Centre should come clean on poll funding

A lastminute amendment removing the cap on companies making donations to political parties is causing alarm

One of the most significant features of Union budget 2017 was the intention to increase transparency in electoral funding. When it was presented last month, it seemed like a good beginning towards cleansing politics of money power. At that time, the finance minister had acknowledged that a transparent method of funding political parties is vital to the system of free and fair elections. He said that political parties continue to receive most of their funds through anonymous donations which are shown in cash. He categorically stated: “An effort, therefore, is required to be made to cleanse the system of political funding in India.”

The most significant proposal was to issue electoral bonds which the donors could purchase from authorised banks. This will stop cash payments which were subject to abuse. Till now, all donations above ₹20,000 are disclosed by the political parties to the Election Commission.

Questions were raised on whether donation through bonds would be disclosed to the Election Commission as well. Under section 182 of the Companies Act, no political donation can be made unless the board of directors passes a resolution authorising such a payment.

Today what has raised alarm is a lastminute amendment in the Finance Bill made quietly, which removes the cap of 7.5% of average three years profit that a company can donate to a political party. Experts are questioning this move, especially when the identity of the recipient will be kept a secret.

The finance minister, in his reply to a Rajya Sabha debate, assured the house that all the concerns will be addressed in the Electoral Bonds Scheme that is being formulated.

The government putting the transparency of political funding high on its agenda is most welcome. But its own actions must be fully transparent, too. The ideal solution would be to set up a National Electoral Fund to which all donors can openly contribute without expressing any preference for any political party. This will also address the donors’ concern for secrecy.

Once public funding of political parties is ensured, private donations must be totally banned.

And since public funds will be involved, there must be an annual audit by the Comptroller and auditor General of India or an auditor approved by it. This will be the most decisive action electoral reform that the country needs.