Explained: Why the ecosystem of political donations needs greater transparency

By: | Published: August 1, 2018 1:57 AM

Political funding in India has remained doggedly opaque, thanks to lawmakers putting parties’ interests before the interests of the nation—among many, a clean and transparent polity.

The ecosystem of political donations needs greater transparency

Political funding in India has remained doggedly opaque, thanks to lawmakers putting parties’ interests before the interests of the nation—among many, a clean and transparent polity. So, when former law panel chief Justice AP Shah talks about how the non-disclosure clause governing political donations by companies needs to go, he is quite right. Unless a company is forced to reveal how much it donated to which party, a quid pro quo, if there is one, can’t be established. On the flipside, forcing companies to disclose this will make it easy for parties to harass them to match donations to rivals. Also, good policies could be painted as cronyism if a large donor to the ruling party legitimately benefits from the reforms the latter brings. While electoral bonds ensure that the contributions are ‘white’ money, what they don’t do is increase transparency.

Shah also backs caps on corporate political donations. The Finance Act 2017 removed the cap set by the Companies Act. Bringing it back, however, won’t make tackle the current opacity. In fact, capping could mean more corporate donations flow via the anonymous below-`2,000 cash donations route. The law on political donations needs to make the ecosystem manifest and clear. And that certainly doesn’t come about from letting parties receive donations anonymously, whether from companies or from people. To that end, the amendments to the Foreign Contribution (Regulation) Act, that help parties avoid scrutiny, also demand a rethink.

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