Context:

• Free and fair elections are a core feature of India’s constitutional democracy. However, persistent inequalities in political funding have undermined the level-playing field among political parties.
• Despite multiple reform attempts—most recently the striking down of the Electoral Bonds Scheme (2018) by the Supreme Court—India’s political finance system continues to be dominated by corporate money.
• This raises concerns of quid pro quo (between the corporates and such parties), institutionalised corruption, and unequal political participation.

Core Issue - Unequal Political Funding:

• Unequal access to private donations distorts electoral competition and political participation.
• Better-resourced parties gain disproportionate advantages in campaigning, visibility, and organisational reach.
• Weak regulation, poor enforcement, and lack of political will have allowed the money–politics nexus to persist.

Corporate Donations and Party-wise Skew:

• Direct corporate donations (FY 2013–14 to FY 2023–24):
  • For example, the incumbent political party (BJP) received nearly 84.65% of all declared direct corporate donations.
  • Its donations were four times more than all other national parties combined.
• Electoral trusts: For example, BJP received around 71.67% of total funds routed through electoral trusts. This indicates a clear financial asymmetry in favour of the ruling party.

Electoral Trust Scheme - Performance and Concerns:

• Introduced in 2013 to formalise corporate political donations.
• FY 2013–14 to 2023–24 data:
  • Among the top ten trusts, Prudent Electoral Trust dominates.
  • It received ₹33,330.54 crore (86.38%) of total trust contributions. 75% of its donations went to the BJP.
• FY 2024–25 data:
  • The trust received ₹2,668.49 crore.
  • Donated ₹2,180.71 crore to BJP and ₹216.34 crore to Congress.
• Inference: Political funding via trusts is highly concentrated—both in terms of donors (few trusts) and beneficiaries (incumbent party).

Transparency Deficit in Electoral Trusts:

• What is known? Names of donor companies and recipient parties (via filings to ECI and IT Department).
• What is not known?
  • Which company donated to which party.
  • Method and rationale of fund disbursal by trusts remain opaque.
• Reform suggestion:
  • Electoral trusts should reflect the name of the company or corporate group that established them.
  • Public disclosure of donors–donees mapping is essential for democratic accountability.

Quid Pro Quo and Supreme Court Observations:

• Political funding in India is heavily dependent on corporates donating to ruling parties at Centre or states.
• This creates a quid pro quo (“something for something”) relationship.
• SC (Electoral Bonds Case, 2024):
  • “The reason for political contributions by companies is as open as daylight.”
  • “Contributions made by companies are purely business transactions made with the intent of securing benefits in return.”
  • Thus, the apex court called quid pro quo an instance of “institutionalised corruption”.

Campaign Finance and Rising Cost of Elections:

• No legal cap on political party expenditure (only on candidates).
• Unlimited party spending has led to:
  • Highly professionalised campaigns.
  • Escalating election costs.
  • India becoming one of the most expensive electoral democracies, surpassing even the US.

Public Funding of Elections - Historical Debate:

• Constituent Assembly (1948) deliberations: Elections are a state affair, not a private one. Public funding was seen as a way to prevent unfair advantage to wealthy candidates. Several committees and experts have supported state funding of elections.
• Preconditions suggested:
  • Internal democracy within political parties
  • Transparency in party functioning
  • Bringing parties under RTI
  • Regulation or ban on private donations

Lessons from the Past:

• Corporate donations were banned (1969–1985).
• The absence of alternative lawful funding:
  • Led to opaque, illegal practices
  • Rise of “briefcase politics”
• Indicates that bans without systemic reform can worsen corruption.

Challenges and Way Forward:

• Disparity in access to funds among political parties: Design a comprehensive political finance framework that
  • Ensures equitable access to funding
  • Diversifies sources of political finance
  • Strengthens transparency and disclosure norms
• Concentration of economic and political power: Strengthen institutional oversight by ECI and judiciary.
• Opaque funding channels: Introduce calibrated public funding alongside reforms.
• Lack of expenditure limits for parties: Cap political party expenditure.
• High entry barriers: Reduce financial entry barriers ( for new or less-resourced candidates) to political contestation.

Conclusion:

• India’s democracy bears the cost of distorted political funding through weakened electoral competition and compromised public interest.
• Without urgent reforms to address inequality, elections risk becoming contests of money rather than mandates of the people.
• Ultimately, when political finance remains skewed and opaque, it is the citizens who pay the price for their democracy.