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Budget 2017: Reducing cash donation to political parties by individual won't check influx of corrupt money

If Union Finance Minister Arun Jaitley thinks that his move to reduce individual contribution to political parties from Rs 20,000 to Rs 2,000 would check influx of corrupt money into the political system, he may find himself pursuing a chimera.

Long before such provision came into existence, political parties have devised mechanism to bypass any scrutiny of their account by creating list of fictitious donations. For instance in Uttar Pradesh, regional parties are believed to have developed a skill in creating a fictitious list of contributors.

Finance Minister Arun Jaitley tabling the Union Budget for 2017-18 in the Parliament. PTI

Finance Minister Arun Jaitley tabling the Union Budget for 2017-18 in the Parliament. PTI

Insiders admit that most of these parties which have collected ill-gotten money through various commercial deals have created an army of people who create the list of their contributors in lakhs to turn their black money into white. Since political parties have any army of cadre, they can create this list to show as donors in large numbers.

There are several instances of Mayawati claiming to build properties and creating wealth with the help of contribution from her countless supporters. And it would be next to impossible to check the antecedents and financial condition of each contributor. Similarly in West Bengal, Tamil Nadu and Bihar, there are examples of regional parties claiming huge collections from their supporters.

There is little doubt that with Rs 2,000 limitation, the capacity to raise money would be reduced ten times. But it can be compensated by increasing the list of supporters by ten times. It is a simple mathematical calculation which may not be difficult for political ingenuity to overcome.

However, the decision to make it mandatory for parties to file I-T return and allow scrutiny of their account may act as deterrent for parties initially. In Jaitley's speech, he made it clear that the non-compliance of the process would rob political parties of their exemption from the Income Tax. Obviously the regular scrutiny of the account would entail a lot of ground work to cover up ill-gotten wealth by political leaders.

The scheme of allowing the RBI to issue bonds for political funding is quite innovative and would ensure secrecy of the donors. Those who want to contribute to political parties above board can opt for these bonds that can be cashed by registered parties. Apparently these scheme sounds too good for those who believe in transparent political conduct. Given a history of opaque behaviour of parties and their contributors, it seems quite unlikely that the scheme would get the traction it truly deserves.

Updated Date: Feb 01, 2017 13:40 PM

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