The 2017-18 Union budget had an unusual feature, a section titled “Transparency in Electoral Funding”. Many commentators have hailed it as a positive step. But is it? An interview with Finance Minister Arun Jaitley in this newspaper is revealing. He stated: “The present system has failed and we are experimenting with a new system”. The “Key Features of Budget 2017-2018” put out by the government contain six statements on transparency in electoral funding. Only two are action-oriented.
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Of the two, the first pertains to a reduction in the limit for cash donations to Rs 2,000 from Rs 20,000. While it looks like a sizeable reduction, it is unlikely to have any real impact. Past experience shows political parties follow the law only in letter and not in spirit. While the existing law required them to disclose donations of more than Rs 20,000 each in order to avail the 100 per cent exemption from income tax, it never forbade them from disclosing donations of less than Rs 20,000.
The other concern is the disparity between what ordinary citizens are being exhorted to do and what political parties are being enabled to do. Ordinary citizens are encouraged to make payments using digital means. Political parties, on the other hand, are being allowed to accept donations up to Rs 2,000 in cash. Another point that follows is curious. It says, “Political parties will be entitled to receive donations by cheque or digital mode from their donors.” This implies that earlier, political parties were not entitled to receive donations by cheque or digital mode.
The second action-oriented point is, “the issuance of electoral bonds in accordance with a scheme that the Government of India would frame” and the amendment to the RBI Act to enable this. The details of the scheme will be known only when it is formulated. But the interview with the FM offers a clue about what it is likely to be. His statement reads, “These bonds will be bearer in character to keep the donor anonymous”. The problem with political financing is that 75-80 per cent of the declared income of political parties comes from unknown sources. If the objective of the electoral bond scheme is “to keep the donor anonymous”, then it seems to be the very antithesis of transparency.
The last two points, though not action-oriented, do seem to strengthen the “shadow of doubt”. These are: “Every political party would have to file its return within the time prescribed in accordance with the provision of the Income Tax Act” and: “Existing exemption to the political parties from payment of income tax would be available only subject to the fulfilment of these conditions.” The first of these has been in existence since 1979 and the second since 2003. To include them in a “proposal to cleanse the system of funding of political parties”, as the FM said in his budget speech, seems an effort to create a mirage.
Transparency in political financing will happen when the political establishment realises that the only way to get out of the shackles of big and black money is to become open. The government can do this by revising its affidavit in the Supreme Court to say all political parties should be under the purview of the RTI Act, thus honouring the Central Information Commission’s 2013 decision.
The writer is former professor, dean, and director in-charge of IIM, Ahmedabad
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