Political finance in India - statistics and facts
2024 is being dubbed as the biggest election year as more than 60 countries across the world are expected to head to polls. With more than 900 million voters, India’s general elections will be the world’s largest democratic exercise. The last general election in 2019 was reckoned to be one of the most expensive in the world. The scale of this year’s elections is expected to be even bigger with a staggering rise in the involvement of political consultancies, campaign groups, and the growing influence of social media.
Freebie culture or tapping into government coffers to fulfill election promises, has become inveterate in Indian politics. Free laptops, meals, gas cylinders, and more are offered to voters as pre-election short-term advantages. As per economists, the cost of these freebies is noticeable in the growing debt to GSDP (Gross Domestic State Product) of Indian states. To ensure fair elections, the ECI conducts seizures of cash, alcohol, and precious metals offered to voters in exchange for votes.
Political parties in India are completely exempt from income tax. A combination of tax exemptions, funding anonymity, and easy registration has resulted in an incessant growth of registered unrecognized parties (RUPPs). And so have been the cases of their use for money laundering and financial impropriety. In 2019, only about 26 percent of these parties contested elections. Many of these RUPPs are under the Election Commission’s scanner and are at risk of being delisted or declared inactive. As India gears up for the colossal elections this year, the stage is rife for more political finance reforms to ensure fair, accountable, and transparent democracy.
Price tag of elections
The central government bears the cost of organizing general elections whereas state assembly elections when held independently are borne by the state governments. In simultaneous elections, costs are shared between the Centre and the states. The Election Commission of India (ECI) overlooks, directs, and controls elections. It also monitors the expenditure incurred by candidates, although there is no legal ceiling on the expenditure of political parties. Besides administrative costs, a major share of election expenditure originates from political advertising and campaigning. Going beyond traditional methods of campaigning through mass rallies, banners, and flags, political parties are now heavily spending on digital campaigns and reaching out to the electorate directly through social media and influencers.Freebie culture or tapping into government coffers to fulfill election promises, has become inveterate in Indian politics. Free laptops, meals, gas cylinders, and more are offered to voters as pre-election short-term advantages. As per economists, the cost of these freebies is noticeable in the growing debt to GSDP (Gross Domestic State Product) of Indian states. To ensure fair elections, the ECI conducts seizures of cash, alcohol, and precious metals offered to voters in exchange for votes.
Political funding
Aimed at checking the black money in political funding, the Finance Bill of 2017 lowered the limit on the permitted amount of cash donations to political parties. But it also removed the cap on official contributions allowed for companies and the requirement to disclose the name of the party. Introduced with big fanfare in the next year, the Electoral Bond Scheme (EBS) aimed to ensure ‘white money’ donations to political parties in the form of time-limited bearer bonds from a scheduled bank and maintain transparency in electoral financing. However, electoral bonds now contribute the majority share of the unknown income of the national political parties opening the floodgates of unlimited anonymous political funding in India. In 2022, 66 percent of national political parties' income in India came from unknown sources.Political parties in India are completely exempt from income tax. A combination of tax exemptions, funding anonymity, and easy registration has resulted in an incessant growth of registered unrecognized parties (RUPPs). And so have been the cases of their use for money laundering and financial impropriety. In 2019, only about 26 percent of these parties contested elections. Many of these RUPPs are under the Election Commission’s scanner and are at risk of being delisted or declared inactive. As India gears up for the colossal elections this year, the stage is rife for more political finance reforms to ensure fair, accountable, and transparent democracy.
