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Insights into Editorial: Demonetization, Election Commission and Electoral Reforms



Insights into Editorial: Demonetization, Election Commission and Electoral Reforms



India today stands as a model for emerging democracies across the world. Having held periodic elections since 1951, with the exception of the two-year Emergency period, the efficacy of the electoral structures both at the national and State-levels has to a great extent defined India’s success as a modern democratic nation-State. Unfortunately, over the past two decades, the essence of democracy has been corroded by corruption in the electoral financing structure. It is believed that the government’s recent move against black money prepares the ground for reforms of electoral finance.

electoral reforms india


The Election Commission of India has been deeply concerned about the use of black money in elections. It has repeatedly written to the government, suggesting electoral reforms for the last two decades. On its part, the ECI has been doing its best. The setting up of the expenditure monitoring division in 2010 in the commission was a milestone in its efforts to challenge the abuse of money in elections. Stringent guidelines, and strict enforcement, led to the seizure of hundreds of crores of rupees and put some fear of god in the hearts of the profligate politicians. However, the threat posed by black money still remains.


How bad is the problem?

Estimates say nearly $5billion was pumped into 2014 Lok Sabha elections, most of which was black money. Such gargantuan sums of money, coupled with the fact that there is visible involvement of some corporates in the campaign, gives an appearance of corruption.

  • State-funding is a staple of election financing in countries with the fairest elections. In India, the void is filled by illicit corporate donations, resulting in quid pro quo post-elections.
  • A dysfunctional system of election financing is also major cause of criminalisation of Indian politics – in the absence of state support, funds must be managed from somewhere, and more muscle usually ensures more money.


System of election financing in India:

The system is two-tiered – based on parties and candidates. The parties are required to disclose income but not expenditure, while it’s the other way round for candidates.

  • The parties, whose main source of income comes from donations by individuals and corporations, use loopholes in the law to avoid disclosing identities of even the big individual donors. As regards corporate donations, despite the availability of tax breaks, most of it is done off-the-books mainly to avoid reprisals in case the opposing party wins.
  • On the other hand, the candidates grossly underreport expenditure while actually spending far higher than the legal limits allow. Most of the illegal spending by candidates comes from the assistance given to them by their parties which carry greater financial heft, and have no ceiling on expenditure.


What reforms are needed?

  • Prescribe a ceiling for political parties’ expenditure, like that for the candidates.
  • Consider state funding of political parties (not elections) with independent audit and a complete ban on private donations.
  • Enforce internal democracy and transparency in the working of the political parties. Bring them under the RTI.
  • Set up an independent national election fund where all tax-free donations could be made. It could be operated by the ECI or any other independent body.
  • Accept the ECI’s proposal to legally empower it to cancel elections where credible evidence of abuse of money has been found.
  • Debar persons against whom cases of heinous offences are pending in courts from contesting elections.
  • Empower the ECI to de-register those political parties which have not contested any election for 10 years and yet benefited from tax exemptions.
  • Make paid news an electoral offence with two years’ imprisonment by declaring it a “corrupt practice” (Sec 100 RP Act) and “undue influence” (Sec 123(2)).


Way ahead:

From asking political candidates to disclose all contributions received by them to making it mandatory for corporates to seek shareholders’ approval at their annual general meetings before donating funds to political parties, the Law Commission has recommended sweeping electoral reforms in its 255th report submitted to the government. Now, it is up to the government to implement these reforms.



The current form of political funding has become a burden on the economy. Many parliamentarians have raised concerns over the use of excessive money in election campaigns. This presents the PM with the best chance to carry out significant anti-corruption reforms in the history of independent India.