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Have Indian elections funded by 'invisible money' become dirtier?

Indian laws punishing dirty political funding remain unchanged since the days of the British raj

Sai Manish  |  New Delhi 

Kashmir, polls, Srinagar, EVM, vote, voting

Finance Minister Arun Jaitley’s scathing indictment of the of India for its failure to check the influence of black money in elections since independence could be a double-edged sword for the Modi government. Jaitley exhorted to an audience at a conclave in Delhi last week, “For 70 years, India’s democracy has completely been funded by invisible money — elected representatives, governments, political parties, Parliaments. And I must say that the completely failed in checking it.”

“I am delighted with his statement. But the action does not match the avowed intentions and the words. Instead of making transparent as he set out to achieve, whatever transparency existed has been sought to be done away with. Removal of the cap on political donations of 7.5% of net profits that corporates could donate to political parties and the requirement of disclosure of political donations to the recipient parties have dealt a death blow to existing transparency. Earlier all donations over 20,000 rupees were disclosed to Now even the crores that are given would be anonymous. Now that companies don’t need to reveal which parties they have donated to, they can run political parties in India. I am surprised no one raised a hue and cry over this” SY Quraishi, former Chief Election Commissioner of India told Business Standard.

The Election Commission’s so called failure to check dirty can partly be explained by the fact that it is indentured to archaic legal provisions vesting it with the ability to punish parties caught indulging in funding malpractices.  The Election Commission, a constitutional body, principally punishes dirty through two laws – the (IPC), 1860 and the (RPA) 1951. 

By the look of it, the Commission’s powers to punish errant parties and candidates under these laws seem to be ineffective. Under IPC, any person caught making illegal payments relating to an election can be slapped with a fine of not more than 500 rupees. Any payments less than 10 rupees made without the candidate’s written consent are not liable to be punished under the IPC. Any party or candidate that fails to maintain proper accounts of the money spent by it is also slapped with a similar fine.

Under the RPA, the has broader powers than under the IPC. The has the power to disqualify any candidate for three years if he fails to disclose his poll expenses when asked for it. But invariably, it is smaller candidates who have been at the receiving end of the Commission’s wrath in this regard.

A look at the list of persons disqualified by the Commission since 2015 shows that most of them are either independents or first time candidates rather than the big fish from established political outfits. Some of them were infact unaware that they have been disqualified from contesting elections for three years. In the states of Gujarat & Himachal Pradesh, which go to polls later this year, 37 and 38 candidates respectively were disqualified from contesting elections till 2018 by the

A look at the profile of these candidates shows that most of them were first time candidates contesting as independents or as candidates of smaller and unrecognized parties. Two of them – Girshji Jenaji Dabhi who contested from Mehsana and Madan Lal Baryal who contested from Chamba in 2014 – exemplify this lot. “I didn’t even know I was disqualified from contesting” said Dabhi. Meanwhile, Baryal, a farmer from Bharmour in the Chamba district of Himachal Pradesh said, “I didn’t know I was disqualified from contesting. I had submitted my expenses thrice to the commission. I will check with the local office of the Commission now.”  

In December 2016, the came out with proposed electoral reforms in an attempt to clean up in India. One of them involved prohibiting anonymous donations of 2000 rupees and above. At present the limit is set at Rs 20,000. This was implemented by the government this year after being announced by Jaitley in his budget speech.

There were other significant recommendations made by the Commission on which the Modi government has maintained a stoic silence. One of them was to put a ceiling on the expenditure incurred by political parties. At present there is no limit on the amount of money a political party can spend during its election campaign. The Commission recommended, “The ceiling should be either 50% of or not more than the expenditure ceiling limit provided for the candidate multiplied by the number of candidates of the party contesting the election.”

Another recommendation was to regulate the sale of coupons printed by political parties to collect donations. At present, there is no limit on the number of coupons that can be printed by political parties. The Commission contended that parties were collecting small sums of money from anonymous donors by issuing such coupons. These small donations amounted to a bigger sum and parties were not required to disclose details of those who purchased these coupons. It was felt that such small donations needed to be accounted for to ensure transparency in The Commission recommended, “The political parties should be mandated to register details of donors for coupons of all amounts.”

The also recommended implementing a 1996 judgment of the Supreme Court to regulate the sale of coupons. The judgment of India’s highest court in a petition filed by senior advocate Prashant Bhushan’s non-governmental organisation (NGO) Common Cause had reprimanded certain political parties including the Bharatiya Janata Party (BJP) for not filing their income returns to the The SC ruled, “Income Tax authorities have been wholly remiss in the performance of their statutory duties under law. The said authorities have for a long period failed to take appropriate action against the defaulter political parties. The Secretary, Ministry of Finance, Department of Revenue, Government of India, shall have an investigation conducted against each of the defaulter political parties and initiate necessary action in accordance with law.”  However, nothing seems to have come out of the investigation.

The Election Commission’s move to set up an Election Monitoring division in 2010 also seems to have borne little results. Despite rules to limit election spending by candidates, parties have found ingenious ways to circumvent these rules. A former official said, “Politicians have got smarter. Now most of the money intended to influence voters reaches constituencies much before the model code of conduct comes into force.”

While the Modi government came out with electoral bonds saying these would render more pellucid, observers have been skeptical of the government’s intentions. They point out that earlier 70% of the donations to parties could be shown as petty cash donations. Now all the donations through electoral bonds could be clubbed as petty cash donations which would put it beyond the scrutiny of the

Jaitley while criticising the had also complained that not a single political party had given suggestions on electoral bonds despite the government seeking their opinion in March this year.  Quraishi said, “To be fair to the Finance Minister, he invited suggestions from political parties to make election funding more transparent. I am shocked no party responded to the call. It is a dereliction of their responsibility to not involve themselves in the process to clean up election funding. They have forfeited their moral right to criticise it.”

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