The major purpose of demonetisation of high value currency notes as announced by Prime Minister Narendra Modi on November 8 was to dig out hoarded black money. The timing of the move couldn’t have been better since election season is also upon us with Assembly polls due in Punjab and Uttar Pradesh next year. In that light, one of the major issues the government and the election commission need to look at is ridding the political system of black money. Maybe removing limits on campaign expenditure would be a good place to start the clean up.
It is naive to say that Indian politics is bereft of corruption and black money. In fact, politics is an expensive affair; elections, even more so. We have seen over the years that parties spend hundreds of crores on election campaigns among other expenses like worker payments, logistics, gifts and handouts etc. It is no wonder that before every big elections the authorities seize huge hoards of money, liquor, gold etc to be used as election fund or handouts to voters.
Party candidates are allowed to spend a limited amount of money on their election campaign — ₹28 lakh for Lok Sabha elections and ₹7 lakh for Assembly elections. Now, some Assembly constituencies are bigger than Lok Sabha constituencies and vice versa. Limiting campaign expenditure only leads to secret spending of money sourced from black channels. In an isolated incident, Gopinath Munde had admitted in Parliament that he spent ₹8 crore in the 2009 Lok Sabha election.
Additionally, parties are allowed to fund unlimited amounts of money on behalf of the party program in an election. For this end, parties keep collecting funds and filling their coffers for events like elections. This is also in a way unfair to independents who don’t have a party to fund their campaign and have to spend within the limit. For example Delhi has 7 Lok Sabha constituencies but 70 Assembly constituencies. While Delhi’s bordering Noida Assembly constituency is around the average size of a Lok Sabha constituency in Delhi.
The more sensible thing would be to make the process of funding transparent and removing limits on campaign funding as is practiced in countries like the US. As such, political parties in India do not have to disclose the identity or personal details of donors if their donations are below ₹20,000. Therefore, essentially a party can accept countless amount of donations below that amount without disclosing the source of the money.
The problem of black money in election funding may be solved to some extent if the limit on expenditure is removed.