Introduction
Elections in India are among the most expensive in the world. Political parties and candidates require massive funds for campaigning, organizing rallies, and mobilizing supporters. While official election expenses are regulated by the Election Commission of India (ECI), a significant portion of funding remains unaccounted for, flowing through illegal cash transactions. This hidden money—commonly referred to as black money—has a deep-rooted influence on India’s political system, leading to corruption, favoritism, and lack of transparency.
The Scale of Election Spending in India
According to a report by the Centre for Media Studies (CMS), India’s 2019 Lok Sabha elections cost an estimated ₹60,000 crore, making it the most expensive election ever held in the country. However, official disclosures by political parties account for only a fraction of this spending. A large portion of campaign expenses, including cash payments for advertisements, transportation, and vote-buying, goes unreported.
Key Sources of Election Funding
- Corporate Donations – Companies contribute huge amounts, often in exchange for future political favors, leading to crony capitalism.
- Individual Donations – While individuals can donate, most large contributions remain anonymous due to the use of cash.
- Undisclosed Cash Contributions – Black money, often obtained through illegal means, is widely used for election expenses.
- Electoral Bonds – Introduced in 2018 as an alternative to cash donations, electoral bonds allow anonymous funding to political parties, raising concerns about transparency.
How Cash Transactions Influence Indian Elections
1. Vote-Buying and Voter Manipulation
One of the biggest concerns is the use of cash to directly buy votes. A 2022 investigation by the Association for Democratic Reforms (ADR) found that in some constituencies, parties distribute cash, alcohol, or gifts in exchange for votes. This practice, though illegal, remains widespread, especially in rural areas where voters are more susceptible to monetary influence.
2. Unaccounted Campaign Expenditure
Despite strict rules set by the Election Commission, candidates often exceed spending limits. According to a Hindustan Times report, many politicians fund their campaigns through black money, using cash transactions to avoid scrutiny. Expenses for renting vehicles, hiring crowds for rallies, and running social media campaigns are often settled in cash, making tracking difficult.
3. Shadow Financing from Business Tycoons
Industrialists and corporate houses frequently provide massive funds to political parties in the hope of securing favorable policies once the party is in power. Since these donations are often made in cash or through backdoor channels, they go unreported, increasing corruption. The Panama Papers leak and Paradise Papers investigation revealed how some Indian politicians and business leaders used offshore accounts to hide election funds.
4. Criminalization of Politics
Cash-based election funding has also contributed to the rise of criminal elements in politics. A 2023 ADR report stated that nearly 40% of MPs and MLAs have criminal charges against them, including corruption and bribery. These candidates often use illegal funds to win elections and later use their political power to protect their wealth.
Attempts to Curb Black Money in Elections
The Indian government and the Election Commission have introduced several measures to reduce the influence of cash transactions in politics:
1. Introduction of Electoral Bonds
Electoral bonds were introduced in 2018 to make political donations more transparent. However, critics argue that these bonds favor ruling parties, as donors can remain anonymous. A 2023 Supreme Court petition questioned the opacity of electoral bonds, calling for greater transparency.
2. Demonetization and Cash Limitations
The 2016 demonetization drive was aimed at curbing black money, but its impact on election funding was minimal. Political parties found new ways to distribute money, often using lower denominations. The Election Commission has since placed limits on cash transactions, requiring parties to disclose donations above ₹2,000.
3. Strict Election Monitoring
The Election Commission deploys surveillance teams to track illegal cash flow during elections. In the 2023 Karnataka Assembly Elections, authorities seized ₹375 crore in cash, liquor, and gold, highlighting the scale of black money usage.
Why Cashless Transactions are the Future
Shifting to a cashless economy could significantly reduce corruption in election funding. Here’s how:
- Digital Transactions Ensure Transparency – Using UPI, bank transfers, and digital payments can make political funding more accountable.
- Real-Time Tracking of Donations – With digital tools, every donation can be monitored, reducing the risk of unreported cash transactions.
- Preventing Vote Buying – If all transactions are digital, political parties will find it harder to distribute unaccounted money.
- Reducing Business-Politics Nexus – Digital donations through transparent platforms would limit corporate influence on policy-making.
The Way Forward
1. Implementing Mandatory Digital Funding
The government should introduce laws making it compulsory for political donations to be made through digital channels. Cash transactions should be completely eliminated from political financing.
2. Strengthening Election Laws
Reforming election laws to cap donations, enforce stricter auditing of party funds, and penalize violators would create a cleaner electoral process.
3. Voter Awareness and Education
Educating voters about the dangers of cash-for-vote schemes and encouraging ethical voting practices will reduce corruption at the grassroots level.
4. Increased Role of Election Commission and Judiciary
The Election Commission of India and the Supreme Court must take stronger action against political parties violating funding laws. Stricter penalties and real-time monitoring can deter corrupt practices.
Conclusion
The use of black money in Indian elections remains one of the biggest challenges to democracy. While efforts like electoral bonds and surveillance mechanisms have been introduced, much more needs to be done. A cashless political funding system is the need of the hour to ensure free and fair elections. If India wants to curb corruption, maintain democratic integrity, and ensure that political power is not bought, transitioning to digital transactions is the only sustainable solution.