceable donations accounted for only Rs. 280 million, 94% remained unaccounted for. Similarly, the BJP received 85% of its funds from unidentified sources. Both parties cleverly circumvented disclosure requirements while hiding their financial machinery from the public eye. Especially in the context of the 1979 reform and SC verdict, is worth the wonder.

The reform efforts or lack of speak for themselves. Many committees have come and gone but even today we are grappling with basic transparency to stay informed on the private and political nexus or possibility of, at the expense of Indians and India’s democracy. The Dinesh Goswami Committee (1990) recommended measures like subsidizing fuel for cars and the use of microphones— measures which acknowledged the reality that elections cost money (though being idealistic and not future looking). The Indrajit Gupta Committee (1998) went one step further by recommending free airtime on state media. 

Implementation, however, remained selective with lawmakers choosing and cherry-picking the reforms that would not encroach on traditional sources of funding. Both the suggested reforms mentioned here, for instance, were never implemented by the government, mainly, due to the lack of political will to unanimously implement these schemes, and also due to the lack of a uniform regulatory framework existing within all political parties in the country.

Fast forwarding to the present context, the Electoral Bond scheme of 2018 is arguably the most controversial addition to this story. These electoral bonds were conceived as an authorised promissory note of sorts, which would be bought by individuals from select branches of SBI, and donate that to the political parties they wish to support without disclosing the same to ECI thereby the public.  Promised as a way to eliminate black money by channeling donations through banks and enhance, it did not succeed all the way and added a level of unprecedented obscurity. 

The bond, which does not bear the name of the payee transparent for all to see and know, did not gain approval from the various stakeholders of the country. The government's argument of protecting donors from exploitation was a pretext for the real impact of the scheme: it channeled almost 75% of all bonds valued at more than Rs. 16,000 crore to the ruling party, while leaving the electorate unaware of who are these donors especially the ones giving large sums for the possibility of influencing policies in their favour.

The 15th February 2024 Supreme Court ruling before the Lok Sabha 2024 season declared Electoral Bonds to be unconstitutional,a landmark in jurisprudence. The five-judge bench recognized a consideration many analysts had long made: anonymous political contributions effectively undermine citizens' fundamental right to information enrishned under Article 19 (1) (a) and enable quid pro quo deals between politicians and corporations.

The post-Electoral Bond vacuum now promises both opportunity and challenge. Successful reform will need to be capable of addressing contribution limits, strong disclosure requirements, and enforcement measures through a robust and strong Election Commission. Especially in this technologically evolved electioneering landscape,where for example campaigns online require new regulatory standards befitting the new reality of electoral politics. Changing India's electoral funding model will take more than a court intervention—it needs political will to put democratic principles ahead of money and power. And political parties? They need to have a solid, united consensus on more things than just resisting checks on their fundings.