Ensuring electoral transparency?
In a bid to burnish its anti-corruption credentials, the NDA government has pushed for wholesale electoral reforms. In his budget speech, Finance Minister Arun Jaitley announced several proposals, which he argued, would induce greater transparency to the process of electoral funding. Nonetheless, as Attorney General Mukul Rohatgi argued in the Supreme Court the other day, the people must not focus on what Prime Minister Narendra Modi or anyone else in his government announces, but the fine print. Change is slow, always has been, and the veil of anonymity that continues to govern political funding in this country remains more or less intact. Delving into the details of these provisions in the Finance Bill, one can ascertain whether they will have a real impact or not. Capping cash donations at Rs 2000 without a similar limit on the number of these transactions or even a detailed disclosure about the donors will do little to enhance transparency. In the history of independent India, most political parties have a displayed a tendency to follow the letter of the law, but not its spirit. In a bid to bypass these constraints, parties will instead start printing out more receipts. Before Jaitley's announcement, all contributions above Rs 20,000, with the names, addresses and PAN numbers of the donors, were to be submitted to the Election Commission. Analysis by the Association of Democratic Reforms, however, show that most parties circumvent this rule by attributing significant portions of their income to contributions less than Rs 20,000, with PAN numbers, addresses and names often missing. In other words, parties will now be inclined to do the same, except under Rs 2,000. Admittedly, the task of masking these donations may become more cumbersome—listing more book entries and probably a higher fee for the accountant—but the cap does little to change the system. Another provision, which requires all political parties to file their income tax returns, also does not entirely change anything considering the existing law requires political parties to file their income tax returns to enjoy tax exemption. However, there are two further provisions of the Finance Bill, which could have a significant bearing on electoral financing.
Jaitley also announced a proposal to amend the Reserve Bank of India Act that would enable approved banks to issue electoral bonds. "Under this scheme, a donor could purchase bonds from authorised banks against cheque and digital payments only. They shall be redeemable only in the designated account of a registered political party. These bonds will be redeemable within the prescribed time limit from issuance of the bond," he said. Going by the government's position, an authorised bank will place itself as a filter to ensure the flow of only "white money" into the electoral bonds. Once again, however, the government leaves the veil of anonymity intact. In an amendment to the Representation of People's Act, which governs elections in India, the government has ensured that electoral bonds are anonymous. Individuals buying bonds to deposit money into the coffers of political parties do not have to reveal their identity. "Every recognised political party will have to notify one bank account in advance to the Election Commission, and these can be redeemed in only that account in a very short time. These bonds will be bearer in character to keep the donor anonymous," Jaitley said. In other words, this becomes another conduit for donating substantial sums of money to political parties that are entirely anonymous. The second significant provision is that parties will be "entitled" to receive any donation if it comes by cheque or digitally. "We needed a new law to mandate that the parties would be 'required' to receive donations by cheque or digitally. The Finance Minister did not propose any such thing," observed noted political scientist, Yogendra Yadav. In fact, bringing political parties under the ambit of the Right to Information Act would have been a real push towards greater transparency. Both the previous government and the current ruling dispensation have argued against this position. Although parties will now record details of which firms or individuals donate by cheque or digitally, these accounts will remain hidden from public view unless the courts intervene. In fact, the Centre has decided to amend the Companies Act and lift the restriction on how much money can they donate to political parties. Companies also do not have to declare which political party they are giving to. In its assessment of these reforms, PRS Legislative, a research firm dedicated to analysing relevant Bills, describes some of the changes initiated. "The amendments to the Finance Bill, 2017 propose to remove: (i) the limit of 7.5% of net profit of the last three financial years, for contributions that a company may make to political parties, (ii) the requirement of a company to disclose the name of the political parties to which a contribution has been made," it said. In other words, the Centre has laid down the red carpet for corporations to funnel massive sums of money into political parties that can now hide behind the veil of anonymity. "The move towards electoral bonds and non-declaration from companies might reduce the black cash problem of Indian politics, but it makes it much easier for American style special interests to pump significant amounts of money into parties without having to declare them," argues a recent editorial in Scroll.in.