USAID Row: Can Election Commission Even Accept Foreign Funding?

'The US has not clarified who got the payout, one shouldn't assume it was the EC,' OP Rawat told The Quint.

US President Donald Trump's allegations of a $21 million payout to India to boost voter turnout have kicked up a political storm in India.

(Photo: Vibhushita Singh/The Quint)

"There is absolutely no chance that any money has been received by the Election Commission of India (ECI) from a foreign government or agency," said former Chief Election Commissioner (CEC) OP Rawat while speaking to The Quint, reflecting on the controversy over US President Donald Trump's remarks that $21 million was given to India to boost voter turnout.

Trump's claim of the $21 million payout, which he later revised to $18 million, has kicked up a political storm between the ruling Bharatiya Janata Party (BJP) and the Congress – both of which have accused each other of facilitating "foreign interference" in India's electoral process.

However, amid the political mudslinging, several questions remain unanswered.

1. If Trump's statement of USAID providing foreign funding is true, who received the money? Was it the ruling government, an Opposition party, or neither?

2. Can the ECI receive money from any and all sources (domestic or foreign) to conduct elections?

3. What is the Indian government's policy on accepting foreign funding/aid? Are there any laws that govern whether the Centre can accept money from external sources?

Through this article, The Quint aims to answer these questions and clear the heightened sense of confusion created by the USAID fiasco.

Who Received the USAID Payout? 

To start with, neither the Elon Musk-led Department of Government Efficiency (DOGE) nor President Trump has clarified to whom the alleged $21 million payout was given, or when. Was it a one-time payout? A yearly payout?

Neither have they provided any concrete evidence that the money was actually given to India.

There are three different versions of Trump's statements:

On 19 February, Trump had said that the US was spending $21 million for voter turnout in India. "Wow, $21 million! I guess they were trying to get someone else elected. We have got to tell the Indian government," he said, implying that the money went to a source apart from the Central government.

On 22 February, while addressing the Republican Governor’s Association Working Session, he said the money was going to "my friend Prime Minister Modi" to boost voter turnout, implying that it was given to the Centre.

Later that very day, he revised the amount to $18 million and said it had gone towards "helping India with its elections", without specifying whom the money was given to – the Indian government, the Opposition, the Election Commission, or a non-government agency.

According to the US Foreign Assistance website, USAID had pledged $500,000 via the Consortium for Elections and Political Process Strengthening (CEPPS) to India in 2013 for electoral purposes. It ended up paying around $435,000 between 2013 and 2018. Notably, the largest tranche of this amount, worth $266,843, was disbursed in 2014 – the year Lok Sabha elections were held.

There is no record of any funds having been given after 2018 for electoral purposes. Further, what is not clear on the website is who in India received the money.

US' Foreign Assistance website showing that USAID pledged $500,000 to India for electoral purposes in 2013. 

(Photo: Screenshot/ForeignAssistance.gov)

CEPPS is composed of the International Foundation for Electoral Systems (IFES), the National Democratic Institute (NDI), and the International Republican Institute (IRI).

The CEPPS website is currently inaccessible.

CEPPS website inaccessible in India. 

(Photo: Screenshot) 

However, the websites of IFES, NDI, and IRI show that they are not engaged in any programme in India currently.

ECI in the Eye of the Storm: Can Election Body Even Receive Foreign Funding? 

Amid the USAID fiasco, the ECI has found itself in the eye of the storm.

After the DOGE cut the alleged $21 million funding to India, BJP IT Cell head Amit Malviya alleged that in 2012, a Memorandum of Understanding (MoU) was signed between the ECI under the leadership of the then CEC SY Quraishi and the IFES – which, as mentioned above, forms a part of CEPPS.

He alleged that the ECI received the payout from USAID following the signing of the MoU and labelled it as "external interference" in India's electoral process.

The Congress-led United Progressive Alliance (UPA) was in power in 2012, when the MoU was inked.

Responding to the allegations, Quraishi took to X to say that while an MoU was indeed signed between the ECI and IFES, it was to facilitate electoral training and not for receiving funding from USAID.

