FM acts tough on political funding

Tries to convey message that Modi government no 'suit-boot ki sarkar', but one for the poor

Preparing the Budget, Finance Minister Arun Jaitley faced three challenges. He needed to convey a message that the Narendra Modi government was no ‘suit-boot ki sarkar’, but a government for the poor. With an eye on the impending assembly polls, he needed to deliver “gains” to the middle classes and small entrepreneurs after the “pain” of demonetisation. The FM also needed to showcase the intent of the government, particularly post-note ban, that it is serious about bringing greater transparency in political funding. The finance minister tackled all three challenges head on.
 
The FM announced tax relief for middle classes and the micro, small and medium (MSME) sector enterprises, budgetary allocations for social sector were either marginally increased or not tinkered with, but his proposals on political funding were the most conspicuous.
 
Jaitley announced two concrete steps to curb the flow of black money in the kitties of political parties. According to Association for Democratic Reforms (ADR), an election watchdog, as much as 70 per cent of donations to political parties are below Rs20,000 and come from unknown sources.
 
According to the current law, political parties do not need to disclose the source of a donation below Rs20,000. Jaitley proposed that this limit for cash donations, on the recommendation of the Election Commission, will be reduced to Rs2,000.
 
"As an additional step, an amendment is being proposed to the Reserve Bank of India Act to enable the issuance of electoral bonds in accordance with a scheme that the government would frame in this regard," he said in the Lok Saha. Under the scheme, a donor could purchase bonds from authorised banks against cheque and digital payments only. They will be redeemable only in the designated account of a registered political party and within a prescribed time limit from issuance of bond. The government is likely to suggest a 30-day window.
 
Jaitley said every political party would have to file its return within the time limit prescribed in the Income Tax Act. He said donors and donees, that is the political parties, will get tax exemption on political donations provided tax returns are filed.
 
ADR’s Jagdeep Chhokar said the reduction of the limit for anonymous contributions from Rs20,000 to Rs2,000 was meaningless as long as there is no restriction on the number of such donations. “If there is no money trail and anonymity is ensured, the political parties will now cut out as many receipts as needed of Rs1,999.99 instead of the earlier Rs19,999.99,” he said. Chhokar said the provision of electoral bonds also falls short of ensuring transparency as it continues to ensure anonymity and is no check on quid pro quo between corporates and political parties.
 
Government sources maintained that the provision of bonds was a forward movement as it will reduce the play of black money in political funding, since bonds will have to be purchased through cheque and digital payments. Communist Party of India (Marxist) chief Sitaram Yechury slammed the move as “playing to the gallery” and a “gimmick”. Congress Vice President Rahul Gandhi welcomed the move.
 
On the Budget, the Congress party said it did not address key issues like job creation and the plight of farmers. It also questioned the government’s GDP figures of 6.6 percent saying that actual growth will not be over 4.5 percent. Gandhi said the Budget was a damp squib. The Bharatiya Mazdoor Sangh, a Sangh Parivar affiliate, termed the Budget disappointing as it overlooked workers, salaried class and poor.