Make funding truly transparent and free of cash for fair polls
The arrival of the election season has once again brought into focus the issue of political funding. There are reports that political parties are preparing to pump in thousands of crores of rupees into the state and Lok Sabha elections over the next six months. Successive Union governments and the Election Commission have failed to prevent parties from spending in multiples of the prescribed limits.
There are three aspects that need to be looked at. First, checking the flow of cash to parties. Second, bringing transparency in funding. And third, getting the parties to follow the prescribed spending limits. In the first term of the Modi government, the then Union finance minister Arun Jaitley introduced electoral bonds with the stated aim of checking the flow of cash and bringing in transparency. The bonds, however, failed on both these counts. Their purchase is shrouded in secrecy. No one except the government—consequently, the party in power—knows the identity of the buyer. As a result, the bulk of the bonds go to the ruling party because buyers avoid the risk of annoying the ruling party by funding the Opposition. As for the cash flow, the government lowered the limit of anonymous cash contribution from Rs 20,000 to Rs 2,000 per donation. But this change failed to slow the cash flow because political parties adjusted to the new reality and started recording all their cash receipts as multiple donations of under Rs 2,000 each.
Another area of concern is the change brought in by the government in the Companies Act to do away with the cap on corporate funding. Earlier, a corporate entity was allowed to donate only up to 7.5 percent of its average profit for three years. The government removed this limit and opened the doors to unlimited funding by companies. The opaque and unlimited funding through bonds has been challenged in the Supreme Court. The petitioners have argued that the scheme gives undue advantage to the ruling party and does not help the cause of transparency. Transparency advocates are keenly watching the outcome of the case and the government may need to tweak the scheme according to the direction of the court. The government would, meanwhile, do well to accept the Election Commission’s proposal seeking an amendment to the Representation of the People Act to cap cash donations at 20 percent of a party’s total donations or at Rs 20 crore, whichever is lower.