Introduction
Conducting elections in India poses an arduous task to the Election Commission of India, keeping in mind the hope in the hearts of millions of people fueled by an expectation of democracy. The Election Commission of India (ECI) ensures the smooth sailing of the very essence of democracy. According to Article 324 of the Indian Constitution, the ECI is in charge of supervising, directing, and controlling the entire process of holding elections for the offices of the President and Vice-President of India, as well as for the Parliament and the Legislature in each state [1]. Tasked with the nigh impossible, a primary domain of responsibility of the ECI lies in managing election finances — finances that involve scrupulous demarcation, distribution, and ground logistics.
Finances for elections tend to go through the roof with every progressive term, with the 2019 Lok Sabha elections seeing an estimated expenditure of an unprecedented Rs. 55,000 crores, a 40% jump from the 2014 elections. Experts defended this massive number by simply stating an increase in the money required to campaign over social media, and in transportation, with an added increase in constituency sizes and a growing candidate pool [2].
Political financing has traditionally been a primary source of corruption in India. Finding out that India’s persistent corruption is explained by the shady flow of money that supports politicians and political parties is hardly startling news to the average Indian. With the cost of elections in India skyrocketing, politicians and the bureaucrats they control have mastered the art of expertly manipulating the regulatory and policy levers at their disposal in exchange for easy campaign funding. Despite the fact that the public is aware of these facts, a large part of the murky currents of political funding is hidden from public view.
What makes these cash currents so shady?
Corporate donations to political parties were effectively banned in April 1969, due to concerns that undue influence on the system would be detrimental to the electoral process. The problem, however, was that this was enacted without substituting public funding for state funding, which resulted in parties experiencing a shortage in adequate legal sources of funding. This gave them little to no choice but to rely on illegitimate sources of funding in the form of black money. Corporate donations were later legalized again in 1985, but this did not make much of an effect to reduce black money and increase transparency in political donations due to various reasons like a lack of tax and personal incentives [3]. Since a party had to reveal all of its donors in its annual reports, companies faced penalizations from parties that were not-so-favored, for donating to rival parties, which again gave these companies no choice but to revert to the practice of secret donations. The country’s administration saw no success in the following decades either, with problems arising from amendments that affected the expenditure cap for parties on favored candidates.
Until 2016, the most dominant (and known) form of funding for political parties would be through such Electoral Trusts. In 2017, the Union Budget announced the Electoral Bond Scheme (EBS), a wild-card scheme that changed the funding game. Simply put, electoral bonds are interest-free bearer bonds to anonymously donate money to political parties. Electoral bonds can be purchased in multiples of Rs. 1000, Rs. 10,000, Rs. 1 lakh, Rs. 10 lakh, and Rs. 1 crore, from authorized branches of the State Bank of India. All transactions to pay the decided amount happen digitally or via a cheque. Once the bond is purchased, the donor can give this bond to a party of their choice, anonymously. [4] The party would then have to encash these bonds within a strict time period of fifteen days.
The Controversy Around Electoral Bonds
With the compulsion of cash flow being conducted on cheques and digital trails, electoral bonds act as a check against popular forms of behind-the-scenes cash-based donations. The government claimed that this scheme would make political funding more transparent, insisting anonymity is essential to protect donors from political parties for donating to rival forces [5]. Another benefit mentioned by the government involved the 15-day encashment time frame for political parties to claim these bonds, stating that it would help prevent the creation of a parallel economy. Some argue that electoral bonds hardly dent the problem of black money and the undue influence of the rich on politics, with the opacity of the entire system playing a large role in the uncovering of illegal, over-the-top spending in election campaigning per candidate in a constituency in elections. A subsection of an updated model of this scheme stated that companies would only have to disclose the total amount donated, which further allows corporations and other donor groups to significantly control elections without public scrutiny.
This apparent distortion in the democracy has also been labeled a ‘retrograde step’ by the Election Commission of India. The ECI strongly objected to this scheme giving similar arguments to the ones mentioned above, commenting on the transactional opacity as a perfect cover for illicit funding [6]. In 2017, a PIL (Public Interest Litigation) was raised by an NGO (Association for Democratic Reforms) to contest the legitimacy and economic feasibility of this step, arguing that as per audit data in 2018 and 2019, the ruling party had received a large majority of all electoral bonds issued, a case that fizzled out with the Supreme Court refusing to pause the launching of the EBS [7]. In April earlier this year, the Supreme Court agreed to hear a similar PIL challenging electoral bond laws.
Hence, a demand for transparency comes forth, a demand requiring party funding disclosure, validation, thorough candidate registration, public funding, and better regulation on corporate donations.
The Cost of Being Gratuitous
Another exploitation of the financial system is the concept of providing “freebies”, a system that seems to have infected the political climate of the country prior to elections. These “freebies”, are in the form of domestic essentials or gifts that are provided to people to generate a mass support assembly to garner votes. They can take the form of domestic appliances, food, alcohol, electricity, and water, among other items [8]. While the innocent public sees these provisions as free of cost, everything comes at a price. However, the fact that these promising freebies obviously don’t come from the party’s or the politician’s pocket, but from the everyday taxpayer’s pocket raises numerous moral, ethical, and legal issues because the specified budget allocated to these parties is demarcated to be used solely for the welfare of people, and not as a lucrative took to gain public support. On the face of it, most parties are against freebies, but only a few stick to their statements in actuality.
Earlier this year in January, the Supreme Court issued notices to the Central Government and the Election Commission, demanding guidelines to be framed on the matter. This was in response to numerous petitions and PILs raised seeking appropriate action against parties that promise irrational freebies during elections [9]. In addition to these protests, Prime Minister Narendra Modi addressed a gathering in July, emphasizing the danger that this freebie system poses to the development of the country [10].
Freebies taint the electoral process and undermine the sanctity of democracy. Therefore, the ECI must establish regulations that forbid freebie announcements prior to elections and that ensure proper action against rule-breakers.
Conclusion
Understanding the impacts, effects, and potential changes in the current system is essential to bringing about any sort of reform. Given the nature of data of both fund-raising and spending, the ECI and the Central Government need to step up and formulate the right methods of control in order to help curb this cancer of corruption. The quality and efficacy of the government are adversely affected when corruption distorts, and damages politics and the process of democracy. Resorting to buy votes instead of focusing on the quality, content, and essence of the campaign has time and again proven to be detrimental to the overall political image in the eyes of the everyday Indian.
Article by: Yash Nikhil Mutnalkar, Co-editor, For The Record, PES MUN Society, RR Campus
Comments