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Budget 2017: Will Arun Jaitley's decision to reduce cash funding to political parties make an impact?

Most mediamen have gone gaga about the major reforms introduced in the area of political funding. But a closer look at the provisions makes you wonder if such provisions could be called reform at all. First, the reduction of cash funding from any one source has been reduced from Rs 20,000 to Rs 2,000. Really?

Remember, the operative word is cash, and the unspoken operative phrase is anonymous. Thus instead of showing a donation of Rs 20,000 from just one source, the political party can conveniently say that it was a donation from ten unknown sources. Do bear in mind that Mayawati, the former chief minister of UP had claimed that much of her donations came from Re 1/- contributions.

Unless the source of the Rs 2,000 contribution is known, the ceiling does not matter. It does not matter if the ceiling is Re 1, or Rs 100, or Rs 2,000 or Rs 2 lakh. All that will be required is to change the number of donors when filing returns with the tax authorities.

Representational image. AFP

Representational image. AFP

But then Jaitley is also reported to have said that no transaction of more than Rs 3 lakh will be permitted in cash: “Political parties will be entitled to receive donations by cheque or in the digital mode from their donors.” If this clause is implemented, it could alter the political funding landscape completely.

Take the second provision. In order to make political contributions by cheque a bit more discreet, the Finance Minister has proposed to bring in an amendment to the RBI Act which will enable issuance of electoral bonds. Donors can then purchase such bonds from designated banks, and these bonds can be given to the desired political party. Since the books of the donors will not mention the name of the party, and the books of the party will not mention the name of the donor, secrecy can be maintained about the donors.

The idea is good, but impracticable. Remember that each electoral bond will require a serial number which will have to be entered into the bank registers along with the names of the donors. If such a register does not exist, it could end up with unscrupulous political parties printing bogus electoral bonds (akin to the fake stamp paper racket promoted by Telgi and in which the then deputy chief minister Bhujbal was also allegedly implicated in the truth serum confessions aired on television networks). It could be similar to the fake SGL bonds that were pledged by Harshad Mehta.

If there is a serial number and name against each electoral bond issued, it is only a matter of time before either the ruling party or anyone else with access to the top managers of the bank get the names of the donors and the serial numbers electoral bonds purchased. Yes, the public won’t have access to this information. But savvy individuals and the ruling party can get this information.

The only way electoral reforms can work is by implementing the reported statement of the FM – that cash donations beyond an aggregate of Rs 3 lakh will not be permitted. But till this is made official, there are enough grounds to feel skeptical.

Updated Date: Feb 20, 2017 18:25 PM

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