{"id":85817,"date":"2026-09-28T18:42:46","date_gmt":"2026-09-28T13:12:46","guid":{"rendered":"https:\/\/www.nextias.com\/ca\/?p=85817"},"modified":"2026-09-28T18:42:49","modified_gmt":"2026-09-28T13:12:49","slug":"political-funding-india","status":"publish","type":"post","link":"https:\/\/www.nextias.com\/ca\/editorial-analysis\/28-09-2026\/political-funding-india","title":{"rendered":"Political Funding in India"},"content":{"rendered":"\n<p><strong>Syllabus: GS2\/Polity &amp; Governance<\/strong><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Context<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Concerns over the finances of <strong>Registered Unrecognised Political Parties (RUPPs)<\/strong>, <strong>rising political donations<\/strong> and the continuing debate over electoral transparency have brought political funding back into focus.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>About Political Parties in India and Electoral Finance<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Political parties<\/strong> are an integral feature of representative democracy. The constitutional basis of political parties is found<strong> mainly in Article 19(1)(c)<\/strong> which gives to the citizens the <strong>freedom to organise associations.<\/strong><\/li>\n\n\n\n<li>They are registered under section <strong>29A of RPA, 1951.<\/strong><\/li>\n\n\n\n<li>The procedure for <strong>recognition and allotment of election symbols<\/strong> is provided in the <strong>Election Symbols (Reservation and Allotment) Order, 1968.<\/strong><\/li>\n\n\n\n<li><strong>Section 29B of the RPA<\/strong> permits contributions to political parties. The income-tax status of political parties is mainly controlled by <strong>Section 13A of the Income-tax Act, 1961<\/strong> which is subject to stipulated restrictions pertaining to accounting, audit and transparency.<\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Donors may receive deductions under <strong>Sections 80GGB and 80GGC<\/strong>, subject to the law.<\/li>\n\n\n\n<li>Thus, <strong>political parties perform a public democratic function<\/strong> while operating through a legal framework that is considerably less comprehensive than the regulatory regimes applicable to companies or other institutional entities.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Why Do Political Parties Need Funds?<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Political activity inevitably involves expenditure. Parties need resources for:\n<ul class=\"wp-block-list\">\n<li>election campaigns and public meetings;<\/li>\n\n\n\n<li>offices and organisational machinery;<\/li>\n\n\n\n<li>communication and voter outreach;<\/li>\n\n\n\n<li>research and policy work;<\/li>\n\n\n\n<li>training of workers and candidates; and<\/li>\n\n\n\n<li>increasingly, digital and social-media campaigning.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li>The issue, therefore, is not whether parties should receive money, but <strong>how that money is raised, disclosed and spent<\/strong>.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Scale of Political Wealth<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>22 political parties had \u20b918,742.31 crore<\/strong> at their disposal around the Lok Sabha election (2024).\u00a0<\/li>\n\n\n\n<li>Between the announcement and completion of the election, they raised another <strong>\u20b97,416.31 crore<\/strong>.\u00a0<\/li>\n\n\n\n<li>After the election, <strong>\u20b914,848.46 crore<\/strong> reportedly remained with them, while their reported election-related expenditure during the campaign period was <strong>\u20b93,861.57 crore<\/strong>.<\/li>\n\n\n\n<li>The same analysis estimates that tax exemptions associated with political donations resulted in around <strong>\u20b911,813 crore<\/strong> in<strong> foregone revenue<\/strong> over the decade considered.<\/li>\n\n\n\n<li>It shows a sharp rise in stated donations among the parties studied, from <strong>\u20b9714 crore in 2015-16 to \u20b97,203 crore in 2023-24.<\/strong><\/li>\n\n\n\n<li>These data indicate that <strong>political funding<\/strong> is no longer a peripheral electoral concern, but an <strong>essential aspect of public accountability<\/strong>.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Related Issues and Challenges<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Registered Unrecognised Political Parties (RUPPs):<\/strong> These are registered parties which do not meet the criteria for registration as a State or National party.\n<ul class=\"wp-block-list\">\n<li>According to the <strong>Association for Democratic Reforms (ADR)<\/strong>, income of RUPPs grew by 223% in FY 2022-23.<\/li>\n\n\n\n<li>Only 739 of the 2,764 RUPPs had submitted their financial records to the ECI.<\/li>\n\n\n\n<li>The ECI, in August 2025, stated that it had <strong>delisted 334 RUPPs out of 2,854<\/strong> as part of its <strong>electoral-clean-up exercise<\/strong>.<\/li>\n\n\n\n<li>However, <strong>delisting and\u00a0 deregistration both are different measures.\u00a0<\/strong><\/li>\n\n\n\n<li>The ECI\u2019s legal authority to deregister political parties is limited, and enforcement is a concern.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Transparency Deficit: <\/strong>Political parties have a lot of money, but the framework for disclosure is fragmented.<\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Merely filing accounts does not necessarily ensure that the public can easily understand the <strong>source, destination and ultimate beneficiaries of political money<\/strong>.<\/li>\n\n\n\n<li>It gained prominence after the <strong>Central Information Commission&#8217;s 2013 decision<\/strong> concerning the <strong>applicability of the RTI framework<\/strong> to major political parties, which was resisted by the parties concerned.<\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Electoral Bonds:<\/strong> The Electoral Bonds Scheme (2018) was conceived to bring about a <strong>legitimate banking route<\/strong> for political donations but with the name of the donor not being disclosed to the public.