State funding of elections is that apparition that cannot fructify but refuses to fade away. Indian political parties, unlike western democracies, are not mere platforms to put some people into elective public office but are like standing armies that need continuous nourishment. They provide a calling card to millions who otherwise may not have a worthwhile identity or independent standing in the social and economic milieu — the syndrome of whole-timers, pracharaks and party apparatchiks, respectively. 

State or public funding of elections means that government gives funds to political parties or candidates for contesting elections. Its main purpose is to make it unnecessary for contestants to take money from powerful moneyed interests so that they can remain clean. In some countries, state funding is extended to meeting some specific forms of spending by political parties, not confined to electioneering alone. Countries keep changing laws relating to state funding depending on experience and financial condition.

Public funding is good

• Political parties and candidates need money for their electoral campaigns, to keep contacts with their constituencies, to prepare policy decisions and to pay professional staff. Therefore, public funding is a natural and necessary cost of democracy.
• Public funding can limit the influence of interested money and thereby help curb corruption.
• Public funding can increase transparency in party and candidate finance and thereby help curb corruption.
• If parties and candidates are financed with only private funds, economical inequalities in the society might translate into political inequalities in government.
• In societies where many citizens are under or just above the poverty line, they cannot be expected to donate large amounts of money to political parties or candidates. If parties and candidates receive at least a basic amount of money from the State the country could have a functioning multi-party system without people having to give up their scarce resources. 

Against state funding

There are divergent views on the efficacy of state funding of elections. Some have been dismissive of the idea. Those against this idea wonder how a Government that is grappling with deficit budgets, can provide money to political parties to contest elections.

• They also warn that state funding would encourage every second outfit to get into the political arena merely to avail of state funds.
• Also, given that state expenditure on key social sectors such as primary healthcare is “pitifully small”, the very idea of the Government giving away money to political parties to contest polls, is revolting. Therefore, opponents ask the government to channelize public resources towards and not diverted from such essential services. 

Why it is difficult to go for public funding?

The funds that a political party advances to its party candidates in an election vary from one candidate to another, and there is much variation across political parties in this regard. In the 2014 Lok Sabha elections, 263 members of the House claimed that they received a total of ₹75.59 crore from their parties, which averages out to roughly ₹28 lakh each. However, it is believed that an MLA spends on an average about ₹5 crore to get elected. The legal limit of ₹28 lakh is far off this mark.

• Assuming that there are five contending candidates in a constituency, and even if each one of them does not spend as much, but just half of their elected counterpart, an amount of about ₹15 crore will be spent in each constituency, which with about 4,215 MLAs in India works out to an about ₹13,000 crore per annum.
• While the legal limit that a Lok Sabha candidate can spend is ₹70 lakh, a victorious candidate on an average does not spend less than ₹10 crore for the purpose. Suppose we assume again an average of five candidates per constituency, and halving the amount to losers, about ₹30 crore will be spent in each Lok Sabha constituency, and given 543 members of the Lok Sabha, about ₹3,300 crore per annum.
• Then there are elections to the Upper Houses, both at the Centre and in some States, and the local governing bodies. Hence, it is argued that public funding places unnecessary burden on the exchequer. 

What needs to be done?

The government should consider state funding of political parties contesting elections. But such funding should be limited to parties recognised as ‘national’ or ‘State’ by the Election Commission of India, and to candidates directly fielded by such recognised parties.

• Budgetary constraints could come in the way. Therefore, a good start could be made with partial funding — that is, with the state taking care of certain expenditures of the recognised parties. The aim should be to discourage political parties from seeking external funding (except through a nominal membership fee) to run their affairs, carry out their programmes and contest elections.
• A separate Election Fund with an annual contribution of some Rs 600 crore by the Centre and a matching amount by all States put together should be created. Only those parties which have submitted their income tax returns up to the previous financial year could avail of state funding.
• Every candidate of the party eligible for state funding should be given a specified quantity of fuel for vehicles during an election campaign and a specified quantity of paper to prepare electoral literature.

Poll funding has been a source of funnelling black money and cleaning up the poll process is necessary. Looking at the number of parties in India, it is easy to suspect that some of them have been floated by national or state parties to park their income from dubious sources, because such parties are not subject to the Election Commission’s scrutiny. The current form of political funding has become a burden on the economy. Many parliamentarians have raised concerns over the use of excessive money in election campaigns. This presents the government with the best chance to carry out significant anti-corruption reforms in the history of independent India.