Given how political parties have resisted attempts at seriously cleaning up election funding over the past few decades, it is unlikely they will agree to the Election Commission’s suggestions which include, among others, restricting the disclosure of names of anonymous donors to just R2,000 from R20,000 right now and asking political parties to have their books audited and to submit audited books to the Election Commission every year. This is critical since the R20,000 limit allows parties, on average, to conceal the identities of around three-fourths of their donors—the amount, according to Association for Democratic Reforms, is as high as 54% for the CPM, 62% for the BSP, 73% for the BJP, 83% for the Congress party and 92% for the NCP. Of course, if the limit is reduced to R2,000, political parties can claim the bulk of donations received are below even this new threshold. Ideally, then, the disclosure limit should be fully done away with given how the bulk of the country already has Aadhaar numbers, so keeping track of donors is relatively simpler thanks to technology.
What is more important, of course, is to fix the gaping loopholes in the law on election spending. While the amount that a candidate can spend has been increased over a period of time, only the naïve will believe candidates restrict their spending to the R70 lakh allowed per constituency right now for the bigger states. What is required is a more realistic level; have this monitored rigorously and, if need be, independently—the Election Commission does not have either the staff or the wherewithal—and automatically disqualify candidates if they breach the limit. The biggest loophole right now is that, while there is a limit on what a candidate can spend, there is no limit for either political parties or friends of candidates. So, for example, while a candidate can spend R65 lakh, a friend can spend another R1 crore and the political party can do double that. Clearly, that’s a loophole that needs to be fixed at the earliest.
The Election Commission’s other suggestion, that tax breaks be limited to political parties that win elections, is not going to find too many takers, but is one that needs to be taken seriously. Under Section 13A of the Income Tax Act, parties are allowed exemptions on income from, for instance, property and capital gains. Given the large number of political parties that could have been set up primarily to avail of tax exemptions, the sooner this is done away with, the better. While most political parties will take their time in agreeing to the suggestions, prime minister Narendra Modi needs to push his party to agree to not just lowering the limit for anonymous donations, but also to end the glaring loopholes on expenditure. After all, if he hopes to end the culture of black money, he can’t do this as long as political funding remains largely unreformed—if political parties keep demanding black money to fund their illicit expenditure, the system simply has to find ways to keep generating it.