Statistics and Facts of Political Finance in India
15 May 2024 3 mins Personal Finance
With elections scheduled to take place in over 60 nations worldwide, 2024 is termed the year of the largest elections. India's general elections, with over 900 million voters, will be the greatest democratic exercise globally. The 2019 general election was regarded as one of the most costly in history. With a startling increase in the engagement of political consultants and campaign groups and the rising power of social media, this year's elections are predicted to be even more expansive.
Price Tag of Elections
While state assembly elections are paid for by the state governments when they are held separately, general elections are organized by the federal government. The Center and the states split the costs of concurrent elections. Elections are overseen, directed, and controlled by the Election Commission of India (ECI). While there is no legal cap on political party spending, it also keeps an eye on the costs borne by candidates. A significant portion of election expenses comes from political advertising and campaigning in addition to administrative expenditures. Political parties are increasingly actively investing in digital campaigns and interacting with voters directly through social media and influencers, moving beyond more conventional means of campaigning that include large-scale demonstrations, banners, and flags.
In Indian politics, the practice of offering freebies or using public funds to fund electoral pledges has become commonplace. Pre-election short-term benefits include free computers, food, gas cylinders, and other items. Economists claim that the increasing debt of Indian states to their Gross Domestic Product (GSDP) is evidence of the cost of these giveaways. The ECI seizes money, booze, and precious metals that voters provide in return for their ballots in order to guarantee fair elections.
Political Funding
The Finance Bill of 2017 reduced the maximum amount of money that may be donated to political parties in an effort to combat the use of black money in political financing. However, it also did away with the need for the party name to be disclosed and the ceiling on official donations permitted for corporations. The next year saw the much-publicized introduction of the Electoral Bond Scheme (EBS), which sought to preserve electoral funding openness and guarantee "white money" contributions to political parties in the form of time-limited bearer bonds from a designated bank. Nonetheless, electoral bonds currently account for the majority of the national political parties' unidentified revenue, paving the way for limitless anonymous political fundraising in India. In 2022, 66% of national political parties' income in India came from unknown sources.
Income tax is not applicable to political parties in India. Tax exemptions, financial secrecy, and simple registration have all contributed to the unstoppable rise in registered unrecognized parties (RUPPs). Likewise, there have been instances of their misuse in financial misconduct and money laundering. Only over 26% of these parties ran for office in 2019. A large number of these RUPPs might be delisted or deemed inactive since they are being investigated by the Election Commission. More political finance reforms are desperately needed as India gets ready for this year's massive elections in order to maintain an open, responsible, and just democracy.
Reference: https://www.statista.com/topics/11904/political-finance-in-india/#topicOverview
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