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Rising Election Expenditure
Context:
Election expenses have been escalating worldwide, particularly in democracies like India, the U.S., and the U.K. These high costs fuel debates on campaign finance, electoral reforms, and their impact on democratic integrity.
Current Limits and Practices in India
- Expenditure Limits on Candidates:
- Lok Sabha: ₹95 lakh per constituency in larger states, ₹75 lakh in smaller states.
- Legislative Assemblies: ₹40 lakh in larger states and ₹28 lakh in smaller states.
- Implementation: These limits are revised periodically by the Election Commission of India (ECI) to reduce wealth influence.
- Political Parties’ Spending:
- There is currently no limit on political party expenditures during elections, indirectly favouring wealthier parties and candidates.
- The official expenditures reported by parties like BJP and Congress in 2019 were ₹1,264 crores and ₹820 crores, but actual estimates suggest they spent far more.
International Standards and Comparisons
- United States:
- Financed through individual and PAC contributions, with Super PACs having no spending limits due to Supreme Court rulings.
- Estimated 2024 election expenditure is around $16 billion, with significant portions attributed to organisational donations.
- United Kingdom:
- Spending Cap for Parties: £54,010 per constituency, totaling £35 million if contesting all seats.
- Candidate Expenditure: Limited to £46-49,000 during the long campaign and £17-20,000 during the short campaign.
- Observations: These countries enforce limits on both candidates and party spending, unlike India.
Challenges in Election Expenditure
- Escalating Costs: Elections have become increasingly expensive, driven by large donations from organisational donors.
- Nexus between Elected Representatives and Donors: Major donations create dependencies, with donors seeking political favours, which increases the risk of corruption.
- Barrier to Entry: High costs deter well-meaning citizens and new political entrants, making elections primarily accessible to wealthier individuals.
- Illegal Campaign Practices: In India, significant portions are allocated to campaigns, publicity, and illegal voter inducements (e.g., cash distribution).
Legal Framework Governing Campaign Finance in India
- Representation of People Act, 1951:
- Limitations on Candidate Expenditure: Requires candidates to account for their spending but has no equivalent rule for party spending.
- Disclosure Requirements: Contributions over ₹20,000 must be reported to tax authorities; corporate donations are capped under the Companies Act, 1956.
- Election and Other Related Laws (Amendment) Act, 2003: Introduced Section 29C for mandatory financial disclosures by parties, with compliance required to retain tax exemptions.
- Foreign Contribution Regulation Act (FCRA): Bars political organisations from receiving foreign donations to prevent external influence.
- Income Tax Act, 1961: Allows tax deductions on political donations and mandates audited financial accounts be submitted to tax authorities.
Proposed Electoral Reforms
- State Funding of Elections:
- Indrajit Gupta Committee (1998) and Law Commission (1999): Suggested partial government funding for candidates from recognised political parties.
- Feasibility Challenges: Concerns remain on implementing this effectively in the current political and economic landscape.
- Simultaneous Elections:
- Proponents argue this can reduce campaign costs and logistics.
- Challenges: Faces issues with federal principles and requires constitutional amendments. Also, it may not curtail voter inducements.
- Election Commission’s 2016 Report on Electoral Reforms:
- Financial Assistance Regulations: Proposes amending laws so that party funding for candidates counts within candidate spending limits.
- Expenditure Ceilings for Parties: Suggests limiting party spending to the candidate ceiling limit multiplied by the party’s total candidates.
Legal Process Acceleration: Recommends appointing more judges for rapid election case disposal to discourage expenditure violations.
