How to Improve Transparency of Party/ Candidate funding for Elections and Expenditure : Indian experience

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What is political finance?

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Party Finance(Finance of

Political Parties not related to

election)

Campaign Finance(Election related finance of Party and candidates)

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Expenditure permissible under the law [public meetings, posters, banners, vehicle etc.]

Illegal expenditure [Distribution of money, Gifts, liquor or any other item among electors with the purpose of influencing them]

Ceiling forLok Sabha- Rs 70 lakh

($0.11mn)Assembly –Rs 28lakh

($43,000)

Such type of expenditure of election expenses of the candidate is stopped

Election expenditure can be classified into two types on the basis of legal

provisions

INDIAN EXPERIENCE:TYPES OF ELECTION EXPENDITURE

Gray Area(Paid

News, Freebie

s in Manifes

to)

E-filing of accounts by parties and candidates

E-filing introduced (optional) on Pilot basis during Loksabha elections

ECRPs trained by ECI in all states ECRP fees for e-filing borne by ECI For the First time e-filing of

candidates’ accounts made compulsory in Bihar elections

Time for making e-filing compulsory for Parties

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Party Election Expenditure

Party Name

Total Expenditure (in rupees crore)

BJP 712.48

INC 486.21

NCP 64.48

BSP 30.05

CPI(M) 8.8

CPI 6.72

Table 1: Total Expenditure of National parties in Lok Sabha election, 2014.

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8

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INDIAN EXPERIENCE

Laws and Rules

Supreme Court Judgments in response to PILs

Model code of Conduct and ECI instructions

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INDIAN EXPERIENCE

Individuals, Corporates (limit: 7.5% of

average profit) Other entities Electoral Trusts

Political Parties Fund

Raising

From Foreign sources Govt. Agencies Companies making losses

Prohibited

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• Contribution reports in excess of Rs 20,000 ($313) from a single person or entity, filed with Commission (Statutory)

• Audited accounts to be filed with Income Tax Deptt (Statutory)

• Election Expenditure statements filed with Commission within 90 days of declaration of result (Court direction)

• Transparency guidelines for the parties by the Commission

INDIAN EXPERIENCE

Regulations

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Name and address of all donors to be maintained excepting cash collected in rallies

Cash payment exceeding Rs. 20,000/-($313) prohibited

Cash payment to candidates by parties prohibited

Cash donations to be deposited in bank account within 10 days and Restriction on huge amount of cash in hand

Copy of audited account to be sent to Commission

INDIAN EXPERIENCE

Transparency guidelines for the parties by the Commission

INDIAN EXPERIENCE

Own source

Political Party

Others (Friends, Well wishers, electors)

No prohibited source for Candidates nor any restriction on amount to be received

Candidates Funding and Expenses

INDIAN EXPERIENCE

Open a separate Bank account (Non-statutory)

Maintenance of accounts and Inspection and Disclosure (statutory)

Ceiling on Expenditure of candidates (statutory)

Election Petition for exceeding the ceiling (statutory)

Lodging accounts (both Source and expenditure) with ECI after election (Statutory)

Regulations

INDIAN EXPERIENCE

Disqualification by ECI for not lodging in time or for lodging incorrect accounts (statutory)

SC and ECI restrictions on transport of cash during election (Non-statutory)

Model Code of Conduct , limiting number of campaign vehicles and campaign days (Model Code)

Party to indicate resources for freebies (Model Code)Symbols order of the Commission for recognized Parties

Regulations

Inducement of voter or any candidate

Unauthorised exp. for the candidate

Publication in Print media without authorisation

Defacement of public property

Pre-certification of advertisement in electronic media ( Case Law)

Paid News expenditure added to candidate (ECI)

INDIAN EXPERIENCE

Laws on Corrupt practices and unlawful acts

If the areas are not covered under any law, ECI can issue instructions to the candidate and party, which are binding

ECI can derecognize a party, under its Symbols Order, if party violates its lawful instructions.

ECI Suspended the recognition of a NPP for not filing election expenditure account in time

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INDIAN EXPERIENCE

Plenary power of Commission under Constitution (Art. 324)

ECI measures

(Click to view video footage)

Preventive Measures

Campaign for ethical Voting through Media

Booth level Awareness Group

Involving schools/colleges/

CSOs

Signing pledge for ethical voting

For transparency : ECI measures ECI uploads all 3 reports of parties on its website for public viewing (Contribution Report, Annual Audited accounts, Election expense report)

Contribution reports of Parties sent to Income tax department, Home ministry and MCA for verification

ECI sends the election expense accounts of Parties to the CEOs to verify with the shadow register maintained during election

Audited accounts of Parties sent to ICAI for verification of Auditors’ discipline

ECI forms Booth level awareness groups with independent citizens and empowers them to capture photos of malpractice and upload to website for ECI action

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FOR TRANSPARENCY : ECI MEASURES

ECI takes videos of Rallies and campaign materials of Candidates and tallies with expenses

ECI Monitors the helicopter or air craft expense of the candidates and parties

ECI also records the media expense of Parties and candidates

Candidates asked to open separate bank account for election expenses

Independent expenditure Observers to inspect accounts of candidates 3 times and upload on the website 21

ECI measures

Flying Squads to act on complaints

Static surveillance Teams to put check post

Video Surveillance Team to photograph all events, hoardings

Media certifying and monitoring committee to certify electronic advertisement and to monitor Paid News

Shadow Observation Register for each candidate

Enforcement

Complaint Monitoring cell at District level with toll free number

Mobile software given to public to upload photos of corrupt practice to ECI website

Result of ECI Enforcement

Cash seizure Rs.3038 million ($47.46 million)

Liquor seizure Rs.65.94 lakh litres

(worth Rs.918 million/ $14.34 mn)

Drugs seized Rs. 48,004 kg ( worth Rs.8045 million/ $125 mn)

Measures required for transparency

i. Defining third-party campaigners and threshold for registration with ECI

ii. Reporting obligations and expenditure limits for third-party campaigners

iii. Prohibition on certain sources of funding/ contributions for third-party campaigners

(Experience of UK, USA and S. Korea)

Measures required for transparency

i. E-filing of accounts of Party and candidates made compulsory

ii. Separate bank account for Campaign expense of the Political Party during election period

iii. Funds received during campaign period by Political Parties and candidates need disclosure during election period

iv. Limited Direct State funding of campaign expense of political parties, (media expense or Public rallies) to leverage transparency

v. Restraint on receipt of anonymous donations by parties and candidates during election period

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