Clean Electoral Funding

Source: The Hitavada      Date: 17 Apr 2018 11:55:05

By RAMESH 

KANITKAR

AN investigation has revealed that the much-hailed electoral bonds, which were meant to usher in an era of taint-free financing for political parties, carry a secret number “visible on the top-right corner of the original document showing fluorescence, when examined under Ultra Violet (UV) Light.” The saga of electoral bonds started with the Budget Speech of the Finance Minister in the Lok Sabha on February 1, 2017. The speech had a section titled “Transparency in Electoral Funding”, and this is what Arun Jaitley said: “India is the world's largest democracy. Political parties are an essential ingredient of a multi-party Parliamentary democracy. Even 70 years after Independence, the country has not been able to evolve a transparent method of funding political parties which is vital to the system of free and fair elections. An attempt was made in the past by amending the provisions of the Representation of Peoples Act, the Companies Act and the Income Tax Act to incentivise donations by individuals, partnership firms, HUFs and companies to political parties. Both the donor and the donee were granted exemption from payment of tax if the accounts were transparently
maintained and returns were filed with the competent authorities. Additionally, a list of donors who contributed more than Rs 20,000/- to any party in cash or cheque is required to be maintained.


The situation has only marginally improved since these provisions were brought into force. Political parties continue to receive most of their funds through anonymous donations which are shown in cash. An effort, therefore, requires to be made to cleanse the system of political funding in India. Donors have also expressed reluctance in donating by cheque or other transparent methods as it would disclose their identity and entail adverse consequences. I, therefore, propose the following scheme as an effort to cleanse the system of funding of political parties. This reform will bring about greater transparency and accountability in political funding, while preventing future generation of black money.”
The same day, when asked about electoral bonds in the customary post-Budget media interaction, Jaitley said that there is a provision of electoral bonds which requires an amendment to the RBI Act.


A notified bank will be issuing those bonds. Any donor can buy those bonds using a cheque or digital money. These bonds can be given to the political party. “Every recognised political party will have to notify one bank account in advance to the Election Commission and these can be redeemed in only that account, in a very short span of time. These bonds will be ‘bearer’ ones, to keep the donor anonymous (marked bold to add emphasis).” The contradiction between transparency and anonymity was highlighted soon after Budget 2017 was announced.
It was pointed out that it would present not the slightest difficulty to the ruling party (whichever it may be) to get information from the State Bank of India as soon as someone purchased an electoral bond. And as soon as this information reached the political party in power, it would not be at all difficult for that party to get in touch with the buyer and “persuade” him/her to donate the bonds to the ruling party. The apprehension was that this might choke the flow of funds to all Opposition parties. Now that the bonds are numbered, albeit surreptitiously, it will become impossible for all parties in the Opposition to attract legitimate funds. Even without electoral bonds being in place, it is worth noting the increase in the reported income of the seven national parties between financial years 2015-16 and 2016-17.


The income of Bharatiya Janata Party (BJP) increased by 81.18 percent, while the income of the Indian National Congress (INC) decreased by 14 per cent. The share of individual national political parties in the total amount received by all the seven national political parties was as follows: 66.34 per cent. BJP’s share of total funding received by 7 national parties, 14.45 per cent Congress’ share of total funding received by 7 national parties, 11.13 per cent Bahujan Samaj Party share of total funding received by 7 national parties, 6.43 per cent CPI(M)‘s share of total funding received by 7 national parties1.11 per cent, Nationalist Congress Party’s share of total funding received by 7 national parties 0.41 per cent, Trinamool Congress’ share of total funding received by 7 national parties 0.13 per cent, CPI’s share of total funding received by 7 national parties.


How these figures will be once the trails of electoral bonds can be followed based on ‘invisible’ numbers printed on them, is anyone’s guess. Even without the ‘invisible’ serial numbers, the potential for damage that the scheme of electoral reforms could do to the political health of the country is immense. The reason being, while introducing electoral bonds, the government also got the Parliament to approve two key amendments to the Companies Act.The first of these amendments removed the limit of the percentage of profits that a company could donate to political parties. This limit, which was originally 5 per cent but had been raised to 7.5 per cent, was completely removed by one of the amendments to the Finance Bill. This has been done by removing proviso to sub-section (1) of Section 182 of the Companies Act 2013.


The second is even more startling concerning transparency and opacity. Sub-section (3) of Section 182 of the Companies Act 2013 requires that a company making donations to political parties shall disclose “particulars of the total amount contributed and the name of the party to which such amount has been contributed” in its profit and loss account. The second amendment removes this requirement of disclosing the name of the political party. Now a company making a donation to a political party will not need to disclose the name of the party.Adding even more intriguing features to an already dangerous instrument is obviously not a healthy sign at all. It is possibly a signal that the Government wants to ensure, at any cost, that the ruling party has all the information on who donates to whom. So much for “Transparency in Electoral Funding”, promised by the Finance Minister on February 1. 2017, in the ‘temple of democracy’ – the Lok Sabha!
(INAV)