Electoral Reforms and Transparency in Political Funding

Free and fair elections are the foundation of any democratic system, ensuring that political power reflects the will of the people. In India, which is the world’s largest democracy, electoral reforms have been a constant concern due to challenges such as criminalization of politics, influence of money power, and lack of transparency in political funding. While the Election Commission of India has developed robust procedures for conducting elections, the deeper issues of financing and transparency continue to undermine the integrity of the electoral process. Ensuring clean political funding has therefore become central to strengthening democracy and restoring public trust.

Political funding in India has traditionally been opaque, with large amounts of money flowing into campaigns through unaccounted cash donations. The Representation of the People Act, 1951 and rules under it provide for disclosure of donations above a certain limit, but loopholes have allowed parties to conceal sources of funds. To address this, several reforms have been attempted over the years. The introduction of electoral trusts in 2013 was intended to channel corporate donations in a more transparent manner. Later, the Finance Act, 2017 brought in electoral bonds as an instrument for funding political parties, promising transparency and cleaner transactions through banking channels.

The electoral bonds scheme, however, has attracted widespread criticism. While donors’ identities are concealed from the public, they remain accessible to the government through the State Bank of India, creating fears of selective pressure and loss of anonymity. Critics argue that instead of increasing transparency, the scheme has institutionalized opacity, allowing unlimited corporate donations and opening the door to influence by big business. The Supreme Court has been petitioned to review the constitutional validity of the scheme, with arguments that it violates citizens’ right to know under Article 19(1)(a). Transparency in political finance is not only a legal issue but also a democratic necessity, as voters must be aware of who funds political parties in order to assess potential conflicts of interest.

Judicial interventions have played an important role in pushing electoral reforms. In Union of India v. Association for Democratic Reforms (2002) and People’s Union for Civil Liberties v. Union of India (2003), the Supreme Court mandated disclosure of candidates’ criminal records, assets, and liabilities, emphasizing the voters’ right to make an informed choice. Similarly, the Court has supported efforts to decriminalize politics and curb excessive expenditure. The Election Commission has also consistently recommended state funding of elections, stricter auditing of party accounts, and caps on corporate donations. These measures, if implemented, could reduce the influence of unaccounted money and make elections more equitable.

International practices provide useful comparisons. In countries like the United States, campaign financing is heavily regulated, with mandatory disclosure of donations and expenditure. In Germany and the UK, public funding of political parties has been institutionalized to reduce dependence on private donations. India, however, continues to rely heavily on private and corporate funding, making transparency all the more crucial. The absence of state funding combined with weak disclosure mechanisms has perpetuated a cycle where money power plays a decisive role in elections, often overshadowing the democratic principles of equality and fairness.

The way forward lies in adopting a multi-pronged approach. First, the electoral bonds scheme must be revisited to ensure genuine transparency, either by mandating disclosure of donors or replacing it with more accountable mechanisms. Second, robust auditing of party accounts by an independent body is essential to ensure compliance with financial norms. Third, state funding of elections, at least in part, could reduce dependence on private and corporate donations, as repeatedly recommended by committees such as the Indrajit Gupta Committee on State Funding of Elections (1998). Fourth, the role of technology must be expanded to monitor expenditure in real-time and curb illicit flows of money during campaigns.

In conclusion, electoral reforms and transparency in political funding are indispensable to strengthen the democratic fabric of India. While significant reforms have been introduced, loopholes continue to enable opacity and unchecked influence of money in politics. Judicial activism, Election Commission initiatives, and civil society advocacy have all highlighted the urgency of clean and transparent political finance. The ultimate goal must be to create an electoral system where public trust is not eroded by hidden influences and where citizens can exercise their franchise with full knowledge and confidence. Transparency in political funding is not just a matter of legal reform but the very essence of free and fair elections in a constitutional democracy.