A hope belied

Opacity in funding of political parties must go

Union Finance Minister Arun Jaitley’s spirited defence of the income tax exemptions enjoyed by political parties, in relation to the donations they receive, came as a big disappointment. Mr Jaitley asserted, and correctly so, that political parties have not been given any new tax exemption or auditing reprieve. As such, after demonetisation, no political party can accept donations in old Rs 500 and Rs 1,000 notes and any party doing so would be in violation of law. The finance minister said that “just like anyone else,” political parties can also deposit their cash held in the old currency notes in banks till December 30, provided they can satisfactorily explain the source of income and their books of accounts reflect the entries prior to November 8, when the note ban was effected. But, political parties are not required by law to furnish any details of donations less than Rs 20,000 and it is an open secret that this loophole is exploited by black money hoarders to the hilt. Mr Jaitley as well as the whole political class is guilty of turning a blind eye to the fountainhead, as it were, of corruption and black money in India; and given the moral high ground that the Narendra Modi-led government has taken, this is a surprise.

Far from being a justification, the fact that no rules of the game have changed for the political parties is actually the problem here. In reality, it is very plausible for any existing political party to accept banned currency notes after November 8 and show them as separate entries of less than Rs 20,000 (or of Rs 2,000, for that matter) accepted in the past and then deposit this money in the banks without any questions being asked and without a single paisa being taxed. To be sure, there is enough and more evidence to show that there exist many political parties that have never fought an election. It is not unreasonable to imagine their raison d’être being only to launder black money. Worse still, even among prominent political parties, declared donations explain only about 20-25 per cent of income tax returns. This lack of transparency is made worse by all political parties resisting being brought under the Right to Information Act.

In stark contrast to this opacity is the scrutiny (and the related harassment) faced by an ordinary citizen. This trend has exacerbated after demonetisation, with people having to furnish proof of identity and being inked just to get back paltry sums of Rs 2,000 of their hard-earned money. The new diktat that deposits of banned notes exceeding Rs 5,000 would be allowed only after the depositor provides satisfactory answers is another case in point.

For greater probity in public life, any honest citizen would treat such diktats as necessary, albeit inconvenient, steps. Only that, this is not the case at all. What is most likely to happen instead is that political parties will become even bigger sinkholes for black money since now there is a greater incentive to park black money with them. This is an unfortunate development since demonetisation, as ill-planned as it is, was a great opportunity for Mr Modi to make political funding completely transparent. Millions of Indian have put up with the pain of Mr Modi’s decision in the hope that it will be good for the country. That hope stands belied.