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  • Q.7. Can state funding of elections bring in transparency in the poll process? How do the other democracies handle this issue?

    • 03,Oct 2024
    • Posted By : SPM IAS Academy
    • 0 Comments
    • APSC2023
    • GS2

    State funding of elections involves the government providing financial support to political parties or candidates to reduce reliance on private donations. This can potentially promote transparency, reduce corruption, and level the playing field in electoral competition. However, the success of state funding in ensuring transparency depends on how well it is implemented and regulated.

    How State Funding Can Promote Transparency

    A. Reducing Private Donations and Corruption:

    • One of the main issues in electoral politics is the dependence on large private donations, which can lead to corporate lobbying, undue influence, and even policy capture by special interest groups. State funding can reduce this dependency, thus making campaigns cleaner and more transparent.
    • Example: In Brazil, where campaign financing has been a major issue, the Supreme Electoral Court introduced state funding to reduce the influence of corporate donations, following widespread corruption scandals such as Operation Car Wash.

    B. Creating a Level Playing Field:

    • State funding can level the playing field by giving smaller parties and new entrants the resources needed to compete with larger, wealthier parties, thus making elections more democratic.
    • Example: In Indonesia, state funding of political parties is aimed at reducing the financial disparity between large, established parties and smaller ones. While the funding is limited, it offers some relief to smaller parties struggling with resources.

    C. Greater Transparency in Funding:

    • With public funding, the source of election financing becomes transparent and accountable to the public. This can significantly reduce the scope for unreported donations or illicit funding, which are often difficult to trace.
    • Example: The United States has a public funding system for presidential elections, where candidates who accept public funding must adhere to strict spending limits. While not fully eliminating private donations, this system provides some transparency in the campaign finance process.

    D. Public Accountability:

    • Since the funds come from the state, political parties and candidates are held accountable to taxpayers, which increases public trust in the election process. This can discourage excessive or wasteful spending during campaigns.
    • Example: France’s state funding model requires candidates to adhere to spending limits, and all campaign expenses are subject to public scrutiny. This has reduced campaign costs and promoted transparency.
    Constitutional basis of Indian Elections

    Challenges of State Funding

    A. Limited Impact Without Strong Regulations:

    • While state funding reduces reliance on private donations, without strong regulations and enforcement of spending caps, parties may continue to seek additional private funding, making state support less effective.
    • Example: In Indonesia, state funding is limited and often insufficient to cover campaign expenses, which forces parties to rely on private donations, weakening the intended transparency.

    B. Risk of Misuse:

    • If not properly regulated, state funding can be misused, especially in countries with weak governance. There is the potential for corruption, with parties using the funds inefficiently or diverting them for personal gain.
    • Example: In Brazil, despite reforms to restrict corporate donations and provide state funding, concerns remain about transparency and the proper use of public money during elections.

    C. Public Cost:

    • Financing elections with public funds can be costly for taxpayers, particularly in large countries with many political parties. Public opposition to state funding may arise if it is perceived as funding unnecessary or unaccountable political activities.

    How Other Democracies Handle Election Funding

    A. United States: A Hybrid System with Challenges

    • Public and Private Funding: The U.S. has a system of public funding for presidential campaigns, with candidates who accept public funds required to adhere to spending limits. However, the influence of private donations remains strong due to the rise of Super PACs and independent expenditures following the Citizens United (2010) Supreme Court ruling, which allows unlimited spending by outside groups.
    • Transparency Issues: Despite disclosure laws for direct donations, dark money from Super PACs and other sources remains a concern. This has led to increased influence of wealthy donors on the electoral process.
    • Result: While the public funding system brings some transparency, the overwhelming influence of private money, particularly through Super PACs, undermines efforts to fully control campaign finance.

    B. Brazil: State Funding Amid Reforms

    • Public Funding and Restrictions: Brazil moved to ban corporate donations in 2015 after widespread corruption scandals and introduced state funding to limit private sector influence. Political parties now receive public funds based on their electoral performance, and there are strict limits on individual donations.
    • Impact of Reforms: While state funding has reduced corporate influence, enforcement issues persist. In the 2018 elections, corruption concerns and the influence of large private donations still played a significant role, despite state funding.
    • Result: Brazil’s model has reduced some of the corporate control over politics, but the challenges of enforcing strict regulations and eliminating private influence remain.