"There was no financing or even promise of finance involved in MoU, forget X or Y amount. The MoU in fact made it clear in black and white that there would be no financial and legal obligation of any kind on either side," Quraishi wrote on X.

However, this begs the question. Say, for instance, that USAID or any other foreign government or agency would have offered money to the ECI, could the election body have even accepted it?

Answering this question, former CEC Rawat told The Quint:

"All the money that the ECI spends on elections comes from the Indian Budget, that is the Consolidated Fund of India, and from no other source."

Rawat, who served as Election Commissioner from 2015-18 and CEC from January to December 2018, further emphasised that nobody has clarified to whom the money was actually given.

"It has never been claimed by anyone that USAID gave money to the ECI. USAID gave money to some unknown agencies, never clarified by Elon Musk or Mr Trump or anybody else," he said.

"The purpose was enhancing voter turnout. There are many NGOs and agencies working for voter turnout. How can one just assume that the money has been given to the ECI?"

Former CEC OP Rawat to The Quint

When asked whether any foreign agency had approached him for financial purposes during his tenure as CEC, Rawat said: "No foreign government or agency approached me for any kind of funding while I served as CEC. There is no precedent of foreign nations providing money to the Election Commission."

The ECI website, too, confirms that the electoral body can only be financed by state actors.

"If elections are being held only for the Parliament, the expenditure is borne entirely by the Union government while for the elections being held only for the state legislature, the expenditure is borne entirely by the state concerned," the website states.

It further adds that in the case of simultaneous elections to the Parliament and state legislature, the expenditure is shared equally between the Union and the state governments.

What is the Indian Govt's Policy on Foreign Funding? 

While it has been made clear that the ECI can receive funding only from the state, the Indian government's acceptance or refusal of foreign funds is another story altogether.

There are no strict laws or provisions that prohibit the Indian government from receiving funds from foreign countries. At the end of the day, it all depends on the government in power.

"Every government reserves the right to accept or not accept aid," Santanu Sanyal, retired professor of economics at Calcutta University, told The Quint. "However, while government-to-government aid is acceptable, India does not accept aid from private agencies," he added.

Hence, theoretically, India can accept funds from USAID – which is a part of the US State and an extension of the US government, and not a private agency.

The Indian government's stance on accepting or refusing foreign funding is best reflected in how it has reacted to offers of aid during humanitarian crises over the years.

In the decades following Independence, India had been a common recipient of aid as a developing country. The most prominent example of such aid is the PL-480 system from 1954 to the late 1960s, under which the US provided food grains to India.

However, India's image as a recipient was halted in 2004, when the then Manmohan Singh-led government refused foreign aid following a tsunami in Tamil Nadu that year to portray a symbolic stance of self-reliance.

"We feel that we can cope with the situation on our own and we will take their help if needed," Singh had said at the time while refusing to accept financial assistance.

Similarly, when the US and Japan offered aid to India in 2013 following devastating floods in Uttarakhand, the then Finance Minister P Chidambaram had said that the government would rather take assistance from multilateral bodies like the Asian Development Bank and World Bank.

This was also the time when India was attempting to build its image as a donor, as reflected by its offers to financially help countries in south Asia and beyond.

The Singh government's policy on foreign funding was continued by Prime Minister Narendra Modi as well, as indicated by the fact that the Centre refused aid worth Rs 700 crore from the United Arab Emirates (UAE) following floods in Kerala in 2018.

However, the COVID-19 pandemic brought a break in India's policy on aid, when the Modi government acceded to receiving financial assistance from the US, Russia, China et al amid a vast shortage of medical supplies and infrastructure to deal with the crisis.

Hence, the Indian government does not have a staunch policy against accepting aid. But experts say that the tranche of $21 million in question from USAID most likely did not go to the government.

"All government-to-government aid is routed through the Centre, but this time it doesn't seem to have been the case. The money must have been given to some NGOs or private parties. The Indian government was not aware of it; that's why it has been asking the US whom they dispersed the amount to," Santanu Sanyal said.