Political Funding in India: Money Game and Real Face of Democracy
Political Funding in India. This is a system which is the backbone of our democracy, but the lack of transparency and accountability in it has made it controversial as well. So let us understand about it in detail – what is political funding, how does it work, what are its rules, and why is there a need for reforms in it?
What is Political Funding?
In simple language, political funding means the money that political parties or candidates get for their campaigns, rallies, advertisements, and other party expenses. Elections in India are a big spectacle – lights, cameras, speeches, and big promises! But how is all this run? Obviously, with the help of money. This money comes through donations, contributions, or fundraisers – from individuals, companies, or groups.
But it is not that simple. The issue of transparency has always been there in political funding. Who is donating, how much is he donating, and what is he getting in return – all these questions remain in the mind of the public. Political parties in India need big budgets to run, and hence funding becomes a sensitive and powerful thing.
History of Political Funding in India
The story of political funding in India begins after independence. Earlier, the Congress party was dominant, and it used to get donations from businessmen and industrialists. But in 1969, a big twist came – Indira Gandhi banned corporate donations. The idea was to reduce the influence of companies on politics. But this ban did not last long, because parties needed money. In 1985, Rajiv Gandhi removed this ban, and companies started donating openly again.
From then on the system began to evolve, but one problem remained constant – black money and illegal funding. Cash donations, unreported contributions, and hawala transactions made political funding murky. Crores, even billions of rupees are spent in every election, but only a small portion is shown in the official records.
What are the rules and regulations?
Now let’s talk a little about the law. There are some laws to regulate political funding in India:
Representation of the People Act, 1951: This is the base of election laws. It has a rule for parties and candidates to disclose their expenses and donations.
Companies Act, 2013: Companies can donate up to 7.5% of their profit to political parties, but shareholders’ approval is required.
Income Tax Act, 1961: Political parties get tax exemption if they keep a record of their donations and income and report it to the Election Commission (EC).
Foreign Contribution Regulation Act (FCRA): Foreign donations are not allowed to political parties.
But these rules are not perfect. One loophole is that it is not necessary to disclose the source of cash donations of less than Rs 20,000. So the parties take advantage of this – big donations are shown as small amounts, and the name of the real donor is hidden.
Electoral Bonds: Game Changer or New Drama?
In 2018, the Modi government introduced Electoral Bonds – this was a big step to reform political funding. The idea was that donors could give money to parties anonymously, and reduce the use of black money. Electoral Bonds are a kind of promissory notes which are bought from State Bank of India (SBI) and donated in the accounts of eligible parties.
Advantages:
Cash donations reduced.
Donors got privacy, who were earlier afraid of blackmail or pressure.
Transparency increased a bit through the banking system.
Problems:
The name of the donors is not known to the public, so the question of accountability arises.
Critics say that it benefits the ruling party, because SBI is under the government.
Bodies like RTI or CAG cannot audit it.
In 2024, the Supreme Court declared Electoral Bonds unconstitutional and banned them, saying that it is a violation of the voters’ “right to know”. Now the parties are having to go back to the old system, and there is a debate going on as to what will be the next step.
What is the real scene of political funding?
Now let’s come to the real point – what is the ground reality? The amount of money spent in elections in India is many times more than the official numbers. As per the rules of the Election Commission, a Lok Sabha candidate can spend a maximum of Rs 95 lakh (in urban areas). But experts say that the actual expenditure ranges from Rs 50 crore to Rs 100 crore in big constituencies!
Where does this money come from? Corporate houses, real estate tycoons, and sometimes illegal sources like mining or liquor mafia. “Quid pro quo” game is played – meaning, donate, and in return get policy favors or contracts. This is a hidden truth that everyone knows, but proof is rarely found.
Regional Parties Vs National Parties
The funding pattern is different for different parties. National parties like BJP and Congress get money from big corporate donors. BJP reported donations of Rs 785 crore in 2019-20, while Congress reported Rs 139 crore. But regional parties like TMC, DMK or SP collect funds through their state-level businessmen and local influence. Small parties often depend on cash, which is difficult to track.
Problems and Challenges
There are some big problems in political funding:
Black Money: Hawala, cash and unreported donations are still a big issue.
Lack of Transparency: Hiding the name of donors is a problem for voters – they do not know who is influencing their government.
Corporate Influence: Big companies can get the policies changed in their favour.
Inequality: The party which can raise more money has a higher chance of winning – this is bad for democracy.
Why are reforms needed?
Now the question is – how can this system be improved? Experts and activists have been talking about reforms for many years. Some suggestions are:
State Funding of Elections: Government should give money to political parties for elections so that there is no need for private funding. But for this, a big budget and strict rules are needed.
Full Transparency: The public should know the source of every donation, no matter how much it is.
Digital Payments: Ban cash completely and make online transactions mandatory.
Independent Oversight: Give full power to Election Commission or any other body for monitoring funding.
But bringing these reforms is not easy. Parties themselves do not want to change the system for their own benefit, because this is their source of power.
What is the role of the public?
What can we, as voters, do in this? First of all, it is important to be aware. When you vote, think about where the candidate or party is getting their money from. File an RTI, raise questions on social media, and demand transparency from your local leaders. Change will come only through public pressure.
Conclusion: Future of Democracy
Friends, political funding is an issue that is deeply connected to the heart of our democracy. Until there is transparency and fairness in it, true democracy is difficult. Electoral Bonds was an experiment that failed, but it made one thing clear – there is a need for change in the system. This money game is running our Government, and we have to decide what kind of future we want – where votes have value, not notes.
So in the next election, when you go to cast your vote, think a little – who is standing behind the party that is winning? If you liked this blog, do share it, and share your thoughts in the comments. Democracy will be strong only when we all fight for it!