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अंग्रेज़ी सीखने का अवसर (कक्षा प्रारंभ : 5 अक्तूबर, शाम 6 से 8)
Q. Black money and state funding to elections: Can state funding to elections will curb the black money. Comment.
Nov 17, 2016 Related to : GS Paper-3

Ans :

Recently Prime Minister Narendra Modi favoured a debate on transparency in political funding, as part of central government’s drive to clean up black money.  It has been observed that most of the funding to political parties comes from the undisclosed sources and many experts referred it as black money.


  • As most of the political parties receive funding from undisclosed sources, hence as long as India’s politics is systemically dependent on unaccounted money for its finances, there can be no decisive political will to eradicate black money. 
  • Political parties spend huge amounts of money every year and even more in election years and reports only a fraction of what they spend. When the bulk of their spending is financed by unaccounted income, it compromises the integrity of governance, suborns the civil service, promotes crony capitalism and makes managing the government a decisive core competence of entrepreneurship. 
  • All this will change if the sources of political funding are made fully transparent. As a solution to this problem many suggested for state funding to political parties. 

Arguments in favour of state funding-

  • If political parties and candidates gets state funding, it has the potential to limit the likelihood of them feeling the need to accept money from donors who want to influence their policies.
  • If political parties and candidates receive a substantial amount of their income from the State, they can more easily be required to disclose their income and expenditure. 
  • If their financial statements are made publicly available, voters can decide which sources of funds are acceptable to them, and they will also have better opportunities to hold politicians accountable. Hence it will increase the transparency and helps to curb the black money.

Arguments against the state funding-

  • Currently India collects just about 16% of GDP as tax and state expenditure on many essential public goods such as primary healthcare and public health engineering is very less. 
  • Public resources have to be channelled towards and not diverted from such essential services, and that, too, to finance political parties that already get abundantly financed. 
  • Further, state funding of elections will not prevent parties from soliciting and getting undisclosed supplementary private funding, with associated implications. Hence State funding is not the solution to curb the funding of political parties through black money channel.


  • To contain the black money in elections, instead of state funding, there is need of strict monitoring of expenditure by political parties and their functionaries at each and every level.
  • Political parties should be asked to disclose its expenditure in every regular interval of time. 
  • Also the Election Commission could determine the actual expenditure and ask the parties to show source of income strictly. It will bring in transparency and helps in curbing the black money. 

Recently central government has launched fight various initiatives to act against black money decisively. Demonetisation of 500 and 1000 rupee notes is one of the important among them. To curb black money effectively, we need to end undisclosed sources of political funding and needs to bring transparency. Though many are arguing for state funding, but that is not a permanent solution, there is need of strict political will and effective measures.


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