Electoral funding by cash pegged at 2k

Electoral funding by cash pegged at 2k
Heralding massive reforms in electoral funding, Finance Minister Arun Jaitley on Wednesday said donations to political parties above Rs 2,000 will have to be made either by cheque or digital mode of payment. Jaitley said in his budget speech that the government had accepted the Election Commission's recommendation to reduce the cash donation a political party can receive from Rs 20,000 to Rs 2,000 from any one source, which they need not declare.

The government's move will hit regional parties, which get money in smaller amounts, in Uttar Pradesh and other states as it would be difficult for them to make voluminous entries in their account books of people who donated Rs 2,000 or lesser, a ministry official explained. Funding over Rs 2,000 will have to be accepted by parties by cheque or digital mode.

“Former US President Obama took online donations from people, like $50 from one, $100 from another, and there was no hassle. We must follow the same example,” Jaitley said outside the House, stressing the aim of bringing transparency in poll funding. The finance minister listed another measure in Budget 2017 to cleanse electoral funding, which Prime Minister Narendra Modi has been harping on - purchase of “electoral bonds” from authorised banks against cheque and digital payments. The bonds can be deposited in the designated account of a registered political party within a prescribed time limit from the issuance of the funding instrument.

Finance ministry sources said this has been done to make funding transparent and easier for big donors, who otherwise had to generate cash to give to political parties. The minister told Lok Sabha, “An amendment is proposed to the Reserve Bank of India Act to enable the issuance of electoral bonds in accordance with a scheme that the Government of India would frame in this regard.”

Both the donor and donee political parties can avail existing exemption from payment of Income-Tax only if they fulfill these conditions. “This reform will bring about greater transparency and accountability in political funding, while preventing future generation of black money,” Jaitley stated.

Opposition parties, however, were circumspect on the impact of new measures. Senior JDU MP Sharad Yadav wondered how these measures would check unsourced funding. “The government did not explain how the steps will ensure clean electoral funding”.

Corporate houses, said a senior government source, have been complaining to finance ministry that they avoid making public money paid to particular political parties out of fear of antagonising others.
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