What is Political Funding & Electoral Reforms?
Historical Background
Key Points
7 points- 1.
Sources of funding include membership fees, donations from individuals and corporations, electoral bonds (now scrapped), electoral trusts, and state funding (debated).
- 2.
Representation of the People Act, 1951 (RPA) mandates disclosure of donations above ₹20,000 to the Election Commission of India (ECI).
- 3.
Income Tax Act, 1961 provides tax exemptions for donations to political parties under Section 80GGC (individuals) and 80GGB (companies).
- 4.
Companies Act, 2013 (prior to 2017 amendment) allowed companies to donate up to 7.5% of their average net profit of the preceding 3 years.
- 5.
Election Commission of India issues guidelines for expenditure limits for candidates and parties.
- 6.
Reforms aim to curb black money, reduce corporate influence, ensure level playing field, and enhance transparency.
- 7.
Key reform proposals include state funding of elections, strengthening disclosure norms, regulating expenditure by third parties, and internal party democracy.
Visual Insights
Evolution of Political Funding & Electoral Reforms in India
This timeline highlights key committees, legislative changes, and judicial interventions that have shaped political funding and electoral reforms in India, leading up to the present.
Concerns about money power and lack of transparency in political funding have been persistent in India. Various committees and commissions have proposed reforms over decades, leading to incremental legislative changes. The Electoral Bonds Scheme, introduced in 2017, was a significant, albeit controversial, attempt at reform, which was ultimately overturned by the judiciary in 2024.
- 1990Goswami Committee Report on Electoral Reforms (recommended state funding, ban on corporate donations).
- 1993Vohra Committee Report (highlighted nexus between criminals, politicians, and bureaucrats).
- 1998Indrajit Gupta Committee on State Funding of Elections (recommended partial state funding).
- 1999Law Commission Report (recommended stricter regulations on party finances).
- 2003Amendments to RPA 1951 (mandated declaration of donations above ₹20,000).
- 2007Second Administrative Reforms Commission (ARC) Report (recommended comprehensive electoral reforms).
- 2013Companies Act 2013 (initially capped corporate donations at 7.5% of net profits).
- 2017Finance Act 2017 (introduced Electoral Bonds, removed 7.5% cap on corporate donations).
- 2018Electoral Bonds Scheme operationalized.
- Feb 2024Supreme Court strikes down Electoral Bonds Scheme as unconstitutional.
Political Funding & Electoral Reforms: Challenges & Solutions
A mind map illustrating the key challenges in political funding and the proposed electoral reforms to address them, crucial for understanding the ongoing debates in Indian democracy.
Political Funding & Electoral Reforms
- ●Challenges in Political Funding
- ●Key Electoral Reforms Proposed/Implemented
- ●Legal & Institutional Framework
- ●Impact on Democracy
Recent Developments
5 developmentsThe scrapping of the Electoral Bond Scheme by the Supreme Court in February 2024 is the most significant recent development.
Increased focus on Electoral Trusts as a primary channel for corporate donations post-Electoral Bonds.
Ongoing debate on the need for a new, transparent mechanism for political funding.
Calls for stricter enforcement of existing disclosure norms and regulation of 'shell companies' for donations.
Discussion on the feasibility and implications of state funding of elections.