What is Political Party Funding?
Historical Background
Key Points
8 points- 1.
Sources of funding include: donations from individuals and corporations, membership fees, sale of publications, public funding (where applicable), and electoral bonds.
- 2.
Legal limits on corporate donations (previously capped, now uncapped with the introduction of electoral bonds).
- 3.
Reporting requirements for donations above a certain threshold (currently Rs 20,000).
- 4.
Tax exemptions for donations to political parties under Section 80GGB and 80GGC of the Income Tax Act, 1961.
- 5.
The Election Commission of India (ECI) oversees compliance with funding regulations.
- 6.
Controversies surrounding transparency and accountability, particularly regarding the use of electoral bonds.
- 7.
Debate on state funding of elections to reduce reliance on private donations.
- 8.
The Association for Democratic Reforms (ADR) plays a crucial role in analyzing political party finances and advocating for reforms.
Visual Insights
Political Party Funding in India: Sources, Regulations & Challenges
This mind map outlines the multifaceted nature of political party funding in India, covering its various sources, the legal framework governing it, and the persistent challenges and reform efforts. It connects the concept to broader governance and democratic principles.
Political Party Funding
- ●Sources of Funding
- ●Legal Framework
- ●Challenges & Concerns
- ●Reforms & Way Forward
Evolution of Political Funding Regulations in India
This timeline traces the key legislative and judicial developments shaping political funding regulations in India, from early attempts at transparency to the recent landmark Supreme Court ruling on electoral bonds. It highlights the ongoing struggle for greater accountability.
Political funding in India has historically been opaque, leading to concerns about black money and undue influence. Legislative efforts have aimed at increasing transparency, but new mechanisms like electoral bonds also faced scrutiny. The Supreme Court's recent ruling marks a significant shift, pushing for greater accountability.
- 1951Representation of the People Act enacted, includes provisions for election expenditure.
- 1985Anti-Defection Law (52nd Amendment) passed, impacting party discipline and funding dynamics.
- 2003Amendments to ROPA mandate political parties to disclose donations above Rs 20,000.
- 2013Companies Act, 2013, removes cap on corporate donations (previously 7.5% of average net profit).
- 2017Introduction of Electoral Bond Scheme through Finance Act. Amendments to RBI Act, ROPA, IT Act, Companies Act.
- 2018-2023Electoral Bonds in operation; widespread criticism regarding anonymity and transparency.
- Feb 2024Supreme Court declares Electoral Bond Scheme unconstitutional, citing violation of Right to Information.
- March 2024SBI discloses electoral bond data as per SC directive; ECI publishes data on its website.
- 2025Ongoing debate on alternative transparent funding mechanisms and strengthening existing disclosure norms.
Recent Developments
5 developmentsSupreme Court's ruling on electoral bonds, declaring them unconstitutional.
Increased scrutiny of political party finances by investigative agencies.
Debate on alternative mechanisms for political funding, such as direct benefit transfer.
Efforts to enhance transparency through online disclosure platforms.
Growing awareness among citizens about the importance of ethical political funding.