Show us the money

Political parties must be made to account for the bulk of their funding

Written by Jagdeep S. Chhokar | Published: April 8, 2013 12:50 am

Political parties must be made to account for the bulk of their funding

Three actions of the government in the last couple of months seem to give a lie to its intentions on political and electoral funding. Let’s start with the latest action. On March 26,it was reported that the government had blocked the Election Commission’s move to make party funding more transparent.

Article 324 of the Constitution gives plenary powers to the EC for the superintendence and direction control of the conduct of all elections to Parliament and the state legislatures. The overall scheme is laid down in the Representation of the People (RP) Act,1951. The practicalities of how elections are to be conducted are laid down in the Conduct of Election (CoE) Rules,1961.

The RP Act was amended on September 11,2003. Section 29B,which was inserted,permitted a political party to receive “contributions voluntarily offered to it by any person or company other than a government company”. Section 29C,also added then,required every political party to submit to the EC a statement of all donations above Rs 20,000 “in such form as may be prescribed”. The law ministry prescribed Form 24A for such reports. The income tax law was amended on April 1,1979,by adding section 13A,whichgranted political parties 100 per cent exemption from income tax on the donations received by them.

Recently,the total income of political parties as revealed by their income tax returns was compared with the donations received,as reported in Form 24A,both accessed under the RTI Act by the Association for Democratic Reforms (ADR). It revealed that the statement of donations reported in Form 24A accounted for only about 20 per cent of the total income of political parties. The source of 80 per cent of their income was unknown. Several parties claim that this share comes through donations of less than Rs 20,000,often in cash or through what is called “sale of coupons”,of which no record is kept.

Last year,the EC wrote to the law ministry,asking it to make Form 24A more transparent about contributions. The law ministry responded by saying “no compelling reasons” had been mentioned to necessitate such amendments. The EC then reminded the law ministry that “the objective of filing contribution reports is to bring transparency in the funds received”. It pointed out that the proposed modifications would make political funding more comprehensible to citizens. One of the suggested modifications was that the total funds received by political parties be declared,not just those received in tranches of more than Rs.20,000. The law ministry replied that the modifications were not in keeping with section 29C of the RP Act. It seems obvious that the law ministry is taking a narrow,legalistic view and is overlooking the broader purpose of the legislation. It would still be legalistic,but more progressive,if it initiated amending Section 29C. But the law ministry,and the government,do not appear to see anything wrong in 80 per cent of the income of political parties being shrouded in mystery,even if that spreads scepticism about the way political parties function.

The second action happened on March 13,2013,when the Centre submitted an affidavit to the Supreme Court,saying that section 10A of the RP Act,1951,gives the EC the power to disqualify a person only if she does not file an account of election expenses. She could not be disqualified for any other reason,“including the correctness or otherwise of such accounts.”The government’s contention seems to be that the EC can only accept the account submitted by a candidate. It has no authority to scrutinise it and take action.

This goes against the SC judgment in the case of R. Shivarama Gowde vs P.M. Chandrashekar,where it had rejected this very contention: if “an account is found to be incorrect or untrue by the EC after enquiry under Rule 89,it could be held that the candidate had failed to lodge his account within the meaning of Section 10(A) and the EC may disqualify the said person.” The legalistic law ministry does not seem to be aware of the SC’s pronouncements.

The third event happened on January 23,2013,when the Justice Verma Committee released its report. It stated that electoral reforms were necessary “to the achievement of gender justice and the prevention of sexual offences against women”. It then made proposals in this regard,including stripping the legislature of persons who have criminal cases pending against them,proper scrutiny of affidavits,transparency of electoral and political funding. Soon after the report was made public,the Union law minister said the report would be referred to the Law Commission. If the law ministry can forget the Supreme Court ruling,how can the law minister be blamed for not knowing that a Law Commission report on electoral reforms has been lying with his ministry since 1999?

The tussle continues,with the EC and citizens pushing for greater transparency. At the other end,the government and political parties seem to be trying to stonewall change by using a time-tested principle: “delay is the deadliest form of denial.”

The writer is former professor,dean,and director-in-charge at IIM,Ahmedabad. Views are personal

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