Transparent financing

Next govt must address political funding

Voting to elect the 18th Lok Sabha ends this week, and the results will be out on June 4, paving the way for the formation of the next Union government. Irrespective of the political shape and combination of the next government, it will need to quickly get down to business and address the policy and governance challenges. One such issue is related to elections themselves. In February, a Constitutional Bench of the Supreme Court struck down the electoral-bond scheme because it violated the right to information under Article 19(1)(a) of the Constitution. The apex court also directed State Bank of India, the authorised bank to issue electoral bonds, to disclose the details of the donations, which have since been thoroughly analysed in the media and elsewhere. The state of electoral funding in India has always been a matter of concern and the apex court’s judgment has provided an opportunity to address all issues related to the finances of political parties.
 

The Union home minister in an interview recently highlighted the possible need for an alternative to the electoral-bond scheme. It is well understood that the use of black money, or money power in general, is a significant concern for Indian politics, and the next government must address this issue urgently. An alternative mechanism must address the basic reasons for scrapping the electoral-bond scheme. In this regard, the next government would do well to constitute a committee with representation from major political parties to study all aspects of political funding and come up with suggestions, which can be debated threadbare in Parliament before implementation.
 

With the Supreme Court judgment in the backdrop, the starting point for any alternative mechanism should be transparency. An opaque system of financing can have a number of ill effects, including policy capture. Furthermore, since the idea is to eliminate the influence of black money, the new mechanism can do away with cash donations. India is a world leader in payment solutions, and given the general popularity of the Unified Payments Interface, this should not be a problem. The committee may also look at the possibility of strengthening the Election Commission of India, enabling it to strictly monitor the income and expenditure of political parties. It is often suggested that state funding of elections or political parties should be introduced to contain the influence of illicit money, or money power in general, to preserve the level playing field. However, this can only work if there is proper monitoring of political finance and parties are restricted from raising funds from other sources.
 

Another option could be a national fund where citizens and corporations contribute. The collected funds can be distributed among political parties in a way that maintains a level playing field. This would also take away the fear of retribution, which is often cited as a reason against transparency in political funding. The committee can also be asked to look at the way money is spent. There are expenditure limits for contesting candidates, for example, but not for political parties, which can affect the balance in a competitive democracy. To be fair, the issue of political finance is complicated with no easy solutions. However, with the scrapping of the existing mechanism by a court judgment and the constitution of a new Lok Sabha, India will have an opportunity to set things right as far as possible.