JOIN USThe Centre on Thursday said it was open to the idea of completely banning cash donations for elections, but rejected the suggestion of state funding of polls.
“If there is a consensus to bring cash donations to an end, it is a different matter. If somebody has any improvement to suggest, we welcome it as it concerns all of us. We will discuss it in detail in the Finance Bill,” Finance Minister Arun Jaitley said, replying to the debate on the Budget in the Lok Sabha.
Many political parties had suggested a complete ban on cash donations, saying capping them at Rs 2,000 was a flawed idea.
Jaitley, however, said the Rs 2,000-limit on donations in cash was suggested by the Election Commission.
“The number of Rs 2,000 is not given by us (the government). We decided on this number on the recommendation of Election Commission, which suggested to reduce the limit from Rs 20,000 to Rs 2,000 to usher in transparency in political funding,” he said.
In this year's Budget, the government had proposed to cap cash donations for political parties from one source at Rs 2,000. It had also proposed introducing electoral bonds which donors would be able to purchase from authorised banks. They would be redeemable only in the designated account of a political party.
Presenting the Budget, Jaitley had said political parties would be allowed to receive donations by cheque or the digital mode.
Jaitley rejected the idea of State funding of elections suggested by some parties, including Trinamool Congress.
“Your optimism is based on the fact that when State funding starts only State-provided funds will be used in elections and nobody will use private funds in the elections. Your optimism is based on this one belief which is not consistent with Indian reality," he said.
Jaitley said the digital mode of payment was the best way to fund elections and gave the example of former US president Barack Obama to substantiate his argument.
“When American president Barack Obama fought his first election (2008), he had taken only small donations through digital payments,” Jaitley said.
He said issuing electoral bonds would also ensure that only legitimate, tax-paid accounted money comes into the political system. The finance minister said the identity of the donor will be kept secret since the Banking Regulation Act prohibits sharing of details of bank transactions to anyone including the government and the courts.
Defending government's decision to demonetise Rs 500 and Rs 1,000 notes, Jaitley said "cash is the biggest facilitator of crime" even though he agreed that there will be crime even if there is less cash.
He said the cash-to-GDP ratio in India is 12.2% as against 2 to 5% in developed and emerging economies.
Later, Lok Sabha Speaker Sumitra Mahajan adjourned the House to meet again on March 9.