India's Election Commission is working to limit how much political parties spend on election campaigns

• The EC has sent a draft reform to the law ministry which places a limit on the expenditure political parties can incur when campaigning for elections.
  
• The issue has been on the election watchdog’s priority list since 2016 and now looks to be gaining momentum as most parties have agreed to it in principle.
  
• As part of its bid to crack down on electoral spending, the EC also wants to limit anonymous donations to 20% of a party’s total collections.

Ahead of crucial state elections in Rajasthan and Madhya Pradesh and more importantly, national elections in May next year, India’s Election Commission (EC) is working with the law ministry to limit how much political parties spend on election campaigns.

The issue has been on the election watchdog’s priority list since 2016 and now looks to be gaining momentum, as most parties other than BJP have agreed to it in principle following an all-party meeting in August, and a draft reform has been sent to the law ministry. The idea behind the move is to ensure that smaller, regional parties get a fair chance when campaigning for elections and to limit the role played by wealth in determining electoral outcomes.

Recent data from the Association of Democratic Reforms (ADR), a NGO, shows a significant wealth gap between the party in power, BJP, and opposition parties like the Congress- which doesn’t bode well for a fair election result next year.

The EC has said that a limit to a party’s election spending hinges on the limit placed on individual candidate spends, and proposed that the party limit should be 50% or less of the combined maximum spend prescribed for all of the party’s candidates. The Law Commission has said in the past that a party spending limit will be extremely difficult to implement and monitor, so it remains to be seen whether the EC’s proposal will pass muster.

The EC places a cap on how much individual candidates can spend, based on what legislature they’re campaigning for and what state they’re in, but has not yet placed a cap on the election expenditure incurred by a party. For a Lok Sabha candidate, the cap is between ₹5 and ₹7 million while the cap for state assembly candidates is between ₹2 and ₹2.8 million.

Anonymous donations

As part of its bid to crack down on electoral spending, the EC also wants to limit anonymous donations to 20% of a party’s total collections. This would be a significant reform as parties usually declare most of their donations as being from anonymous donors.

While the EC has capped online cash donations to political parties at ₹2,000 instead of ₹20,000 and facilitated the launch of electoral bond sales, it still has more to work to do in making the political funding more transparent.

A number of political parties, including the BSP, never end up declaring any donors because they say all their individual donations are less than ₹2,000. According to the ADR, 46% of all the funds political parties received in 2016-17 came from unknown sources.

In response to this, the EC feels that the proportion of anonymous donations to overall donations should be capped at 20%, so the origin of at least 80% of a parties’ funding sources can be identified.