Political financing is an important aspect of democracy. Political parties and individuals running for office incur expenditure in the form of campaign expenditure, PR & advertising, salaries of the staff, maintenance of offices etc. Financial resources to meet this expenditure are sought from various sources. 

This could include public financing, where the elections are funded through public resources like taxes and governed by public or a designated body. Political financing can also be through self-financing where the candidate uses his/her personal resources, or they can opt for private financing where they seek support through political donations from public (individuals & organizations) who have vested or common interest.  

Since the primary purpose of most of the political parties and their involvement in elections is to seek positions of power, there is a possibility that the funding from various sources could be in anticipation of favours in return and that the support is not necessarily ideological, or issue based. 

Such favour seeking can have a detrimental effect on the tenets of good governance & democracy itself. Hence, democracies across the world are engaged in efforts of bringing in transparency in political financing. Transparency in political funding is an important tenet of a mature democracy and could expose such favour seeking after the elections.  However, the level of transparency and the laws relating to such funding vary in different countries. 

Issues in election funding

• No cap on funding
  Currently, there is no cap on the amount that can be donated to political parties. This has allowed ruling parties to gather majority of funding.
• Non disclosure of identity
  Identity of the donor remains confidential. If the identity is not known, people cannot decide if there is a hidden agenda behind donation.
• No rules and regulations
  There are no laws in the country that define election funding or regulate the ways funds can be given to political parties.

Importance of regulated funding

• Working for welfare of people
  If private entities fund political parties, then the government in power will be obliged to work for the donors instead of people.
• Level playing field
  Many good candidates are unable to fight elections because of lack of funds. If financing is regulated, it makes the field level for all candidates.

Ensuring transparency in funding

• RTI
  Political parties should come under RTI act so that their operations are in public domain. This keeps them from misusing their authority.
• Monitoring
  There should be specialized body that will monitor election funds as well as spending by parties and candidates.

Thus, transparency should be brought in the way elections are fought in the country. This will strengthen democracy in the country.