Plug systemic lacunae to clean up political funding

Black money gets its life breath from the depraved electoral system which thrives on it. It is natural for political parties to mobilise funds which come from donations but neither the donors nor the recipients want the world to know about it. This hush-hush affair has been polluting the Indian polity beyond measure.

The Union government has taken a bold and commendable step to limit the role of cash in the political arena by seeking to amend the Representation of People Act, 1951, to make it mandatory for political parties to divulge the identity of the donor if the donation is above Rs 2,000.

The Election Commission of India (ECI) often laments that over 85% of total donations made to political parties are from unknown sources. However, it is not able to act in the absence of any such law as section 29 C of the RP Act mandates political parties to disclose the names and addresses of donors only when the amount exceeds Rs 20,000. It does debar from making such declarations for donations below this amount but no parties do it.

According to data released by the Association of Democratic reforms, in financial years 2013-14 and 2014-15, the BJP received Rs 673.81 crore and Rs 970.41 crore, respectively, but only Rs 170.86 crore and Rs 437.35 crore, respectively, were from known sources.

Similarly, the Congress got Rs 598.06 crore and Rs 593.31 crore in the same period but only Rs 59.98 crore and Rs 141.46 crore were from named sources. The BSP did not declare any sources though it got Rs 66.91 crore and Rs 111.95 crore in the period and claimed that not a single donation exceeded Rs 20,000. This is true of all other parties.

Obviously, lies are being dished out with impunity. It is heartening that Finance Minister Arun Jaitley has announced that the Reserve Bank of India Act is proposed to be amended to enable the issuance of electoral bonds by the RBI. A donor can buy bonds from an authorised bank through cheque and deposit them in the registered bank account of any political party which will be redeemable within a stipulated period. It is not clear at this stage how the anonymity of the donor will be protected as the corporate sector wants confidentiality.

The present system has many lacunae which need to be plugged. Though a ceiling has been fixed for the expenditure by candidates in elections, there is no such ceiling on expenses by the parties which spend unlimited money on their candidates. Besides, candidates make false declarations in their affidavits.

Chief Election Commissioner Nasim Zaidi has suggested enhancing the punishment — currently six months — to two years in jail. If they are convicted for two years, they will be disqualified from the membership of the House and would not be able to contest either. However, the law laid down in this regard by the Supreme Court is violated flagrantly. There are instances from UP and Maharashtra where MLAs were not disqualified despite a conviction of over two years in jail as the concerned Assemblies did not notify their seats as vacant and they completed their jail terms without losing their membership.

The ECI has also recommended to the Centre to make distribution of money among voters a cognizable offence so that offenders are arrested immediately and obtaining bail is not easy. It has requested the government to take urgent steps to designate malpractices as particular offences and has even suggested to issue an ordinance to enforce it without delay.

The question is whether reducing the limit of cash donation would mean the end of the role of money power. It is not easy as political parties have been dividing donations of crores into multiples of amounts less than Rs 20,000. Now, it may be divided into fractions of less than Rs 2,000. So, the Law Commission, in its 2555th Report (Electoral Reforms) in March 2015, suggested to amend the RP Act and add a new section 77A to require candidates or their election agents to maintain an account and disclose the particulars like names, addresses, and PAN of donors and the amounts contributed, and for political parties to pay from the date of notification of elections by crossed account payee cheque or draft or bank transfer.

State funding of polls
Many people feel that the state funding of elections would contain the menace of money power to a considerable extent.

As far back as 1972, the joint Parliamentary Committee on Amendments to Election Laws recommended that the state assume the burden of legitimate election expenses of candidates and political parties. Subsequently, Tarkunde Committee (1978) suggested partial funding by the state, while Dinesh Goswami Committee (1990) favoured state funding in kind.

Indrajeet Gupta Committee (1998) recommended state subvention to political parties so as to establish such conditions where even parties with meager financial resources are able to compete with those having stronger financial bases. The law Commission, in its 170th Report (1999), said that it was desirable that state funding be introduced but with the requisite precondition that political parties are barred from raising funds from sources.

The Commission to review the Working of the Constitution (2002), headed by Justice N Venkatachaliah, said that any system of state funding of elections bears a close nexus to the regulation of working of political parties by law and to the creation of a foolproof mechanism under law with a view to implementing the financial limits strictly. So, he favoured deferring proposals for state funding till these regulatory mechanisms were put firmly in place.

However, the Second Administrative Reforms Commission (2007) was of the view that a system of partial state funding should be introduced to reduce the scope of illegitimate and unnecessary funding of expenditure for elections.

Curbing electoral malpractices is the call of the hour. It is for the first time that the government has openly admitted that black money is a threat to the purity of elections.