    C. Indonesia: Limited State Funding

    • Small Scale State Funding: Indonesia provides limited state funding for political parties, which is based on their electoral success. However, the amount of public funding is relatively small compared to the costs of running campaigns, leading to continued reliance on private donations.
    • Transparency Issues: Political parties and candidates continue to depend on large donors, which can result in opaque financing practices. Though state funding is present, it has not significantly reduced the role of money in Indonesian elections.
    • Result: While state funding helps to an extent, the scale of funding is insufficient, and private donations still dominate the political financing landscape.

    D. France: Strict Limits and Public Funding

    • Public Funding and Spending Caps: France has a well-developed public funding system for political parties, which is complemented by strict spending limits and caps on private donations. Parties receive state funding based on their performance in elections and must disclose all campaign finances, promoting transparency.
    • Enforcement of Regulations: France’s system is backed by strict regulations and penalties for violations, including disqualification of candidates who overspend.
    • Result: France has succeeded in maintaining a transparent and relatively low-cost election system, with limited influence from private money and corporate donations.

    E. Germany: A Mixed Model with Transparency

    • Public and Private Funding: Germany has a mixed system of public funding and private donations. Parties receive public funds in proportion to their electoral success, while private donations are subject to strict disclosure requirements.
    • Transparency: Donations above a certain threshold must be disclosed, ensuring accountability. The public funding model allows smaller parties to compete, while transparency rules keep private influence in check.
    • Result: Germany’s model effectively balances state support with private donations, promoting transparency and fairness in the electoral process.

    For state funding of elections to promote transparency and reduce the influence of unaccounted money, India needs a holistic approach involving legal reforms, institutional strengthening, and a robust regulatory framework. Several judgments and recommendations from statutory bodies provide a blueprint for such reforms:

    A. Supreme Court Judgments:

    • The Supreme Court, in the case of Common Cause v. Union of India (1996), highlighted the need for transparency in political funding and mandated the disclosure of sources of donations above ₹20,000. Further, in the Association for Democratic Reforms (2002) case, the Court emphasized the right to know the financial background of candidates, linking it to the right to information.
    • The Election Commission of India (ECI) can mandate greater transparency by requiring all political donations and expenses, including those below ₹20,000, to be publicly disclosed, creating a clearer financial trail.

    B. 2nd Administrative Reforms Commission (2nd ARC):

    • The 2nd ARC (2008), in its Fourth Report, recommended the introduction of partial state funding to curb the influence of money in elections. The report emphasized that public funding should be supplemented by strict expenditure limits, auditable accounts, and penalties for violations.
    • The government could start with partial state funding as recommended by the ARC, especially for recognized political parties, while simultaneously enforcing strict limits on election expenses and implementing penalties for violations.

    C. Law Commission of India:

    • The Law Commission of India’s 255th Report (2015) on electoral reforms suggested state funding of elections but advised against full state funding unless other reforms, such as enhanced transparency in donations and expenses, are enforced. It stressed that a clean electoral process requires not just funding reforms, but also institutional oversight.
    • Way Forward: Implement a phased model of state funding based on the Law Commission’s recommendations, starting with public funding for smaller parties and candidates who meet predefined criteria, and scaling up based on the effectiveness of regulatory oversight.

    D. Election Commission of India (ECI):

    • The ECI has consistently called for reforms in political funding, including the introduction of electoral bonds and state funding. However, the ECI has expressed concerns about the anonymity provided by the electoral bonds, which defeats the purpose of transparency.
    • Reform the Electoral Bonds Scheme to ensure greater transparency, with mandatory public disclosure of donor identities and the amounts donated, aligning with the ECI’s call for transparency.

    E. National Commission to Review the Working of the Constitution (NCRWC):

    • The NCRWC (2002) proposed state funding of elections to promote equal opportunity for all political parties and candidates. It suggested that state funding should only be introduced once the political parties’ internal governance is made transparent and democratic.
    • Strengthen the internal democracy of political parties by enforcing regular elections, transparent financial reporting, and adherence to democratic processes as prerequisites for receiving state funding.

    State funding can be a viable solution to ensure transparency in the electoral process, but it must be implemented in conjunction with other reforms. Drawing from the recommendations of the Supreme Court, 2nd ARC, Law Commission, and the Election Commission, India can adopt partial state funding, impose strict expenditure limits, and enhance financial transparency. These steps would reduce the influence of private money in elections and ensure that political campaigns are conducted fairly, transparently, and within legal boundaries.

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