Money and Elections: Necessary Reforms in Electoral Finance


In light of the modifications in electoral finance laws made in the 2016 and 2017 Budget, this report builds on existing discussions to clarify how such reforms in election law can be evaluated. It examines the evolution of key legal provisions before identifying barriers and systemic issues in the field on the basis of India’s unique experiences. It further enumerates potential solutions on the basis of international practice and draws up proposals to overcome existing regulatory barriers so that such solutions may be effectuated:

1. Electoral finance law must pivot towards transparency, strictly requiring disclosures of candidate assets and liabilities (including the source of assets), registration and reporting requirements for political parties, and the applicability of the Right to Information Act, 2005 to such parties.

2. Rules regarding funding and expenditure need to be tightened by placing an absolute cap on anonymous donations, banning corporate donations (except possibly to an Election Commission-controlled Trust), regulating political advertisements, preventing foreign sources of donations, outlining permissible categories of expenditure, regulating third-party expenditures, and laying a limited base for public funding.

3. The enforcement of the proposals above must be accompanied by the possibility of strict penalties such as the deregistration of defaulting political parties, along with increased provision for the independence of the Election Commission of India.   

Issues related to electoral finance have a long and troubling history in our polity with many previous attempts to tackle the problems involved. However, the matter has come back into focus with the last few Union Budgets creating avenues for funding through new instruments, measures that reduce public scrutiny on certain fronts, and changes that affect past foreign donations. This report was released at the Vidhi Dialogue event featuring Dr S.Y. Quraishi, Prof Rajeev Gowda, and Dr Aditya Sondhi.

Download the full report- Money and Elections: Necessary Reforms in Electoral Finance