ELECTION EXPENDITURE LIMIT (Syllabus: GS Paper 2 – Polity)

Context: With the general elections underway, among the Election Commission’s (EC) key responsibilities is monitoring poll expenditure, both by parties and individual candidates, through its own observers and state and Central enforcement agencies.

Election Expenditure Limit

• About: It denotes the maximum amount candidates are legally permitted to spend on election campaigning, encompassing various activities such as public meetings, rallies, advertisements, posters, banners, and vehicles.
• Requirement of Expenditure Statement Submission: All candidates are mandated to submit their expenditure statement to the Election Commission (EC) within 30 days following the conclusion of an election.
• Revision Factors: The EC frequently revises the spending limit, primarily considering cost factors and the escalating number of voters.
• Revision Process: In 2022, the EC revised the cap after forming a committee and soliciting input from political parties, chief electoral officers, and election observers.
• Reasons for Revision: The revision was prompted by a significant increase in the number of electors and the Cost Inflation Index (CFI) since 2014.
• Cost Inflation Index: The CFI, utilized to gauge the year-on-year inflation-driven rise in prices of goods and assets, surged from '240' in 2014-15 to '317' in 2021-22.
• State Funding of Elections: In this system, the states bear the election expenditure of political parties contesting the Election.

Cost Inflation Index

• Purpose: CII serves to gauge the annual increase in prices of goods and assets due to inflation.
• Calculation Method: It's computed to synchronize prices with the inflation rate, meaning a higher inflation rate results in increased prices.
• Consumer Price Index (CPI): CPI compares current prices of a basket of goods and services with those of the previous year to quantify price increases.