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Part IV: Control of Election Expenses

CHAPTER III: State Funding

4.3.1. This part of chapter relates to proposal for state funding of elections put forward in the working paper. The working paper had reiterated the proposals contained in the Dinesh Goswami Bill of 1990 which, as has been stated herein before, was based upon the consensus of all the political parties.

4.3.2. It is necessary at the outset to refer to Inderjit Gupta Committee which was appointed by the Parliament to got into the question of state funding. The Committee has also recommended partial state funding of political parties more or less on the lines of the Dinesh Goswami Bill 1990.

4.3.3. Views of participants in seminars considered. Shri Som Nath Chatterjee, who presided over the session devoted to 'Election Expenses and State Funding' in the National Seminar held on 24.1.1999 supported the idea of state funding. (Hew as a member of the said Committee.) Mr. Chatterjee referred to a 1971 Parliamentary Committee known as 'Jagannadha Rao Committee' of which S/Shri. Atal Bihari Vajpayee and L.K. Advani were members besides himself, which Committee had also recommended state funding. He referred to the deliberations of the Committee appointed by Shri Jayaprakash Narayan, provisions of Dinesh Goswami Bill and to the recommendations and resolutions of the Inter-Parliamentary Council (at which all parliamentarians were represented), held in May 1994. All of them recommended the idea of state funding. Mr. Chatterjee referred in some detail to the contents of the Inderjit Gupta Committee Report recommending partial state funding of the recognised political parties; both at the national and state levels. The recommendations made, he said, were designed to meet the unavoidable expenditure required to be incurred by each political party though it may not satisfy their total requirements. Such a course, he said, will help the bona fide candidates. He also expressed himself in favour restrictions being placed upon ostentatious expenditure on elections including on cut-outs, banners, arches, public meetings and so on. According to him, the proposals of the Inderjit Gupta Committee Report represent a good beginning though they do not exclude private funding of the political parties. He also supported the idea of creating a state fund, as recommended by the Inderjit Gupta Committee. This fund should have a reserve of six hundred crores. The said amount, he said, was fixed keeping in mind the rate of rupees ten per elector. Mr. Chatterjee also stressed the importance and necessity of vigilance by public, media and all other organisations interested in public welfare.

4.3.3.1. Shri K.K. Venugopal, senior Advocate, was also of the opinion that time had come for seriously considering the state funding of elections. He referred to the fact that in several countries such a practice was in vogue. He pointed out that in no case, money as such should be paid to the candidate or to a political party. Only certain material, which was necessary for every political party to convey its message and its programme to the electorate should be provided. If the state funding was in the shape of cash, he opined, millions of candidates would come forward to contest elections only for the sake of money. He also referred in this connection to the practice in England where free television time was made available by BBC and by independent television companies. Postal communication was also accessible free of charge to the candidates. Council halls are made available for holding the meetings. The cost of printing and compiling of the registers were all paid by the State. He then referred to the French electoral system which he said is the most generous in this respect. Money is not given there directly by the state but pamphlets, leaflets, posters, handbills and other publicity material including election manifestos and statements are printed by the state machinery at the specific request of the candidate. Vehicles including oil and petrol are provided by the State. Help was extended to the candidate to organise public meetings and public address systems. Radio time and television time was also made available to a candidate free of cost. Turning to India, Mr. Venugopal said that the problems confronting the country were very acute and that election funding on a major scale could not be undertaken at the cost of poverty, primary education, primary health care, population control, clean drinking water, creation of employment and so on. He opined that any deprivation in these areas would negate the very socialist democratic foundation of the nation. While commending the proposals of the Law Commission in this behalf, he referred to France again where, with a view to preventing a large number of independent candidates from taking advantage of state funding, it has been provided that every candidate receiving State funding shall execute a bond and also furnish a bank guarantee for the financial support extended to him so that in case he got less that 8 per cent of the total votes polled, he would forfeit his bond and money would be recovered from the guarantor. He was of the opinion that such a provision should be made in the Indian law also, if state funding was to be provided. Such a course, he submitted would prevent a host of candidates appearing on the electoral scene and, at the same time, would render great service to democracy by providing a level playing field to all the persons who genuinely desired to serve the nation as representatives of the people. He submitted that the existing professional politicians alone could not represent the people and that it was necessary to bring into existence a new generation of educated individuals who desired to serve the country.

4.3.3.2. One of the participants suggested that it should be open to private individuals and other bodies to make contributions to the Election Fund and that contributions thereto should be exempt from income-tax. While some of the participants wanted the State funding to be restricted to recognised political parties(RPPs), some others suggested that it should be extended to all the candidates. As a matter of fact, there was a sharp division of opinion, in this session, on this question.

4.3.3.3. At the seminar held on 14th November, 1998 too, these proposals had elicited mixed response.

At the Banagalore seminar, some of the participants suggested that if the state funding was to be introduced, it must be made conditional upon internal democracy being assured within the political party. To the same effect were the opinions expressed at the Thiruvananthapuram seminar. In the responses received to the working paper, differing opinions were expressed. While some members agreed with by the opponents of this proposal is that such a course would place an unwanted burden on the public exchequer and that unless other proposals relating to maintenance of accounts etc., were also given effect to, state funding should not be resorted to.

