Indian elections are festivals and these festivals cost huge amount of money. Apart from the USA and UK , no other democratic countries spend huge money in election. The debate on political funding always steers towards corruption and black money. A large share of this funding comes from corporate houses which have been considered as undeclared income and non recorded account.

So transparency in political funding is a much needed concept to curb the flow of black money. Further it is reported that only a small part of funding from corporate funding is spent in elections.

In order to maintain transparency and to curb corruption in funding the elections, a concept of State funding of elections is designed. It is an ideal type. The motto of this concept is to provide funding to political parties or candidates to participate in elections by the Government. Many scholars advocate that the State funding of election is the best available medium to get transparency in political funding. It is assumed that State funding of elections may give equal status to new and growing political parties with the old and established parties in India.

State funding is divided into two types such as  direct funding where the Government provides funds directly to the political parties. It is to note here that direct funding by tax is prohibited in India and indirect funding which includes other methods except direct funding, like free access to media, free access to public places for rallies or free or subsidized transport facilities. It is allowed in India in a regulated manner.

Still many studies and committees by several Governments have already examined the pros and cons of State funding of elections. In the year 1998, the Indrajit Gupta Committee on State Election Funding recommended the State funding of elections by citing two types of restrictions. Firstly, only national and State parties with a symbol should receive State funding. Independent candidates should not. Secondly, only recognised political parties and their candidates should get short term State funding in kind in the form of specific infrastructure. In 1999 the Law Commission Report on Electoral Law Reform said that that the State funding of elections is “desirable” as long as political parties are not allowed to accept money from other sources with appropriate regulatory framework in place. Whereas in the year  2001, the National Commission to Review the Working of the Constitution, did not recommend State funding of elections citing the inappropriate framework for the regulation of political parties. But in the Ethics in Governance report by the Second Administrative Reforms Commission in 2008, it is suggested to have partial State funding of elections.

Benefits of the State funding of elections such as dependency on party for funding will be reduced as well as it may limit the influence of donors. On a larger canvas, State funding of elections can break the corporate-political nexus. The idea of State funding is opposed by the Election Commission of India.  The commission argues that it would be very difficult to regulate candidate spending in elections. In many cases, the ECI observes that the expenditure in elections goes beyond the State prescribed limits.  India as a country only collects 16% of GDP as tax, which has been spent on many necessary public and national items. Indian elections expenditure is an expensive affair. So the State cannot afford to spend the revenues upon the funding of elections which get maximum finance. And there is no guarantee that political parties will not get any supplementary private funding. In addition to this the gap between political leaders and average citizens would widen as a result of State sponsorship. By considering those assumptions, the ECI believes that State funding is a vague idea in India.

According to a report by the Centre for Media Studies, approximately Rs 55,000 crore was spent during 2019 general elections in India. The expenditure has gone up to 6 times more than the 1998 election.  The trend of election expenditure is skyrocketing. It estimated that Rs 700 was spent on per voter in 2019 Lok Sabha elections for 90 crore voters in India.  In 2019 LS election Rs 27,500 crore was spent by the BJP whereas Rs 9, 625 crore was spent  by the Indian National Congress and Rs 17,875 crore by others compared to Rs 12,750 crore by BJP , Rs 9300 crore by Congress and Rs 7, 950 crore by others in 2014 Lok Sabha elections. Further this report said,  BJP spent about 20% in 1998 against about 45% in 2019 out of total poll expenditure estimate of Rs 9,000 crores to Rs 55,000 crore. In 2009, Congress party’s share was 40 percent of total expenditure, against 15 to 20 percent in 2019. The report  further reveals that 25% of total expenses i.e Rs 14,000 crore was distributed to voters directly.

The practice to lure voters through direct cash was not new. But the extent and magnitude of this cash practice is rampant and conspicuous. Most of the political parties follow this trend. Freebie culture and vote for cash are a threat to democracy. 

So the question is how much a candidate should spend in election? In 2020 the ECI has constituted a committee to examine the expenditure limit for candidate in election . A revised expenditure cap has been introduced. Expenditure limit has been increased from Rs 20 lakh to Rs 28 lakh for Assembly and Rs 54 lakh to Rs 75 lakh in Lok Sabha elections. This increment has happened by keeping certain facts in mind such as Covid 19 pandemic where digital campaign was resorted to and there was an increase in number of electors. Further to this, the CII (Cost inflation Index) played a pivotal role in enhancing the election expenditure limit for the candidates.

As far as Odisha is concerned, a report by Odisha Election Watch and Association for Democratic Reforms (ADR) shows that the average amount of money spent by the 147 MLAs in the elections was Rs 18.72  akhs, which was 67% of the expense limit. The average spending for 113 MLAs from BJD was Rs 18.95 lakh (67.7% of the expense limit). For 23 MLAs from BJP, the average election expenditure was Rs 18.42 lakh (65.8% of the expense limit), while the average election expenditure for 9 MLAs from Congress was Rs 17.18 lakh (61.4% of the expense limit). For the lone MLA from CPI(M), the average spending was Rs 26.83 lakh (95.9% of the expense limit) and for the Independent MLA, it was Rs 5.29 lakh (18.9% of the expense limit).

However, the State funding of elections will remain in debate. It can be achieved if we follow certain reforms like decriminalising politics, audit and strict legal framework.