Campaign Finance Reforms in India: Issues and Challenges

The essence of any democratic system is the healthy functioning of political parties and consequently free and fair elections. Free and fair elections imply not only a legal institutional framework for the conduct of elections and a transparent electoral process,

The essence of any democratic system is the healthy functioning of political parties and, consequently, free and fair elections. In turn, the conduct of fair polls requires not only a legal institutional framework and a transparent electoral process, but a campaign finance institutional structure that adequately ensures a level playing field along with the upholding of the cardinal principles of probity and transparency in public life. Such principles are true not only in India but in any other democratic country as well.

In 2011, the Anna Hazare-led anti-corruption movement in India became instrumental in mobilising public opinion against graft at all levels of government. Corruption—and the pernicious influence of black money particularly at the higher echelons of the Indian government—has agitated the ordinary Indian citizen for a long time. What is the root cause of corruption? It is now generally conceded that the fountainhead of corruption and widespread prevalence of black money is the country’s electoral politics; indeed, nowhere else is corruption in India more pervasive.

For instance, according to figures presented in the Lok Sabha, Rs. 11.2 billion was earmarked for the
2009 elections. However, the unofficial expenses—unaccounted money, private sector contributions, and black money—were two to three times the official figure. For the 2014 elections, meanwhile, election expenditure is said to cross the Rs. 100-billion mark. The challenge for India is how to achieve political equality while society is deeply mired in economic inequality. De Tocqueville may well have been right when he wrote thus: “Democratic institutions awaken and foster a passion for equality which they can never entirely satisfy.” Yet the integrity of these institutions demands that control of economic resources does not permit domination of the political process on the simple expedient of unrestrained liberty for all in the political arena.

It is against this background that a close examination of electoral reforms in India, vis-à-vis campaign finance, assumes immense importance. It must be stated at the outset that reforming campaign finance legislation in India is not the only response to the ills currently prevailing in the electoral arena. Other reforms that must be pursued include: inner party democracy; a meritocratic system of entry into the political arena instead of one based on feudalism and networks; and the use of black money. Campaign finance, however, is one of the most important areas in need of reforms. This paper looks at the legislation governing campaign finance in India, different forms of financing, the dilemmas involved (for example: state funding, quasi-state funding and corporate funding) and challenges faced by the institutional structure overseeing electoral reforms, the Election Commission of India. The attempt is not to suggest specific solutions but to throw some light on the various debates surrounding campaign finance in India.

Editors / Author

Samya Chatterjee