Polity & Governance Prelims cum Mains

Cap on election expenses by parties and candidates: Where things stand

The News

  • All major parties except the BJP pushed for a cap on election expenditure by parties, at an all-party meeting called by the Election Commission.


Highlights of the meeting

  • The agenda of the meeting was the EC’s proposal to the Law Ministry on party expenditure.
  • In the meeting, all major parties except the BJP, pushed for a cap on their election-related expenses, saying only this could ensure a level playing field.
  • The BJP argued that since all parties have to mandatorily file their income and expenditure accounts with the EC, there is no need for a ceiling on expenses during elections.
  • The Congress, too, supported a cap on party expenditure, even though it was not as vocal as the regional parties.


Current status of ceiling on expenditure

  • The Election Commission (EC) imposes limits on campaign expenditure incurred by a candidate but not political parties.
  • The limit of expenditure by a Lok Sabha candidate is capped between Rs 50 lakh and Rs 70 lakh, depending on the state he/she is fighting from.
  • In Assembly elections, the ceiling is between Rs 20 lakh and Rs 28 lakh.
  • This expenditure includes money spent by a political party or a supporter towards a particular candidate’s campaign.
  • All the candidates must mandatorily file a true account of election expenses with the EC.
  • An incorrect account or expenditure beyond the ceiling can attract disqualification for up to three years under Section 10A of The Representation of the People Act, 1951.


Concerns regarding the current expenditure ceiling

  • Many candidates and parties are complaining that the EC’s limits were too low and unrealistic.
  • The RPA, 1951 only provides cap on expenditure by a candidate in his/her campaign but expenses incurred either by a party or the leader of a party for propagating the party’s program is not covered under this ceiling.
  • This dilutes the real purpose of capping the candidate’s expenditure.
  • Also, there is evidence to suggest that candidates may be spending beyond their ceilings and may not be providing true accounts of their poll expenses to the EC.


Election commission’s stand on capping party expenditure/Arguments for ceiling

  • The EC has asked the government to amend the R P Act and Rule 90 of The Conduct of Elections Rules, 1961, to introduce a ceiling on campaign expenditure by political parties in the LokSabha and Assembly polls.
  • It proposed that the limit should be either 50% of or not more than the expenditure ceiling limit provided for the candidate multiplied by the number of candidates of the party contesting the election.
  • Limits on campaign expenditure are necessary for providing a level-playing field for everyone contesting elections.
  • The limits will curb the menace of unaccounted money in elections.
  • It will also control the money power used by political parties and their allies and ensures that a candidate can’t win only because he/she is rich.
  • The 255th Report of the Law Commission on electoral reforms argued that unregulated or under-regulated election financing could lead to “lobbying and capture”.
  • It can create nexus between big donors and political parties/candidates, which can result in crony capitalism.


Recommendations of law commission/arguments against

  • In its 255th report on electoral reforms, the Law Commission was against identifying a ceiling for expenditure by parties.
  • It said that it would be very difficult to fix an actual, viable limit of such a cap and then implement such a cap on party expenditure.
  • It says that it will result in phenomenon of under-reporting of expenses by all the parties.
  • It will be similar to our past experience of prohibiting corporate donations in 1969, which did not lead to a reduction in corporate donations.
  • Instead, in the absence of any alternative model for raising funds, it greatly increased illegal, under the table and black money donations.


Way forward

  • As over regulation leads to illegal activities, the cap on party expenditure may lead to under-reporting of expenses by parties. Hence, we need to provide some alternative models and bring some other reforms such as:
    • Provide a “legal backing” for the parties to have separate bank accounts for the purpose of election campaign expense and incur election expenses only by bank transfer or cheque from the said accounts.
    • This will help segregate parties’ other non-campaign expense from the campaign expense.
    • For controlling under-reporting of expenses, increase the disqualification from 3 years to 5 years under Section 10A of Representation of the People Act.
    • There can be a national trust under the Election Commission to disburse money donated by corporates for political activities, dis-favouring direct corporate funding to them.
    • The modalities of state funding of political parties can also be worked out.
    • There is need for having fast track courts for faster trials on cases related to electoral offences.

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