Political funding: Bonds will bring clean money after 1-2 elections, says FM Arun Jaitley

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New Delhi | Published: February 4, 2017 5:37:48 AM

Defending his decision to introduce electoral bonds to fund political parties, finance minister Arun Jaitley on Friday said that “it is a step which deserves to be tried”.

If the election commission has any other suggestions, the government is ready to accept them, said FM Arun Jaitley. (PTI)If the election commission has any other suggestions, the government is ready to accept them, said FM Arun Jaitley. (PTI)

Defending his decision to introduce electoral bonds to fund political parties, finance minister Arun Jaitley on Friday said that “it is a step which deserves to be tried”. “I have no doubt that once one or two elections are contested on this particular pattern, we will see a significant amount of clean money getting into democratic elections,” Jaitley said while addressing a post-Budget interaction with industry associations in New Delhi.

Taking cognisance of the growing clamour for political parties to disclose their sources of donations, the National Democratic Alliance government in the Union Budget announced to introduce electoral bonds for making anonymous donations to political parties and capped cash donations at Rs 2,000 from one source from earlier Rs 20,000.

“The Election Commission suggested to reduce cash donation from one source to Rs 2,000 and we accepted that suggestion. If the Election Commission has any other suggestion, we are ready to accept,” said Jaitley.

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The government’s move was appreciated by the representatives of industry bodies Confederation of Indian Industry, Federation of Indian Chambers of Commerce and Industry and Associated Chambers of Commerce and Industry of India in their opening remarks at the start of the interaction.

Under the scheme, which Jaitley said would be introduced soon, electoral bonds can be purchased from notified banks by donors and the banks will sell these bonds against cheque or digital payment only. Political parties will be required to notify one bank account with the Election Commission and will be able to redeem these bonds in those accounts only.

“It will be tax-paid, clean money with which these bonds will be purchased. The donor will know who he has given the money to. In the hands of the recipient, it will be clean money and in the hands of the donor it will be tax-paid money,” said Jaitley, adding that the government’s steps against the shadow economy will continue.

In line with the government’s resolve to move towards a less-cash economy, the finance minister also said the government would like to incentivise and encourage people to give small donations in very large volumes through the digital mode.

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Talking about the issue of disclosure of identity under the current system, Jaitley said that going back to the existing status quo is not worthwhile, as it has not worked and added the government thinks the move is consistent with its stand of ushering in a cleaner economy and getting rid of black money.

Though five states — Uttar Pradesh, Uttarakhand, Punjab, Manipur and Goa — are going to polls and results are to be announced on March 11, it is too short a time period for the introduction of the scheme.

Talking about the fiscal prudence considered while preparing the Budget, the minister said priority was given to spur growth. Since the current government came into power in May 2014, fiscal deficit has come down to 3.2% of the gross domestic product (in FY18) from 4.6%.

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