Suggestion for a Clean & Fair Political Funding Model

A fair and fresh Political Funding Model being suggested

Political funding model can be improvised
Political funding model can be improvised

The Political Funding Model recommended would be fair and clean

[dropcap color=”#008040″ boxed=”yes” boxed_radius=”8px” class=”” id=””]F[/dropcap]unding of elections and political parties has always been a contentious topic; the latest central budget also has a new idea in the form of Electoral Bonds. There are also suggestions from the President, the PM, opposition parties, judiciary, media, civil society, and just about every thinking person. But there’s a model followed in some developed countries like Canada, which appears to be broadly the best model we should consider following, with our own adaptations in consultation with all the political parties.

Many suggestions have been made for reform in political funding, but none comes even remotely closely to solving the problem of ‘bad money power in politics.

Let’s go back to the drawing board. What are the issues we should keep in mind when we try to clean up political funding system and make it honest, fair and workable?

For a good democracy, we need good political parties. To do their work, they need funding, which they may want to mobilize from their supporters. It is fair for them to expect that their income is exempted income from the tax on. To ensure that the money they receive as a donation is legitimate money and not black money, they can be required to keep proper account of all their income and expenses.

Millions of poor and marginalized may want to donate small sums of money from their meagre earnings to a good political party that does a lot of good to them; it could even be in the form of collection from hundis these political parties may keep during public meetings. It may be difficult to give receipts to every such small donor. So, the party may want to be permitted to collect small value donations without receipts. But this provision is very easy to misuse.

[dropcap color=”#008040″ boxed=”yes” boxed_radius=”8px” class=”” id=””]S[/dropcap]ince the stakes in politics are very high, HNIs (high net-worth individuals), underworld, crony capitalists, and various lobbies, with big money, would want to donate money to select political parties, with the expectation of a ‘quid pro quo’ from the parties they fund after these parties come to power, which is not in the best interest of democracy. And typically this donation would be in the form of cash so that their funding of specific parties would not be publicly known; if it is known, the other political parties and the general public could target these donors, and any benefits they receive from the Government later would give away the ‘quid pro quo’. So, the receiving parties would falsely claim these as small value donations from millions of poor. There’s no easy way to stop this.

In the case of political parties that are new and hence are not funded by the Government, they may be permitted to use their own money and donations, with a ceiling on their resource mobilization and expenditure.

Almost all political parties receive donation money, good and bad (mostly bad), with indirect (or even direct) suggestion of ‘quid pro quo’. This defeats the basic dictum of ‘Government of the people, for the people and by the people’, and creates Governments ‘of the moneyed, for the moneyed and by the moneyed’. Some believe it is better not to permit just one Rupee of donation with bad intent, even if it means not permitting a crore of Rupees with good intent since it is difficult to prove the intention of every donor.

Many suggestions have been made for reform in political funding, but none comes even remotely closely to solving the problem of ‘bad money power in politics’, other than the suggestion this article focuses on. Even the Electoral Bond proposed by the Government creates more problem than it solves. In fact, it keeps the identity of the donor (who funds any specific party) a closely guarded secret, worse than the current situation when at least the identity of some of the donors is disclosed.

[dropcap color=”#008040″ boxed=”yes” boxed_radius=”8px” class=”” id=””]T[/dropcap]he suggestion proposed in this article is, to set apart a certain substantial percent of the annual national and state budget as funds for political parties. The allocation to different political parties can be made based on some objective criteria, say the percentage of votes obtained by each party in the previous elections. The funds allotted should be substantial (say 1-2% of annual national/ state budget), adequate to meet not just the cost of funding elections, but also for running the party at all levels, so that these parties would need no more money from any other source, including the public, business, industry, etc.

In the case of political parties that are new and hence are not funded by the Government, they may be permitted to use their own money and donations, with a ceiling on their resource mobilization and expenditure. Details of all these percentages and amounts can be worked out by consensus at the time of framing the law.

This will end the role of vested interest groups and black money in politics and limit political and electoral spending. Any party or individual found violating this should be punished very severely, like individuals involved being debarred from politics and from contesting any elections (not just elections to Governments, but even to positions in political parties) permanently, apart from other punishments like penalties and imprisonment depending on the seriousness of the offense. Any individual or party attempting to bribe voters should also be punished likewise. Anyone found to be corrupt while in power should also be banished from politics for the rest of his/ her life. Political parties they belong to should also be penalized in some significant deterrent way. Severe deterrence will ensure compliance.

[dropcap color=”#008040″ boxed=”yes” boxed_radius=”8px” class=”” id=””]T[/dropcap]his will be fair in the sense that those in power won’t be able to misuse their power and create black money to fund their political party. They may still resort to corruption for self aggrandizement, but the scale will hopefully come down, due to the consequences. This may not create a level playing field, but it will create an equitable playing field. After all, the goodwill a party has been able to create will get it votes and these votes will get it money from the Government to run the party, and such parties should be encouraged vis a vis parties that don’t find favour with the people.

Since the percentage difference in spending between the leading party and the others will be limited, no party will get an unfair advantage; even newcomers will stand a chance of winning if they sound credible and make promises that appeal to the people.

1. The views expressed here are those of the author and do not necessarily represent or reflect the views of PGurus.

An Engineer-entrepreneur and Africa Business Consultant, Ganesan has many suggestions for the Government and sees the need for the Govt to tap the ideas of its people to perform to its potential.


  1. Govt should provide funds to the political parties based on their performsnve at all India level subject to 1) fulfillment of promises made during election2) no appeasing policies to attract votes3)no ticket will be given to those who criticize India4)no ticket to corrupted and those who are facing criminal trials5)running the party in a democratic way6)performance and cooperation while in opposition

  2. Few good pointers , a start.Many knowledgeable people who know what is going on in other countries should step in, give us some pointers but we need more answers than what this article has given…
    1.Political party wants money to run organisation i.e to pay rentals/offices,pay for electricity,equipments like computers/A/Cs,phones.Vehicles ,pay for food/travel costs,publicity/advertisements,time in national media.If it is an all India organisation, substantial amount will be much from public/exchequer? What are the practices in advanced countries?Are there good systems?Say for example Germany or Switzerland where the politicians swindle less and known to be scruple?
    2.other reason for crooks masquerading as politicians is that politics is a full time job.Who will pay salaries/expenses of each politician and their chumchas who need to run around in their constituency?If they get elected state or national,do the money and perquisites adequate commensurate to their responsibilities?If they are paid peanuts as in present case, only monkeys will get elected as our representatives..If they don’t get elected, where will they get money to run their families?Present system is skewed totally in favour of very rich crooked fellows to be in politics.How will these crooks suddenly turn angels when they get seat of power?Public people are idiots.So in the interest of law abiding people, how can we get more and more honest capable people to occupy seat of power?These people will be so capable, they anyway will have a good job.Why will they quit that and join a political system full of crooks masquerading as netas?All the crap about sacrifice or honorarium is to fool public.We need a system to support honest capable people who want to get into politics and survive remaining honest.What is the best way?Even a DrSwamy needs money,who is paying him and how does he survive in politics?

    • Excellent questions! I agree, this article was only to get a debate started. We need to study the best practices in other countries and adapt to India.


Please enter your comment!
Please enter your name here