Context
Author states that the recent move proposed by Union Budget to reign in political financing is bound to fail. Why does he thinks so? Let us find out
What has been proposed?
- Limiting anonymous donations: In the Union Budget presented on 1st Feb 2017, it was proposed that political parties would now have to mention details of anonymous donations above Rs 2000 unlike the previous limit of Rs 20000.
- This announcement should be seen in the light of recent ADR report which cited that maximum portion of political funding is composed of such anonymous donations
- Allowing donors to purchase electoral bonds: Budget further proposed to allow donors to purchase electoral bonds from banks against cheque and digital payments to be given to registered political parties for redemption
- Filing Return within time limit: The Budget makes it mandatory for political parties to file returns within a time limit
Author’s contention
Proposal aredoomed to fail, not because they doesn’t go far enough but because they go in the wrong direction
Author’s reasons
- No disruption to the flow of illicit money: The proposal does not disrupt the flow of illicit political donations but only channels it differently, and will not reduce the proportion of cash from unverifiable sources in the total donations received
- Circumvention is easy: Author states that all that political parties would now have to do is to find more people to lend their names to these donations, or better still, find more names of unsuspecting people to be listed as cash donors
- Against transparency: The proposal to allow donors to purchase electoral bonds from banks against cheque and digital payments to be given to registered political parties for redemption, meant to cater to donors’ need to remain anonymous to rival political parties, hardly contributes to transparency
- Low compliance in absence of strict punitive measures: The Budget makes it mandatory for political parties to file returns within a time limit, but in the absence of extreme penal provisions compliance is likely to be low
What should have been done?
- Limit the amount that can be received in cash as donations: Author states that instead of existing proposal budget should have placed a cap on the amount a party may receive in cash as a donation
- There should be no anonymity for donors: Donors should not enjoy any anonymity, before tax authorities or the general public. The absence of such anonymity, of course, will bring down the level of contributions from corporate houses and other entities to parties, not such a bad thing
