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ECI Not in favour of State Funding of Elections

  • Category
    Polity & Governance
  • Published
    11th Mar, 2020

Recently, the Minister of State for Finance has informed Lok Sabha that the Election Commission of India (ECI) is not in favour of state funding of elections.


Recently, the Minister of State for Finance has informed Lok Sabha that the Election Commission of India (ECI) is not in favour of state funding of elections.


  • The ECI has stated that it would not be able to prohibit or check candidates’ expenditure or expenditure by others over and above that which is provided for by the state.
  • It has also mentioned that for addressing the real issues with political fundings, there need to be changed in the following elements of the election funding process :
  • Receipts of funds by political parties.
  • The manner in which received funds are spent by the political parties.
  • Complete transparency in the political funding process.
  • The scrutiny over the above aspects will help to bring better transparency in political funding.


  • The state funding of elections was recommended by the Indrajit Gupta Committee in 1998.
  • ECI allows airtime to recognised national and State parties for campaigning on state media.
  • It had recommended that funding should be given in the form of free facilities provided to these parties and their candidates.
  • Law Commission Report (1999)
    • It had stated that a state funding of elections is ‘desirable’ provided that political parties are prohibited from taking funds from other sources.

National Commission to Review the Working of the Constitution (2000)

    • It did not support state funding of elections but mentioned that the appropriate framework for the regulation of political parties would need to be implemented before state funding is considered.

Current Scenario of Political Funding

  • Political Funding implies the methods that political parties use to raise funds to finance their campaign and routine activities.
  • Methods of Political Funding in India:
  • Individual Persons:Section 29B of RPA allows political parties to receive donations from individual persons.
  • Indirect State Funding:It includes methods except direct funding, like free access to media, free access to public places for rallies, free or subsidized transport facilities. It is allowed in India in a regulated manner.
  • Corporate Funding:In India, donations by corporate bodies are governed by the Companies Act, 2013.
  • Electoral Trusts:A non-profit company created in India for orderly receipt of voluntary contributions from any person like an individual or a domestic company.

Issues with Political Funding

  • One of the biggest disadvantages of corporate funding is the use of fake companies to route black money.
  • Influence of people and companies over political parties to which they provide funds.
  • There are various gaps in Indian rules, the benefit of which political parties take to avoid any kind of reporting.
  • Hidden sources of funding lead to more spending of funds in election campaigns, thus impacting the economy of the country.


State funding of election though recommended by many committees is not accepted by ECI and the government due to the inherent problems. But these are lesser than those that arise from corporate or black funding of elections. It is therefore imperative on ECI and the government to approve state funding of elections.


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