The essence of any democratic system is the healthy functioning of political parties and, consequently, free and fair elections. Conducting fair elections requires not only a legal framework and a transparent electoral process, but an institutional structure regulating campaign finance which adequately ensures that governance caters to the welfare of general public and not special interests. This is true not only for India but for any other democratic country as well. This paper recognises the far reaching impact of campaign financing on future governance after elections. It argues that most of the vices prevalent in current campaign finance system of India can be dealt with by doing away with expenditure limits and by introducing contribution limits in its place. However, without transparency in conduct of the political parties and their candidates, these measures will not have much positive impact. Transparency, through the full disclosure of campaign financing policies and practices, provides the ability to verify that no malpractice has occurred and that regulatory frameworks are being effectively implemented. This paper, therefore, simultaneously argues for a systematic change in electoral law to promote transparency in the financing of election campaigns in India.