Why state financing is the only way to ensure fair and transparent poll funding (Indian Express)

Mains Paper 5 : Polity
Prelims level : Poll Funding
Mains level : Free and fair funding process in poll funding

Context

• In just 28 days since the announcement of the general election, the Election Commission (EC) has seized cash, drugs, alcohol, precious metals and other items worth Rs 1,800 crore.
• Compare this to the legal upper limit of expenditure per candidate Rs 70 lakh.
• Simple arithmetic would show that the seized amount can fully finance up to five candidates from each of the 543 constituencies.
• The amount seized is just the tip of the iceberg. The expenditure in any election is estimated to be several times the legal upper limit.
• Fiscal constraints on electioneering give rise to the problem of unaccounted money. There have been a few solutions.
• However, all of them are premised on an adverse relationship between accountability and transparency.
• Alternately, state funding of the recognised political parties and outlawing of corporate funding could be instrumental in making the electoral process fairer and more participatory.

Background

• In 1962, the late Atal Bihari Vajpayee moved a Private Member’s Bill to prevent electoral donations by corporates.
• It was argued that since all shareholders need not subscribe to the political endorsement by a corporate, it was immoral to allow donations against their consent.
• Vajpayee had propositioned that such funding would only serve corporate interests.
• While all political parties welcomed the bill, the then ruling party did not vote in its favour.
• Never again was such a bill introduced.
• Under Section 29B of the Representation of the People Act 1951, political parties are free to accept donations from any person, except from a foreign source.
• Two inferences can be drawn from this — first, money wields the ability to disrupt political agenda; second, foreign money dilutes electoral integrity.
• Both reasons would equally be valid for any person who is alien to the election process — a non-voter.

Key concerns

• The concerns that arise from foreign-funding are equally applicable to funding from corporates, with the distinction that while the former is a jurisdictional alien; the latter, on account of being a non-participant, is an alien.
• However, party interests deter further expansion in the law.
• The finance ministry’s electoral bond scheme afforded a way to fund political parties without disclosing the donor’s identity.
• Of the Rs 2,722 crore donated through the scheme in the last 15 months, almost 95 per cent has gone to the ruling party, which enjoys a 31.34 per cent vote share.
• The remaining contestants with a 68.66 per cent vote share could only garner 5 per cent funding.
• The anonymity provision under the scheme is antagonistic to transparency — the bonds merely enable an “on-the-books” secretive transfer.
• The State Bank as the facilitator would be privy to the details of the depositor and the political party funded, therefore allowing the ruling party to monitor its rivals.
• What would be unknown to others will be known by the ruling party.

Corporates involvement

• Corporates have long defended their political donations on the grounds of freedom of speech. Within American jurisprudence, corporates claim free speech under the First Amendment.
• Like citizens, they seek to endorse their economic and political views through contributions to campaign finance. However, casting such a wide net of freedom of speech seems misplaced.
• Corporates are associations that further economic interests of their members who enjoy a freedom of trade. Therefore, their freedom of speech is based on their exercise of the freedom of trade, which is essentially for a commercial purpose.
• Citizens, on the other hand, enjoy an unfettered freedom of speech which extends onto the political domain.
• Since corporates are not participants as voters, they have no claim to freedom of “political” speech and expression.
• Therefore, while citizen-voters can donate to a political party pursuant to free speech, corporates must refrain from donating to a political party.

Way forward

• A fair and transparent manner to finance the political parties would require a censure of unaccounted money and direct donations by corporates and non-voters to political parties.
• State funding of recognised political parties is a viable alternative.
• A state funding scheme would be viable through the levy of an election cess on the direct taxes.
• A National Election Fund could be maintained by the EC, into which the proceeds from this cess may be deposited.
• At the current GDP-Direct Tax ratio and voter numbers, a 1 per cent election cess can fund Rs 500 for each vote cast in elections to the Lok Sabha and the state assemblies.
• The cess being progressive would spare the poorer candidates from the costs of funding elections.
• Direct donations to political parties may be permitted only from persons who are entitled to vote. Those not entitled to vote may contribute to the neutral National Election Fund.
• Donations from corporates into this fund will not distort the election process, but would instead improve the integrity of the peoples’ electoral choice.
• Parties would be inclined to adopt a more inclusive agenda when in government since more votes will translate into more state funding.
• Parties will also vie for votes in absolute numbers than merely be the first past the post.
• Democracy will then truly be of the people, for the people and by the people.

Online Coaching for UPSC PRE Exam

General Studies Pre. Cum Mains Study Materials

Prelims Questions:

Q.1) The great debate between the Keynesians and Classical economists concerns with:
a) Role of government in managing economic shocks
b) Existence of private capital
c) Role of tariff versus non-tariff barriers in trade
d) Conflict between indigenous and foreign capital

Answer: A

Mains Questions:
Q.1) Why state financing is the only way to ensure fair and transparent poll funding?