January 9, 2018


Press Release


We are herewith releasing the text of the letter addressed to Finance Minister Shri Arun Jaitley by CPI(M) General Secretary Sitaram Yechury spelling out the CPI(M)’s position on electoral funding.



January 9, 2018

Shri Arun Jaitley

Minister of Finance

Government of India

New Delhi


Dear Shri Arun Jaitley ji,


I am writing as you have asked for suggestions on ‘reforms’ on Electoral funding.


The CPI(M) has constantly and consistently maintained the need for clean electoral funding, and has been deeply concerned over the years as the system has become more skewed towards those with more money. Contesting elections has now become akin to a business enterprise, possible only for the wealthy. This, needs stringent reform.


At the outset, a good move would be to ban corporate funds from being made available to political parties. We believe that corporates, and especially big corporates, see funding of political parties as an investment, an effective and easy way of being able to push policy in directions that suit them. Political parties too, on being recipient of corporate funding use stints in government to make policies that suit ‘friendly’ corporates. These corporates constitute the ‘supply side’ of Corruption which is corroding our system. Unless corporate funding is banned, this problem cannot be solved. The government in 1985, reversed a ban on corporate funding of political parties which had been in place since 1968, but that did not cure the problem of corporate or black money funding political parties; it made the problem worse.


Currently, there is no limit on amounts spent by political parties for election campaigns while there is a limit on the amount that candidates can spend. This, as you know, makes a mockery of the very idea of having a limit on campaign spending. We urge you to bring the Expenditures of political parties within a legal limit, violation of which would be subject to stringent punishment. 


Corporates, like all powerful sections of Indian society, must be asked to do their bit towards strengthening Indian democracy and we think this should take the form of them being asked to give a part of their profits towards a State fund set aside for electoral funding.


No ‘clean-up’ of political funding is possible minus State funding, at least in substantial part, of elections. This has also been recommended by the Dinesh Goswami Committee and the Inderjit Gupta Committee which dwelt on the subject in detail. If like Corporate Social Responsibility (CSR), corporates could be asked to donate a part of their earnings to a pool which, in keeping with certain guidelines (like the support individual political parties may have garnered in the previous election, vote-share or the number of seats they have won) it would be a much fairer and transparent way of getting to contribute to the healthy functioning of Indian democracy, than is the case now.


In Germany, for example, there is state funding of parties, from a corpus which is apportioned on the basis of seats and vote-share of the parties in the Centre and state legislatures in the previous elections. Declared collections by political parties each year, are also matched in certain proportion by money that the state gives to the parties. (This is apart from indirect subsidies like ensuring time on television news proportionately and fairly, across political parties).


We firmly believe that we need such measures, fine-tuned to our conditions to make the process of funding to political parties more transparent.


The measures you have introduced recently, I regret to say, have reversed any move towards transparent and clean political funding that may have been possible. Electoral Bonds are a deeply regressive move. They make the donor, donee and the amount, each of these three vital aspects, a state secret, literally. This shields donors from the gaze of the electorate which needs to know if policies are being made precisely because it helps certain influential donors.


By lifting the maximum limit on Companies available for political donations, you have raised the prospect of allowing ‘shell’ companies being set up with black money to purely fund political parties. This is a step that is also seriously injurious to the state of our democracy.


Having amended the Foreign Contribution Regulation Act (FCRA), retrospectively, via the Finance Bill, this government has made it possible for foreign funding to flood the coffers of political parties, adding a dangerous dimension to the stability of Indian democracy. 


We are deeply concerned about the measures put in place by this government to render the funding of political parties even more opaque than before. What it does is to provide an ‘Electoral Bonds route’ for dubious funds, to pass, unrecorded and undeclared, shielded from the public eye, to certain political parties. 


Electoral Bonds, alongwith the retrospective amendment to the FCRA (which allows indirect political funding by foreign companies) and the lifting of the maximum limit that corporates can contribute to political parties are the most retrogressive steps taken towards political funding in India and must be rolled back.


We urge your government to review and immediately reconsider these measures which constitute making political funding a ‘black box’ which has no scope public scrutiny.


We hope this conversation on electoral funding leads to a deeper debate which your government must push on introducing much needed and more comprehensive electoral reforms. (In Opposition you had supported our proposal of introducing partial proportional representation, but having reaped the fruits of first-past-the-post, your enthusiasm seems to have dissipated).


I hope that in this New Year, the government would be urged to take new steps which would make our democracy healthier, more transparent and enable a genuine level-playing field, where a common citizen can find it as easy to contest elections as a moneyed one.


With regards


Yours Sincerely,





(Sitaram Yechury)

General Secretary