National Conference on Participatory Democracy and Good Governance 2014

CCAL, GNLU

Election Expenditure Regulation Mechanism in India: A Critique

Nirmal Mathew1st BA.,LLB

Gujarat National Law University

Introduction• India the largest democracy with the largest voter base in the

world.• The biggest problem Indian Elections is currently facing is the

Illegal Expenditure.• Indian elections have reached a sorry state of affairs where

without money a multi-party democracy cannot function.• Politicians with large amounts of cash always stand a chance

to win the elections over the other less affluent candidates.• As per ADR reports, 80% of candidates show expenditure up

to 50% of the ceiling• Corporates-Bureaucrat-Politician-Criminal nexus• Massive black economy with less than 4% income tax payers

Election Expenditure Election expenditure can be classified into two types on the basis of legal provisions

• Expenditure permissible under the law [ public meetings, posters, banners, vehicle, Advertisement etc.]

• Accounted

Illegal election expenditure [Distribution of money, liquor or any other item among electors with the purpose of influencing them

•Unaccounted

Inflow of the Unaccounted Money• Bribe Money from the Ruling Party Members• Bureaucrats• Corporates• Smugglers and Drug Peddlers• Large scale tax evaders

Outflow of the Unaccounted Money• Swaying Voters • Rigging Polls• Employing means to intimidate voters• Bribing Bureaucrats• Paid News and media advertisements

Regulations in place• The Representation of the People Act (RPA) of 1951• Election Commission of India Guidelines• Ceiling for election expenditure• Accounting and submission of statements• Conduct of Election Rules, 1961• Indian Penal Code, 1860• Income Tax laws• Scrutiny by team lead by Election Expenditure Observer

Expenditure Monitoring Machinery Election Expenditure Observers Media Certification and Monitoring Committee Static Surveillance Team Expenditure Monitoring Cell Other functionaries Special cell by the Indian Income Tax Department Flying Squads

Best Practices of other Countries• United States of America, UK and Australia.• The Election Expenditure Regulation in the United States

of America is one of the best election expenditure regulatory practices.• Political Action Committee• Soft Money• Legislative Regulations• DISCLOSE Act of 2010• Citizens United v. Federal Election Commission

• In UK• Over 50 million pounds each spent by leading political parties• ‘Commercial Loans’ from corporates• ‘Loans for Peerages’ Affair• Political Parties Elections and Referendum Act (PPERA) 2000• 2006 Sir Hayden Phillips inquiry• 2008 Ministry of Justice report

• State Funding?• Analyzing countries like Spain, Germany and New Zealand it is

observed that political party mobilization will reduce when there is increase in state funding and therefore bringing state funding will not help ease the situation of illegal expenditure completely.

The Critical Analysis• Natural Preference of most political parties is towards rich

candidates• The Large penetration of black money in every sphere in India• Study by Vaishnav (2011)• Short comings of present monitoring system• Inadequate and impractical ceiling

NOTHING OFFICIAL ABOUT IT…

Ceiling Limit for a candidate

Conclusions and Suggestions• Ineffective tackling of inflow of money• Inadequate tax laws and tax enforcement• Soft on income and assets of Political Parties• Lack of transparency and disclosure in election funding• Election Commission need to be proactive rather than being

mechanical and procedural• Too many cooks spoil the broth• Audited Accounts of the Political Parties are not available.

• Proper and systematic audit of accounts of all candidates and political parties by experts

• Random scrutiny of bills and vouchers and field enquiries for verification

• Mandatory publication of accounts by parties and candidates in public domain

• Increase in expenditure ceiling• Amendments in Sec 77-79 and Sec 10A of RP Act 1951• More Flying Squads and Video Surveillance Teams• Notice to candidate for any advertisement in media• Paid News, Surrogate Advertisements, Party aligned news to

be banned with penal provisions for violation

• Proper management of electoral trusts• A minimum tax on the income of political parties. • Income-expenditure monitoring system through a permanent

machinery rather than people posted only during elections• Increased allocation of airtime to all parties in state-run

channels to ensure a level playing field.• Appropriate amendments in RPA Act• Legal change for auditing by panel of auditors of ECI and to

publish annually the audited accounts• Campaign for “Ethical campaigning” through Media

•Thank You