Government’s proposed reforms in political funding are “inconsequential” as they will continue to remain opaque while the proposal to limit cash donations at Rs 2,000 is flawed in terms of accountability, disclosure and political will, according to think-tank ADR.
Association for Democratic Reforms (ADR) keeps a close tab on elections as well as related topics, including on finances of political parties.
A day after the government proposed a slew of measures to make political funding more transparent, ADR said complete transparency in the finances of political parties has still not been adopted in the Budget 2017-18.
In a move aimed at promoting transparency in political funding, Finance Minister Arun Jaitley in his Budget speech had announced capping of cash donation from a single source to political parties at Rs 2,000 apart from the proposal to introduce electoral bonds.
“The Budget, while promising transparency and accountability in political funding, does not answer questions on how it would be implemented at the ground level nor has it promised implementation of related reforms proposed by the Election Commission and Law Commission of India,” ADR said in a statement today.
The Budget fails to address the issue of transparency, disclosure and penalties of political parties, it said.
While this is the first Union Budget to raise the issue of transparency in political funding with an attempt to make parties accountable for their funding, ADR said it is unfortunate that complete transparency in the finances of political parties has still not been adopted in the Budget 2017-18.
“The proposed reforms are inconsequential as political funding will continue to remain opaque,” it added.
Further, ADR noted that the proposal to limit cash donations to Rs 2,000 is flawed on three counts — accountability, disclosure and political will.
The Budget does not promise scrutiny of income declared by political parties from various sources and corresponding measures of penalisation without which the reforms will remain incomplete.
“Unless scrutiny of accounts of political parties is taken up by a body approved by CAG or ECI, parties’ declared income is unlikely to reflect their true income,” it said.
The Budget does not propose that details of all donors who donate above Rs 2,000 be made available to IT department or an external body auditing the accounts of political parties, it said.
“Even if donors make donations by cheque/DD or electronic transfer, unless their complete information is available for audit scrutiny, sources of donations below Rs 20,000 to political parties will continue to stay hidden,” it added.
The Budget limits cash donations to political parties from a single anonymous source to 10 per cent of the current Rs 20,000 cap. This in line with a recommendation by the Election Commission.
Political parties were entitled to receive donations in cheque or digital mode even before it was proposed in the Budget and hence had the option of accepting donations in such forms that can be traced to a donor.
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ADR said that while digital mode of payment has been encouraged, other forms of anonymous donations such as sale of coupons, have not been curtailed.
“For complete transparency, apart from digitisation of donations, the Government of India should also take immediate steps to implement other electoral and political reforms proposed by ECI and Law Commission,” it said.
The national and regional parties should lead by example by filing complete and correct statements of donations to the ECI well in time for public scrutiny so as to encourage financial transparency, ADR noted.
They must also provide all information on their finances under Right to Information Act. This will go a long way in strengthening political parties, elections and democracy, it added.
The Representation of the People Act (RPA) stipulates that for a party to claim tax exemption, treasurer of the party has to submit a donation report declaring details of donors who contributed above Rs 20,000 but there is no legal provision where political parties are debarred from disclosing details of donors who donated below Rs 20,000.This only shows a lack of political will, it added.