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ECI Committee on Expenditure Limit

  • 22 Oct 2020
  • 7 min read

Why in News

Recently, the Election Commission of India (ECI) has constituted a committee to examine the issues concerning the expenditure limit for a candidate.

Key Points

  • About the Committee:
    • It has been tasked with assessing the change in the number of electors across states/UTs and the change in the Cost Inflation Index (CII) and their bearing on expenditure pattern of candidates in recent elections.
  • Background:
    • Political parties in the feedback to the Commission had asked for an increase in the expenditure of Bihar assembly elections to meet the increased digital campaign expenses amid the Covid-19 pandemic.
    • The Ministry of Law and Justice notified an amendment in Rule 90 of Conduct of Elections Rules, 1961, which enhanced the existing expenditure limit by 10%, applicable with immediate effect.
  • Earlier Revisions:
    • The expenditure limit was last revised in 2014 while the same was done for Andhra Pradesh and Telangana in 2018, following their bifurcation in 2014.
    • After that, the limit has not been increased despite an increase in the electorate from 834 million in 2014 to 921 million in 2020 and an increase in the Cost Inflation Index from 220 in 2014 to 301 in 2020.

Expenditure Limit

  • It is the amount an election candidate can legally spend for their election campaign and has to account for, which includes expenses on public meetings, rallies, advertisements, posters, banners vehicles and advertisements.
  • These limits range from Rs. 20 lakh to Rs. 28 lakh for assembly elections and from Rs. 54 lakh to Rs. 70 lakh for Lok Sabha elections.
  • Under Section 77 of the Representation of the People Act (RPA), 1951, every candidate shall keep a separate and correct account of all expenditure incurred between the date on which they have been nominated and the date of declaration of the result.
  • All candidates are required to submit their expenditure statement to the ECI within 30 days of the completion of the elections.
  • An incorrect account or expenditure beyond the cap can lead to disqualification of the candidate by the ECI for up to three years, under Section 10A of RPA, 1951.
  • The limit prescribed by the ECI is meant for legitimate expenditure because a lot of money in elections is spent for illegitimate purposes.
  • It has often been argued that these limits are unrealistic as the actual expenditure incurred by the candidate is much higher.
  • In December 2019, a private member’s bill was introduced in the Parliament which intended to do away with the cap on election spending by candidates.
    • The move was taken on the ground that the ceiling on election expenses ends up being counterproductive by encouraging candidates to under-report their expenditure.
  • There is no cap on a political party’s expenditure, which is often exploited by candidates of the party.
    • However, all registered political parties have to submit a statement of their election expenditure to the ECI within 90 days of the completion of the elections.
  • State Funding of Elections:
    • In this system, the states bear the election expenditure of political parties contesting the Election.
    • This can bring transparency in the funding process as public finance can limit the influence of interested donors’ money and thereby help curb corruption.
  • Recommendations on State Funding:
    • Indrajit Gupta Committee (1998): It suggested that state funding would ensure a level playing field for poorer political parties and argued that such a move would be in public interest.
      • It also recommended that state funds should only be given to recognised national and State parties and funding should be given in the form of free facilities provided to these parties and their candidates.
    • Law Commission Report (1999): It stated that a state funding of elections is ‘desirable’ provided that political parties are prohibited from taking funds from other sources.
    • National Commission to Review the Working of the Constitution (2000): It did not support the idea but mentioned that an appropriate framework for the regulation of political parties needs to be implemented before state funding is considered.
  • The ECI is not in favour of state funding of elections on the grounds that it would not be able to prohibit or check candidates’ and other expenditures over and above what is provided for by the state.

Cost Inflation Index

  • It is used to estimate the increase in the prices of goods and assets year-by-year due to inflation.
  • It is calculated to match the prices to the inflation rate. In simple words, an increase in the inflation rate over time will lead to a rise in the prices.
  • Cost Inflation Index = 75% of the average rise in the Consumer Price Index (urban) for the immediately preceding year.
    • Consumer Price Index compares the current price of a basket of goods and services (which represent the economy) with the cost of the same basket of goods and services in the previous year to calculate the increase in prices.
  • The Central Government specifies CII by notifying in the official gazette.

Source: PIB

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