Regulating political funding: Rules around the world, India's challenge

The Judgement

• The judgement focused on two primary issues raised by the petitions
  • The impact of unlimited corporate funding on free and fair elections
  • The violation of citizens' right to information due to non-disclosure of contributions.

Significance of Party Funding

• Unlike the US, where elections centre around individual candidates, India's parliamentary system places parties at the core of electoral politics.
• Therefore, any effective campaign finance framework must primarily address party funding, rather than individual candidates.

Key Aspects of a Fruitful Party Funding Framework

• The judgement outlined four crucial aspects for an effective party funding framework.

1. Regulation of Donations

• Restrictions on who can donate and limits on donation amounts aim to prevent parties from being dominated by a few large donors.

2. Limits on Expenditure

• Imposing expenditure limits on political parties prevents a financial arms race.
• It ensures that parties compete for votes rather than money.

3. Public Financing of Elections

• Public funding based on predetermined criteria can help reduce reliance on private funding.
• such as past electoral performance, membership fees, and private donations
• Disclosure Requirements
• Mandating the disclosure of donations nudges voters against electing politicians engaged in quid pro quo arrangements.

Challenges and Solutions

• The judgement discussed various challenges in implementing an effective party funding framework.
• These include balancing transparency and anonymity, and preventing quid pro quo arrangements.
• It highlighted the Chilean experiment with "complete anonymity" of party funding.
  • It ultimately failed due to coordination between politicians and donors.

Balancing Transparency and Anonymity

• Many jurisdictions strike a balance by allowing anonymity for small donors while requiring disclosures for large donations.
• India's current framework lacks donation limits for individuals and legal expenditure limits for parties.
• This allows large donors to hide their contributions through schemes like Electoral Bonds.

Evolution of Political Funding

• The judgement emphasised the evolving nature of political funding, noting the increasing involvement of third-party entities in campaign activities.
• This necessitates a reevaluation of traditional assumptions about political funding frameworks in India.