The Times of India (TOI) reported last week that political parties of India are a safe haven for black money.
“Sure, the government is on an overdrive for ridding the economy of black money and promoting cashless transparent transactions, but the fact is that 70 percent of all cash raised by India’s political parties, especially the BJP and the Congress, comes from unknown donors – in income tax parlance — it is called black money,” the report (August 23) said.
Quoting the information put together by the Association of Democratic Reforms (ADR) — an organisation relentlessly working for greater transparency and accountability in our governance process – the TOI report said that in 2013-14, political parties, in their income tax returns, had declared a total income of Rs 1,519 crore (the BJP had the highest share of Rs 674 crore while Congress came second with a collection of Rs 598 crore)
But income from unknown sources amount to more than 70 percent of their total income. Unknown sources are income declared in the income tax returns but without identifying who the donors are. The unknown sources include sale of coupons, purse money, relief fund, voluntary contributions, contribution from meetings and morchas. In each case, a consolidated figure is mentioned, without putting out the names of individual donors. Needless to say, all such contributions are in cash; the fact is that it is big black money which is being passed off as small individual contributions by masses.
Only those individuals and corporate houses that make their monetary contribution by cheque and declare the same in their respective income tax returns find a mention in the I-T returns of the parties. All those who ply their black money into the coffers of the political parties in cash remain unidentified.
Such illegal contributions come from two sources: First, big and medium business houses which make cash donations and keep it off their respective balance sheets. Second, wealthy individuals who make similar donations in cash. This is clearly in exchange for quid pro quo.
That explains why when more than Rs 2 crore went missing from the headquarters of the BJP in Ashoka Road in Delhi in 2008, the party decided not to file a police complaint. ‘When asked why, party spokespersons said the burglary was being investigated internally.’ How could it explain the source of the money – it was the dilemma.
Bhavdeep Kang, a well-known journalist, spilled the beans when she wrote: “Sources in the BJP office say the bulk of the money (Rs 2 crore) had been deposited by an industrialist – ironically, one closely associated with the Congress – on account of favours rendered to his company in BJP-ruled Chhattisgarh. The theft was detected and a hue and cry was raised by a somewhat naive, if honest, party official. He was told to hold his peace, but too late.”
But then BJP is not the only party that thrives on black money. Congress, which ruled for decades in both the Centre and several states, had made cash transactions, the life-blood of its party organisation. Most other parties which fulminated against the corrupt ways of the Congress followed its lead in institutionalising corruption in their respective party framework.
Under the aegis of the Congress government, Section 13A of the Income Tax Act enacted in 1961 exempted political parties from paying income tax. Political parties were given 100 percent tax exemption from all sources of income. The only condition stipulated in the Act (Section 139 4B) was that the political parties would be required to file income tax returns in a prescribed format every financial year, failing which the exemption would be withdrawn.
Despite such mandatory requirement, all the political parties, both national and regional, refused to file income tax returns for years but continued to enjoy income tax exemptions. This was absolutely illegal, but both the ruling and opposition parties were in cahoots to continue the illegality and the government agencies were either coerced or bribed to hold their peace.
This went on for several years till 1996, when the Supreme Court, responding to a public interest litigation filed by the Common Cause (headed by the indefatigable HD Shourie) gave a clear direction that the political parties failing to file income tax returns would not be covered under the Section 13A of the Income Tax Act.
The parties were then left with no option but to file their I-T returns, but since I-T returns used to be a closely guarded secret in India, that remained confined to the files of the officials who merely acknowledged the receipt of the annual returns. That brought the situation back to square one – parties could sit pretty by making any arbitrary claims, but did not have to account for it.
After the Right to Information Act was passed in 2005, the Association of Democratic Reforms (ADR) sought the copies of the I-T returns of different parties under the same Act. But the income tax department – used to the secretive manner of its functioning over the years – refused to oblige saying that information containing details of commercial activities of political parties were exempt under the RTI Act.
The ADR then moved the Central Information Commission. Most political parties, including the Congress and the BJP but excluding the Communist parties, raised their objections to the ADR appeal before the CIC on the grounds of infringement of privacy. The CIC, however, overruled the objections saying that political parties could not claim special privileges while being very much an integral part of the public life. In its order dated 29 April, 2008, the CIC directed the income tax authorities to provide to the petitioner the details of the tax returns of political parties within six weeks.
This decision was a major setback to the parties. But the greater setback came when the full bench of the CIC, in its order on 3 June, 2013, directed that six parties – Congress, BJP, CPM, CPI, NCP and BSP — be designated as public authorities under the RTI Act. “The presidents, general secretaries of these parties are hereby directed to designate CPIOs and appellate authorities at their headquarters in six weeks. The CPIOs so appointed will respond to the RTI applications extracted in this order in four weeks time,” the bench directed.
The Manmohan Singh government then considered the proposal to either issue an ordinance to nullify the CIC order or to amend the RTI Act itself to the effect that political parties were out of the purview of the RTI Act. But before it could act, the UPA went out of power.
In any case, the national parties had chosen not to comply with the CIC order. Frustrated, RTI activist Subhash Chandra Agrawal and Anil Bairwal of the ADR, the original petitioners to the CIC, moved the Supreme Court. In August 2015, the Narendra Modi government made it clear in its submission to the apex court that it was on the same page with the previous Manmohan Singh regime in opposing the CIC stance. Since then the matter is pending before the highest court of the land.
It is shameful that both Manmohan Singh and Narendra Modi – and their finance ministers P Chidambram and Arun Jatley respectively — made big promises in eradicating the menace of black money and enforced many salutary legal provisions to ensure that wealthy individuals and corporate entities did not get away with their illegitimate income, but when it came to their respective political parties – which are the biggest den of the black money – these national leaders have been stubbornly refusing to come clean.
The Supreme Court must act swiftly and decisively to put an end to this national shame.