Rs 1,000, Rs 500 notes banned: Crackdown on black money spells trouble for political parties in poll bound UP

Lead players in the poll-bound state are re-working their strategies on how to manage the campaign with less money with Rs 500 and Rs 1,000 notes becoming illegal.

PTI November 10, 2016 12:04:40 IST
Rs 1,000, Rs 500 notes banned: Crackdown on black money spells trouble for political parties in poll bound UP

Lucknow: The decision to scrap Rs 500 and Rs 1000 currency notes has come at a time when assembly elections in Uttar Pradesh are due and parties normally keep aside a substantial amount of unaccounted funds for campaigning.

Though the parties are tight-lipped on the issue, the crackdown against black money has left many high and dry as Assembly elections are barely few months away. The role that cash plays in polls can be gauged from the fact that as much as Rs 1,039 crore of the total collections by parties over the past three Lok Sabha polls — 2004, 2009 and 2014 — was made in cash against Rs 1,299.53 crore by cheques.

Rs 1000 Rs 500 notes banned Crackdown on black money spells trouble for political parties in poll bound UP

Representational image. PTI

Association for Democratic Reforms (ADR), which had analysed the I-T returns of political parties, said they declared collecting Rs 2,356 crore during the three parliamentary elections. Of this, 44 percent or Rs 1,039 crore was in cash and the remaining was by cheque and in kind — Rs 1,300 crore by cheque and Rs 17 crore in kind.

While cash donations are declared by political parties in line with the Election Commission (EC) guidelines on transparency, seizures during polls indicate that much of the campaign funding is done through black money.

For instance, around Rs 330 crore was seized by the EC in cash during the last general elections in 2014. Economist SP Tiwari said the government's overdrive to root out black money and usher in an era of transparent transactions will remain meaningless as long as it allows political parties to collect donations in cash.

"Political parties and elections are major sources of black money transactions," Tiwari told PTI.

With the crucial UP Assembly elections knocking at the door, major parties in the state are already in the process of replenishing their coffers with heavy cash contributions as funding high-voltage campaigns has become a costly affair with hi-tech measures being adopted by bigger parties.

Lead players in the poll-bound state are understood to be re-working their strategies on how to manage the campaign with less money with Rs 500 and Rs 1,000 notes becoming illegal tender in one stroke.

"Though all paties will be seriously hamstrung, it is going to be a level playing field for all of us," said a leader, requesting anonymity. An assessment based on income tax filings by parties revealed that during the Lok Sabha elections of 2004, 2009 and 2014, parties collected over Rs 1,000 crore in cash, and the sources of more than 90 per cent of such funds were never
disclosed.

Majority of all funds collected by parties was from unknown sources. It is not surprising therefore that most of these contributions are made in cash, said another leader.

ADR said Assembly elections too see huge collection of cash donations by political parties. "Collectively, during the 71 assembly elections held between 2004 and 2015, political parties declared collecting Rs 2,108 crore in cash (63 per cent of total funds) and Rs 1,245 crore by cheque (37 percent)," it said.

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