A modest beginning

Budget provisions on political funding underwhelm

The government has tried to place transparency in political funding at centre stage by making it one of the key elements of its latest Budget. This is a creditable move since no government can claim to be serious about removing corruption and black money in India without first ensuring that the functioning of political parties and their leaders is completely above board. Such demands for transparency have become even more vigorous ever since Prime Minister Narendra Modi announced demonetisation on November 8 last year. In the ensuing months, the government put in place rules that required a common citizen to provide an identity proof, and at one point even be inked, to justify the smallest of all transactions. However, in the larger interest of probity in public life, people endured most of these disruptions while nursing the hope that the government would soon bridge the yawning gap between regulations that govern them and political parties. In this regard, the Budget has made a welcome beginning, but a careful review of the provisions suggests that the government still has a long way to go in narrowing this unjust divergence. 

The first change announced in the Budget, in line with a recommendation of the Election Commission, was to reduce the maximum amount of cash donation that a political party can receive from an anonymous source from Rs 20,000 to Rs 2,000. As of now, 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. Merely reducing this number to Rs 2,000 is unlikely to bring about any meaningful change. The other big announcement was the proposed amendment to the Reserve Bank of India Act to enable issuance of electoral bonds, which can be purchased by donors only by means of a cheque or digital payment and redeemed by a political party. While this provides yet another way in which people can contribute to political parties, it does not improve transparency in political funding. 

The other two provisions announced — that political parties will be “entitled” to receive donations by cheque or digital mode and that parties will have to file their tax returns within the prescribed time frame to avail income tax exemptions — were already in place before the Budget. An analysis by the Association for Democratic Reforms (ADR) shows that, in the past five financial years, the ruling Bharatiya Janata Party defaulted in the submission of its audit report with the Election Commission by an average of 182 days while the Congress, the principal Opposition party, defaulted by 166 days on average. Lastly, in stark contrast to how the government intends to scrutinise individual accounts, the Budget did not unveil any measure to investigate the funding sources of political parties or lay down any penal provisions in this regard.

In essence, the Budget announcements neither make it any easier for a common citizen to understand how a political party is funded nor increase the onus on a party to be more accountable. Worse still, they do not bring about a level playing field between a common citizen and a political party despite the fact that the latter receives tax exemptions on matters of sources of income and any divergence between income and expenditure. The government must bring about real and effective change if its call for a “cleaner” India is to be taken seriously.