How do the world's largest and oldest democracies handle the flow of money into their elections? India and the United States offer two distinct, and evolving, answers to the universal challenge of funding politics without enabling corruption.
India's Experiment with Anonymity
India's political
funding landscape was recently dominated by the Electoral Bond Scheme, introduced in 2018. These were promissory note-like instruments that any Indian citizen or company could purchase from the State Bank of India and donate to a political party anonymously. The stated goal was to curb the use of black money in elections by moving cash donations into the official banking system. However, the scheme was highly controversial. Critics argued that the anonymity it provided to donors, especially corporations, was a major blow to transparency and could facilitate quid pro quo arrangements, where donations are made in exchange for favourable policies. This debate culminated in a landmark decision in February 2024, when the Supreme Court of India struck down the Electoral Bond Scheme as unconstitutional. The court ruled that the scheme violated the voter's right to information. While parties do not have a spending cap, individual candidates have expenditure limits for their campaigns.
America's Model: Unlimited Spending as Free Speech
The American system is built on a different foundation, shaped significantly by the Supreme Court's 2010 decision in Citizens United v. FEC. This ruling established that corporations and unions have a First Amendment right to free speech, which includes spending money to influence elections. While direct contributions from individuals and traditional Political Action Committees (PACs) to a candidate's campaign are capped, the Citizens United decision paved the way for 'Super PACs'. These independent-expenditure-only committees can raise and spend unlimited sums of money from corporations, unions, and wealthy individuals to advocate for or against a candidate, as long as they do not coordinate directly with the candidate's official campaign. This has led to a massive increase in outside spending in US elections.
Transparency: The Core Point of Divergence
The fundamental difference between the two approaches lies in their treatment of transparency. India's now-defunct electoral bonds were designed around donor anonymity, which the government argued was necessary to protect donors from political retribution. In stark contrast, the US system, at least in theory, mandates disclosure. PACs and Super PACs are required to report their donors to the Federal Election Commission (FEC), and this information is made public. However, the American system has its own transparency challenges. 'Dark money' groups, often organized as social welfare non-profits, can spend on political issues without disclosing their donors, and they can also contribute to Super PACs, effectively obscuring the original source of the funds.
Corporate Influence in Both Systems
Despite their different rules, both systems grapple with the immense influence of corporate money. In India, the electoral bond scheme removed the cap on corporate donations, allowing companies to contribute unlimited amounts anonymously. The Supreme Court specifically cited the risk of 'quid pro quo' arrangements between corporations and parties as a reason for striking down the scheme. In the United States, while corporations cannot donate directly to a candidate's campaign from their treasuries, they can give unlimited funds to Super PACs. This allows major corporations to spend heavily to shape election outcomes and public discourse, leading to concerns that the voices of ordinary citizens are being drowned out by powerful special interests.
Regulators and Rules of the Game
The regulatory bodies in each country also play different roles. In India, the Election Commission of India (ECI) is a powerful constitutional body that oversees the entire election process, including enforcing expenditure limits on candidates. Failure to submit accurate expenditure reports can lead to disqualification. In the US, the Federal Election Commission (FEC) is the independent regulatory agency responsible for enforcing campaign finance law. However, it is often criticized for being gridlocked and slow to act, which hampers its ability to effectively police the complex and ever-expanding world of election spending.
