India’s democracy is one of the world’s largest and most vibrant. Yet, its electoral process faces a growing challenge: the influence of money. With election costs skyrocketing and transparency in political financing under intense scrutiny, the debate over state funding of elections has resurfaced. While proponents see it as a solution to reduce the role of unaccounted money, critics and officials caution that it is not a silver bullet. Experts and stakeholders offer varied perspectives on whether state funding can truly ensure transparency and fairness in India’s polls.
The money problem: Scale and lack of transparency
Election campaigns in India have become extraordinarily expensive. Analysis has shown that the 2024 Lok Sabha elections were likely the costliest in the country’s history, with expenditure estimated at around ₹1.35 lakh crore—more than double what was spent in earlier general elections.
Data from the Association for Democratic Reforms (ADR) indicates that between 2004-05 and 2022-23, nearly 60 per cent of contributions to major political parties came from unknown sources, underscoring deep transparency gaps in political finance.
Importantly, while individual candidates must adhere to expenditure limits set by the Election Commission of India (ECI)—₹95 lakh for Lok Sabha and ₹40 lakh for state assembly seats—these limits do not cover party spending on media, rallies, and campaign infrastructure, leaving a wide window for unregulated expenditure.
This opacity was exacerbated by instruments like electoral bonds, introduced in 2017. The Supreme Court struck down the scheme in 2024, terming it unconstitutional and harmful to citizens’ right to information, after evidence showed a disproportionate share of bond funds flowed to the party in power.
What is state funding
of elections?
State funding of elections involves public financing of political campaigns, either fully or partially, to reduce reliance on private money. Models range from direct cash transfers to reimbursement of verified expenses or allotment of resources in kind, such as free media time or facilities.
The idea traces back to reform suggestions like those of the Indrajit Gupta Committee (1998), which recommended limited public funding and non-monetary support such as free travel and airtime, to level the playing field without introducing cash inflows that might be misused.
However, not all authorities support state funding. The Election Commission of India (ECI) has historically expressed reservations. In written submissions to a parliamentary panel, the Commission noted that state funding alone cannot check overall election expenditure, especially that incurred by parties and third parties beyond direct candidate expenses. The ECI has stressed the need for comprehensive reform in reporting and spending rules rather than simply introducing state funding.
Another voice in this debate includes views from former officials and civil society. Former Election Commissioner T.S. Krishnamurthy has suggested stronger reforms in political financing and more stringent oversight rather than solely relying on public funding mechanisms. While his comments on direct state funding were less explicit, he has called for reducing the dependence on private campaign funds—a principle that aligns with the idea of public financing.
Global lessons: Not one size fits all
International democracies offer varied models of state funding:
France has a strict hybrid system combining state funding with capped private donations and strict audits, which many analysts point to as a best-practice approach.
Germany provides proportional public subsidies based on past election performance, alongside mandatory disclosure of private donations.
Brazil, after banning corporate contributions, increased public finance but still struggles with enforcement and transparency gaps. These examples suggest that state funding alone is not sufficient; it must be part of a broader framework of rules, disclosures, and enforcement mechanisms.
Challenges in the Indian context
Critics of state funding in India raise practical concerns. Public funds are limited, and allocating large sums to party campaigns—especially without strong checks and balances—could invite misuse or political manipulation. There are also fiscal priorities related to health, education, and development that compete for the same funds.
Moreover, state funding needs to be coupled with effective regulation of party funding and election spending. Experts argue that real-time digital disclosure systems, stricter limits on corporate and third-party spending, and strong audit mechanisms would be necessary for any public financing to succeed.
A middle path: Partial and conditional public support
Several reformists advocate for a partial state funding model, blended with tight disclosure norms and strict enforcement. This could include:
• Public reimbursements for verified campaign costs above a threshold.
• Free access to state media broadcast slots and public venues.
• Mandatory digital disclosure of donations above small thresholds.
• Real-time expenditure tracking during campaign periods.
Such an approach seeks to reduce the influence of big private money without imposing the full financial burden on the state or encouraging misuse of public funds.
Conclusion
State funding of elections could contribute to enhancing transparency and fairness in India’s electoral process, but it is not a standalone solution. Experts agree that comprehensive electoral finance reform—including stringent reporting requirements, expenditure limits across the board, and institutional oversight—must accompany any public funding model.
As India grapples with concerns about rising campaign costs and opaque financing, the debate continues not just about whether to fund elections from the exchequer, but how to do so in a way that strengthens democratic integrity without unintended consequences.