The ban on Rs 500 and Rs 1,000 notes will likely have a bearing on the forthcoming assembly polls in Uttar Pradesh, Punjab, Goa and Manipur.
India’s electoral funding is largely opaque. According to the Association for Democratic Reforms (ADR) parties receive up to 75 percent of their funds from unknown sources.
According to the Stockholm-based International Institute of Democracy and Electoral Assistance (IDEA), India is among very few countries in the world to “allow political parties or candidates to receive anonymous donations”.
Elections in India has largely been a game of cash, with parties spending on through cash for a variety of purposes including renting a chair for a public meeting that comes for Rs 10 a day, festoons for Rs 600 apiece and helicopter rides that cost up to Rs 500,000 an hour.
Despite stringent penalties and rules, offering bribes and cash to voters, sometimes as small as Rs 500 is a commonly-used strategy to attract votes.
In the last Lok Sabha elections, the Election Commission had seized more than Rs 300 crore of rupees, more than the double the what was seized during previous elections five years ago.
With a high-octane election in UP and Punjab scheduled for early 2017, the latest move to ban high denomination notes will likely force political parties to redraw their spending strategies that operate outside regulatory boundaries.
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