Poll funding: Taking a few steps backwards

If the provisions (amendments) in the Finance Bill 2017 come into effect, instead of moving forward to bring about electoral reforms, the government would certainly be moving a few steps backwards. In his several addresses to the nation, Prime Minister Narendra Modi reiterated his commitment to bringing about reforms in elections, cleaning politics and increasing transparency in political funding. But the proposed amendment in the Finance Bill regarding political funding can neither bring about transparency in political funding nor in any way help in putting a check on election expenses or curb the role of black money in elections. If there is anything, the proposed amendment if finally approved, only facilitates in building a much more close association between political parties and business houses, an arrangement popularly referred to as crony capitalism. Will this in any way contribute to bringing about reforms in the electoral process?

One does not need any expert to analyse this, even an ordinary person may be able to say if the proposed amendment will help political parties in generating unaccounted money much easily or if this will bring about transparency in election funding on which the government has showed its commitment on several occasions.

The existing law, under which political parties could receive donations of less than Rs 20,000 in cash without making any disclosures about such donations, has attracted criticism in the past. The existing law also prescribes that any donation to political parties over and above Rs 20,000 can only be made by cheque and political parties are required to keep a record of such donations and disclose details of such donations. Under the present law, business houses and corporates are allowed to give donations to political parties only up to 7.5 per cent of their average net profit of the past three years. While it is lawful to give donations to political parties, in order to prevent building a close nexus between political parties, business houses and companies, the existing law prescribes an upper ceiling on how much money a business house or company can donate to a political party. While both business houses and political parties perform equally important but distinctly different functions, there should not be undue influence or control of business houses on any political party.

But the proposed amendment in the Finance Bill (if passed) will only help in building a close nexus between business houses and political parties, to the extent of business houses virtually owning political parties. The proposed changes in donations to political parties under the new “electoral bonds” makes a mockery of the governments commitment to bring about transparency in election funding. Under the proposed Finance Bill 2017, the upper limit of how much companies can donate to a political party have been removed, the parties could donate as much as they can, even all its profits, and no rule could prevent parties from doing that. Also, such donations could be kept anonymous, neither is a political party required to share any details of such donations nor the companies/business houses are required to share details of any such donation. So practically, business houses could even own the political party by way of giving all its profit to the political party and virtually putting all members of the party on its payrolls. While concerns have been raised in the past about the growing culture of crony capitalism, the proposed amendment to the Finance Bill 2017 will only lead to facilitating the growth of such a culture. The whole idea of transparency in political funding will fall apart.

There have always been concerns about misuse of existing provisions by political parties on accepting donations below Rs 20,000 in cash without making any disclosure. The proposed amendment to bringing down the amount of donations, which political parties could receive in cash from Rs 20,000 to Rs 2,000, is seen as an important step in bringing about transparency in political funding, but even this seems to be merely lip service.

Earlier, if anyone needed to make donation of Rs 20,000 to a political party, it could have been done in one go. But under the changed law, for giving the same amount of donation in cash, the company may have to do this 10 times. While there may be more entries required (not even that as parties are not required to make any disclosure), but it hardly helps in either putting a check on the amount of donation or process of donation, or even in transparency in political funding. This can in no way help in putting a check on the use of black money in elections.

When political parties were required to at least keep a record and disclose the amount of donations and various details about such donations, we were able to get at least some information, though it was heavily under-reported, but still we had some assessment and there was some check on political parties. Political parties were required as per law to disclose such donations, but the proposed amendment makes political parties immune from that. The information cannot be obtained under the Right to Information Act as this does not apply to political parties.

The new amendment to reduce the amount of cash donations is still a welcome step, but it is still unclear what prevented the government from putting a complete ban on cash donation for political parties rather than only reducing the limit of cash donations.

This will only create an initial buzz, but sooner than later we will realise that it hardly helped in bringing about the desired impact.

But one fails to understand how empowering political parties under law of not being required to make any disclosure of the donations which they received could help in making funding more transparent.