When the President spoke

In his New Year’s address to Governors and Lieutenant Governors on Thursday, President Pranab Mukherjee said that the government’s demonetisation drive could have a deleterious impact on India’s economic growth.  “Demonetisation, while immobilising black money and fighting corruption, may lead to a temporary slowdown of the economy,” Mukherjee said. “We all will have to be extra careful to alleviate the suffering of the poor which might become unavoidable for the expected progress in the long term.” President Mukherjee also alluded to Prime Minister Narendra Modi’s December 31 address to the nation, in which he announced a slew of welfare measures aimed at the poor. “While I appreciate the thrust on the transition from entitlement approach to an entrepreneurial one for poverty alleviation, I am not too sure that the poor can wait that long,” Mukherjee added. Considering the partisan nature of the public debate on demonetisation, especially with five State Assembly elections on the horizon, the President sought to introduce a measure of nuance. The ruling Bharatiya Janata Party continues to hold onto its position that anyone opposing the demonetisation drive supports the hoarding of black money while demonising the use of cash in day-to-day transactions. Unfortunately, the opposition has not stepped up to the plate, failing to comprehend public support for the currency exchange measure in some quarters, and doing an inept job of communicating to the masses the deep distress forced upon the common man. In areas outside metropolitan cities, and especially among migrant workers and small farmers, who make a significant chunk of the workforce, the currency shock has indeed been a bane to their existence. It is unfortunate that the opposition has not measured up to the Prime Minister and his coterie in conveying these concerns. What President Mukherjee did during Thursday’s address is to tell representatives of the Centre in the various states –Governors and Lieutenant Governors—that the poor need urgent assistance “here and now” to overcome the pain caused by demonetisation. As argued in these columns, some of the welfare measures announced by the Prime Minister on New Year’s Eve will bring little succour to those most affected. As the BJP government prepares the annual budget for the coming financial year, it would be on wise on their part to take note of the President’s words and work towards alleviating the suffering brought on by this ill-advised policy measure.        

Modi has done little to assure the people that major reforms will be initiated to stem the flow of black money in politics. His pitch to hold Lok Sabha and Assembly elections simultaneously does little to further the anti-corruption front. Other than this suggestion, Modi just urged political parties to drop their “holier than thou" approach, and to take undefined “steps to free politics of black money”. There seems to be much reluctance on the government’s part to establish a concrete plan of action. Apparently, the public must follow one set of rules, while those who make them abide by another set of rules. Bringing political parties under the ambit of the Right to Information Act, amendments to the particular provision of allowing political parties only to declare the source of contributions received by them over Rs 20,000 and the introduction state funding are some of the measures that could present the way forward. These actions have been discussed in some detail in previous editorials. There are, however, other measures that the Centre could introduce in its bid to stem the flow of black money in politics. First, all political parties must endeavour to end cash donations and move to digital payments. If the neighbourhood vegetable vendor and Kirana store owner are being asked to go digital, so must political parties, starting with the ruling BJP. One the issues of greater scrutiny of party finances, many politicians argue that no further action is required because their books are already subject to audit by a chartered accountant (CA). It’s a weak position to take, primarily because a party can choose a CA, who will certify whatever it wants without any checks. Back in 2014, the Election Commission of India and the Institute of Chartered Accountants of India formulated clear guidelines to monitor accounts set up by political parties. Greater action must be taken to pass new laws that would convert these guidelines into rules to be followed compulsorily, and enforced by a third-party auditor.

Last month, there were reports that the Election Commission of India (EC) would write a letter to the Central Board of Direct Taxes (CBDT), informing its decision to delist 200-odd political parties that have not contested polls since 2005 and existed merely on paper. As part of the recommendations made in a document titled “Proposed Electoral Reforms”, which was published this month on the EC’s website, the poll body argues that these parties are mere conduits for money laundering operations and should not be entitled to tax benefits extended to political parties. The government should amend Section 29A of the Representation of Peoples Act (RPA) to definitively empower the Election Commission to deregister parties that blatantly operate as tax havens. Finally, the government must amend Section125A of the RPA, which deals with the filing of false affidavits by candidates fighting elections. Within 30 days of an election, candidates have to file affidavits disclosing their personal assets and liabilities at the time of nomination and expenditure statements. However, the law does not empower the poll body to impose severe penalties on those who file false or misleading affidavits. Specific amendments to Section 125A would enable the Commission to impose harsh penalties.