Report No. 255

(i) History of reform proposals

2.29.4. The first committee to deal with the issue of public funding was the Dinesh Goswami Committee on Electoral Reforms in 1990, which advocated for partial state funding of elections in the form of limited in-kind support for vehicle fuel (which is a primary campaign expense); rental charges for microphones; issuance of voter identity slips; and additional copies of electoral rolls.113

113. Government of India, Report of the Committee on Electoral Reforms, May 1990 (hereinafter "Dinesh Goswami Report"),
<http://lawmin.nic.in/ld/erreports/Dinesh%20Goswami%20Report%20on%20Electoral%20Reforms.pdf>; Gowda, supra note 94, at 228

2.29.5. In 1993, the Confederation of Indian Industries constituted a Task Force that recommended that elections be funded in effect, through a tax on the industry. This would involve the funds to be raised either through a cess on excise duty, or through corporate contributions to an election fund pool managed by the State, which would then be distributed via a pre-decide formula based on vote and seat share.114

114. ORF, supra note 51.

2.29.6. The 1998 Indrajit Gupta Committee Report on State Funding of Elections endorsed state funding of elections, seeing "full justification constitutional, legal as well as on ground of public interest" in order to establish a fair playing field for parties with less money power.

The Committee envisaged a phased introduction of public funding, given the economic conditions of the country in 1998, beginning with in-kind state subsidies (and no cash) such as rent-free office space, free telephone facilities, electoral rolls' copies, loudspeakers, specified quantities of fuel, food packets, and airtime (both on state and private media).

Gradually, the Committee envisioned a transition to full state funding, along with monetary provision via the creation of a central-governed Election Fund, whose funding would be provided by the Centre and the states together. However, the Committee excluded independent candidates from the benefits of state funding and required parties to submit audited accounts and tax returns to avail the benefits.115

115. Government of India, Committee on the State Funding of Elections, December 1998, at 11-45, 55-56,
<http://lawmin.nic.in/ld/erreports/Indrajit%20Gupta%20Committee%20Report.pdf>.

2.29.7. This was followed soon after by the Report of the Law Commission in 1999 on the Reform of Electoral Laws, which endorsed the ideas of the Indrajit Gupta Committee Report on partial state funding, as a first step towards total funding given that the latter was not "feasible" in light of the "prevailing economic conditions". However, the Commission clarified that given that the underlying premise of state funding was the elimination of the influence of money power, corporate funding and black money support, it was:

"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. 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."116

116. LCI, 170th Report, supra note 108, at para 4.3.4.

2.29.8. In 2001, the NCRWC concurred with the 1999 Law Commission report that the question of permitting state funding "should not even arise" without:

"an effective systemic acceptance of full audit of party funds including a full audit of campaign funds, deletion of explanation 1 to section 77(1) of the Representation of People Act 1951, a fool proof mechanism to deter expenditure violations, and until the government is convinced that these improvements have been institutionalised and are no longer being breached."117

117. NCRWC, supra note 93, at para 14.7

2.29.9. To do so otherwise, would simply add to the burden on the Exchequer and taxpayers without any public or systematic benefit. The NCRWC's views were premised on the failure of the existing mechanisms of partial or indirect state funding in reducing campaign expenditure and the need to bring in transparency mechanisms first.118

118. Ibid, at paras 14.9, 14.10

2.29.10. Similarly, the ARC's 2007 Report on "Ethics in Governance" also recommended partial state funding of elections to reduce the scope of "illegitimate and unnecessary funding" of elections expenses.119

119. Fourth Report of the Second Administrative Reforms Commission, Ethics in Governance, (2007)
<http://arc.gov.in/4threport.pdf> at para 2.1.3.1.6 (hereinafter "ARC Report").