<p>The proposal in the Union budget to allow 100 per cent tax exemption on donations made by companies through trusts to political parties is an admission of the opaqueness of the present election campaign finance system. It is also a small step forward to improve the system and to reduce the generation and deployment of black money in elections. Both the Congress and the BJP have agreed on the usefulness of the proposal, though the Left parties have opposed it and seen it as a move to legitimise the influence of big business in politics. The major parties have noted that the proposal will make the funding of elections more transparent. Major proposals for reform of electoral finance have been ignored by governments but the budget provision, though made in self-interest, has merit in it. <br /><br />Making contributions to political parties is legal but most companies are reluctant to make direct donations. They route their contributions through trusts set up by them. The tax exemption, if availed by companies, will make the contributions above board and clear, though the provision will also help in making them bigger. The tax incentive might draw more money into the political parties’ coffers. But it will not harm the system through creation of unaccounted money. It is well known that campaign expenditure is the mother of all kinds of corruption, vitiating the entire political and government system.<br /><br />Only rich candidates, or those backed by the rich, are in a position to contest elections, because campaigning has become very expensive. The Election Commission’s norms are observed only in violation. When the donor’s name and address are openly written on the suitcase, and he takes responsibility for it, the money remains white and the politics hopefully remains clean. The public would also know who pays whom or whom all.<br /><br />But if money power in elections is to be really reduced, larger reforms are needed. Campaign financing changes should be part of a major electoral reform package. State funding of elections is an obvious solution. It will reduce the role and influence of donors and shift the position of the beneficiary from individual candidates to political parties. There will be a big burden on the exchequer but the advantages will outweigh the costs. Till the time the political establishment</p>
<p>The proposal in the Union budget to allow 100 per cent tax exemption on donations made by companies through trusts to political parties is an admission of the opaqueness of the present election campaign finance system. It is also a small step forward to improve the system and to reduce the generation and deployment of black money in elections. Both the Congress and the BJP have agreed on the usefulness of the proposal, though the Left parties have opposed it and seen it as a move to legitimise the influence of big business in politics. The major parties have noted that the proposal will make the funding of elections more transparent. Major proposals for reform of electoral finance have been ignored by governments but the budget provision, though made in self-interest, has merit in it. <br /><br />Making contributions to political parties is legal but most companies are reluctant to make direct donations. They route their contributions through trusts set up by them. The tax exemption, if availed by companies, will make the contributions above board and clear, though the provision will also help in making them bigger. The tax incentive might draw more money into the political parties’ coffers. But it will not harm the system through creation of unaccounted money. It is well known that campaign expenditure is the mother of all kinds of corruption, vitiating the entire political and government system.<br /><br />Only rich candidates, or those backed by the rich, are in a position to contest elections, because campaigning has become very expensive. The Election Commission’s norms are observed only in violation. When the donor’s name and address are openly written on the suitcase, and he takes responsibility for it, the money remains white and the politics hopefully remains clean. The public would also know who pays whom or whom all.<br /><br />But if money power in elections is to be really reduced, larger reforms are needed. Campaign financing changes should be part of a major electoral reform package. State funding of elections is an obvious solution. It will reduce the role and influence of donors and shift the position of the beneficiary from individual candidates to political parties. There will be a big burden on the exchequer but the advantages will outweigh the costs. Till the time the political establishment</p>