<\/li>\n\n\n\n<li><strong>Other Challenges:<\/strong> These include the rising costs of elections, unequal access to financial resources, non-availability of scrutiny of party accounts, funding of inactive parties, and the lack of a single, publicly searchable database that offers comprehensive political-finance data.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Efforts and Measures<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Judiciary: <\/strong>The <strong>Supreme Court<\/strong> in <em>Association for Democratic Reforms v. Union of India,<\/em><strong>struck down the Electoral Bond Scheme<\/strong> and the amendments to the law connected to it as illegal.\n<ul class=\"wp-block-list\">\n<li>It stressed the right of the voter to transparency about political finance and proved that the manner of political funding might have direct ramifications for election openness.<\/li>\n\n\n\n<li>Earlier judicial interventions have demonstrated the link between informed voters and free and fair elections.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Election Commission: <\/strong>ECI has taken <strong>action against inactive RUPPs,<\/strong> and has pushed for election reforms several times.\n<ul class=\"wp-block-list\">\n<li><strong>Article 324<\/strong> gives it broad powers over the conduct of elections, although those powers remain subject to existing legislation.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Government and Legal Framework: <\/strong>The principal safeguards include <strong>Section 29A of the RPA<\/strong>, Sections <strong>29B and 29C<\/strong>, the Election Symbols Order and <strong>Section 13A of the Income-tax Act<\/strong>.\n<ul class=\"wp-block-list\">\n<li>Donor-side deductions are separately governed by <strong>Sections 80GGB and 80GGC<\/strong>.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Use of Technology: <\/strong>A central digital platform can make political-finance disclosure more meaningful by allowing standardised, searchable and machine-readable reporting of donations, expenditure, audited accounts and compliance status.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Way Forward: Strengthening Electoral Integrity<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Uniform Financial Disclosure:<\/strong> All registered parties are required to upload audited accounts, donor information and spending data to a common, searchable site of ECI.<\/li>\n\n\n\n<li><strong>Independent Audit:<\/strong> A stronger external audit of party accounts, with a proper legal framework, can enhance confidence.<\/li>\n\n\n\n<li><strong>Clear Standards on Deregistration: <\/strong>Objective criteria should target parties that remain registered but frequently fail to contest elections.<\/li>\n\n\n\n<li><strong>Rationalisation of Tax Exemptions:<\/strong> Tax advantages should be tied to real democratic and electoral action and not only to formal registration.<\/li>\n\n\n\n<li><strong>Stronger ECI Capability:<\/strong> Article 324 provides the ECI with wide constitutional powers over elections; this should be supported by clear statute authorities and substantial investigative capacity.<\/li>\n\n\n\n<li><strong>Greater Public Disclosure:<\/strong> Political finance should be transparent enough for citizens to understand who funds political organisations and how those funds are utilised.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Conclusion<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Money is necessary for political competition, but secrecy around money can weaken public confidence in that competition.\n<ul class=\"wp-block-list\">\n<li>The objective should not be to prevent political parties from raising funds; it should be to ensure that citizens can reasonably know <strong>where significant political money comes from and how it is used<\/strong>.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li>For Indian democracy, the larger principle is simple: <strong>political finance must remain compatible with the voter&#8217;s right to make an informed choice<\/strong>.\n<ul class=\"wp-block-list\">\n<li>Electoral reform will remain incomplete unless the financial side of politics receives the same seriousness as the conduct of polling itself.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"has-background has-fixed-layout\" style=\"background-color:#fff2cc\"><tbody><tr><td><strong>Daily Mains Practice Question<\/strong><br><strong>[Q] <\/strong>Examine the challenges associated with transparency and accountability in political finance in India. Suggest suitable reforms to strengthen the integrity of India\u2019s electoral system.<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p><a href=\"https:\/\/www.thehindu.com\/opinion\/lead\/the-murky-world-of-political-party-finance\/article71504827.ece\" rel=\"nofollow noopener\" target=\"_blank\">Source: TH<\/a><\/p>\n\n\n\n<div class=\"wp-block-buttons is-layout-flex wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link wp-element-button\" href=\"https:\/\/www.nextias.com\/ca\/wp-content\/uploads\/2026\/09\/edt28-09-26-eng.pdf\">Download PDF<\/a><\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p><strong>Published on:<\/strong> 28 September, 2026<\/p>\n<p>Concerns over the finances of Registered Unrecognised Political Parties (RUPPs), rising political donations and the continuing debate over electoral transparency have brought political funding back into focus.<\/p>\n","protected":false},"author":15,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[22],"tags":[],"class_list":["post-85817","post","type-post","status-publish","format-standard","hentry","category-editorial-analysis"],"acf":[],"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/85817","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/users\/15"}],"replies":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/comments?post=85817"}],"version-history":[{"count":1,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/85817\/revisions"}],"predecessor-version":[{"id":85820,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/85817\/revisions\/85820"}],"wp:attachment":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/media?parent=85817"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/categories?post=85817"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/tags?post=85817"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}