India: Transparency & Accountability in Political Funding

By Shelly Mahajan; Major General Anil Verma (Retd.)
Program Associate, Association for Democratic Reforms; Head, Association for Democratic Reforms

While political funding is a necessary component for political parties to play their role in the democratic process, transparency and openness in financing of political parties is the cornerstone of a well-functioning democracy.

Absence of disclosure of sources of party funds facilitates corruption and gives rise to quid pro quo between big donors and politicians. Countries where parties or political leadership are overly reliant on funding from a chosen few donors, policy decisions are co-opted. The equitable playing field gets eroded when one party has indomitable access to excess campaign finance.

In case of India, recent political finance ‘reforms’ have done little to make parties accountable for the money they receive and have instead legitimized opacity. In the name of ‘transparency’, India is headed into the opposite direction. This paper provides an overview of the political finance regime in India, the rules regulating it, prevailing challenges and the impact of an ineffective regulatory framework. Towards the end, the paper suggests some possible measures to enhance transparency and accountability in political financing and to restore the health of India’s electoral politics.


The role and importance of political parties have long been established while framing regulations in political party financing is a recent development. The need for such regulations is felt due to the changing conditions in which parties exercised their activities over the recent decades. Parties in contemporary democracies need substantial funding to carry out their core activities which should be seen as necessary and unavoidable costs of democracy.

Inherently, political funding is not problematic given that vibrant election campaigns can engage citizens and initiate democratic dialogue between parties and voters[1].  It strengthens political parties and candidates, and provide chances to compete on more equal terms. However, money can become a tool for some to unduly influence the political process, unequal access to funding can hurt the level-playing field, un-regulated political funding can result in influx of black money, co-optation of politics by business interests and wide-spread vote buying. This distorting effect of money on the democratic process demand regulation by law. The earliest examples of legislations regulating the operation of political parties or their funding go back to the 1940s, varying from country to country depending on the legal framework and socio-cultural context.

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politics; election Politics; Election south-asia; india South Asia; India

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