4.3.4. Conclusions - After considering views expressed by the participants in the seminars and by various persons and organisations in their responses and after perusing relevant literature on the subject, the Law Commission is of the opinion that in the present circumstances only partial state funding could be contemplated more as a first step towards total state funding but it is absolutely essential before the idea of state funding (whether partial
or total) is resorted, the provisions suggested in this report relating to political parties (including the provisions ensuring internal democracy, internal structures) and maintenance of accounts, their auditing and submission to Election Commission are implemented. In other words, the implementation of the provisions recommended in Chapter one Part three should be a pre-condition to the implementation of the provisions relating to partial state funding set out in the working paper in the Law Commission (partial funding, as already stated, has also been recommended by the Inderjit Gupta Committee). If without such pre-conditions, state funding, even if partial is resorted to, it would not serve the purpose underlying the idea of state funding. The idea of state funding is to eliminate the influence of money power and also to eliminate the influence of money power and also to eliminate corporate funding, black money support and raising of funds in the name of elections by the parties and their leaders. The state funding, without the aforesaid pre-conditions, would merely become another source of funds for the political parties and candidates at the cost of public exchequer. We are, therefore, of the opinion that the proposals relating to state funding containted in the Inderjit Gupta Committee Report should be implemented only after or simultaneously with the implementation of the provisions contained in this Report relating to political parties viz., deletion of Explanation 1 to Section 77, maintenance of accounts and their submission etc. and the provisions governing the functioning of political parties contained in chapters I and II of Part IV and chapter I of Part III. The state funding, even if partial, should never be resorted to unless the other provisions mentioned aforesaid are implemented lest the very idea may prove counter-productive and may defeat the very object underlying the idea of state funding of elections.

4.3.5. It is desirable that total state funding should be introduced but on the condition that political parties are barred from raising funds from any other source. In this chapter, we have proceeded on the assumption that only partial instead of total state funding is feasible in the
prevailing economic conditions in the country.

4.3.6. In the Inderjit Gupta Committee report on State Funding of Elections also, it has been recommended -

" 6.14 The committee, therefore, sees full justification constitutional, legal as well as on ground of public interest, for grant of State subvention to political parties, so as to establish such conditions where even the parties with modest financial resources may be able to compete with those who have superior financial resources, on a level with a fair chance of success at the hustings."

The committee also emphasised that such funds could not be doled out to independent candidates and that such of the registered parties as had secured recognition as national and State parties under the Symbols Order on the manifest demonstration of their popular support among the electorate for State sunvention. We concur with the suggestion.

4.3.6.1. On the issue as to whether full or partial State funding should be admissible, the said Committee further observed:

"Para 9.1. Given the budgetary constraints and financial stringencies being faced currently by the country, compounded by the recent economic sanctions imposed by certain foreign countries, sparing or diverting from the meagre financial resources of the country at this juncture, huge funds that may be required to provide full State funding to political parties will neither be advisable nor feasible. A harmonious balance has to be struck. Therefore, to being (sic) (read instead "begin") with political parties may have to contend with only partial funding by the State."

The Committee further recommended that for the present, only part of the financial burden of political parties may be shifted to the State. This should be so done that it provides them relief not only in carrying out their electoral activities and meeting partly the cost of essential items of electioneering campaigns of their candidates but also helps them partially in the current administration of their day to day functioning during non-election period.

4.3.6.2. The Committee recommended that, to begin with, State subvention may be given only in kind, in the form of certain facilities to the recognised political parties and their candidates.

4.3.6.3. The Committee underlined the need to curb the mounting expenses of parties and candidates and ostentatious show of money power by them, by placing reasonable restrictions by law in respect of all or any of the following matters:

(i) Wall writings;
(ii) Display of cut-outs, hoardings, banners;
(iii) Hoisting of flags (except at party offices, party offices, public meetings and other specified places);
(iv) Use of more than a specified number of vehicles for election campaigns and fro processions;
(v) Announcements or publicity by more than a specified number of moving vehicles;
(vi) Holding of public meetings beyond the specified hours;
(v) Display of posters at places, other than those specified by the district/electoral authorities.

4.3.7. We reiterate all the recommendations made in the Indrajit Gupta Committee Report subject to the reservations made in para 4.3.4. So far as the Explanation I to section 77 (1) of the Representation of the Peoples Act 1951 is concerned, we have already recommended its deletion.

4.3.8. As a post-script, we may also refer to the report of the Committee on Standards in Public Life (the Neill Committee: Cmd. 4057) submitted on October 13, 1998 by that Committee to the Government of the United Kingdom. They have made several proposals, inter-alia, for regulating the election expenditure as well as for making auditing and accounting rules for political parties. The proposals are generally aimed at encouraging (i) more openness about the sources and use of party funds; and (ii) greater public confidence that individuals and organisations were not buying influence with political parties.

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