How does political parties raise funds?

HOW DO POLITICAL PARTIES RAISE FUNDS
ReLakhs.com

Ever wondered how these political parties gather funds… I am certainly sure you would have thought about it once in your life when you read headlines like “this political party spent 1000cr on advertising their campaign” or you must have thought about it when you hear the news that certain “political party spent 500cr just to celebrate a famous political figure’s birthday” yeah if you never thought about it then think about it and try to find out your answers in this article

The political parties today need to “sell” to the people in order to lure the public towards them so they can get votes and that is where the public gets fool.                                                                   

Let’s discuss here How does political parties raise funds?

CORPORATE FUNDINGS:

These funding are basically a coalition with corporate firms mostly Indian firms recent surveys showed that the most amount raised in the name of the donation came from corporate funding. These corporate fundings are governed by the companies act 2013.

The conditions for corporate fundings

  • companies that are raising the funds should be around 3 years or older because these days it is quite easy to make shell companies and fool the public in the name of high returns.
  • The funds raised by these corporate firms in the name of corporate fundings should not exceed the average of 7.5% of the net profit.
  • Before these funds are raised a proper resolution is passed amongst the board of directors without their approval no contributions would be made further.

ELECTORAL TRUSTS IN INDIA:

These trusts are registered as non-profit companies electoral trust’s main objective is to gather voluntary funds. These trusts have certain rules under which they work. It is prohibited for these electoral trusts to run any other sort of business or company. Also, it is considered as an outlaw for these trusts to donate to some other trust

All this comes under companies act 2013.



STATE FUNDINGS: 

Public funding or state funding you can say this is an effective way to save unnecessary funds spent for electoral campaigns. A lot depends upon state funding…this is a concept in which funds are provided by the government to political parties for purposes regarding elections. These kinds of fundings are mostly subdivided into two parts

1 Direct Funding-this method is simple funds are directly given to political parties.

2 Indirect method- This concept involves providing other luxury services for a political party instead of direct funds the services which are commonly included are

1) public rallies can be done without any permission they also have free access to public places

2)the transport facilities which are provided are also subsidized.

However, the state cannot provide direct funds thus direct funding is prohibited on the other hand indirect fundings are allowed but under certain regulated manner.

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