Polity

KEY POINTS

·         A transparent method of funding political parties is vital to the system of free and fair elections.

·         Despite the existence of Representation of the People Act (RPA), the IT Act, the Companies Act and the Foreign Contribution (Regulation) Act (FCRA), transparency in political funding in India is abysmal.

Issues in Electoral funding

·         Electoral funding in India lacks transparency because of a fewer disclosure requirements.

·         Political parties have to declare the source and the amount donated for all contributions above 20,000.

·         Black Money – unaccounted money largely entered into elections through this funding forum due to lack of stringent laws against funding.

·         Electoral funding to political parties were mostly done in favour for a wealthy returns ranging from tax exemption, subsidized raw material and further their business strategies by twisting the law and pumping in money.

·         In that case, the provision approved by GOI reads, companies no longer need to declare the names of the parties to which they have donated, stands as a route for corruption.

Electoral bonds as alternatives

·         Electoral bonds are essentially bearer bonds that ensure donor anonymity.

·         While the identity of the donor is captured, it is not revealed to the party or public.

·         As for political parties, they no longer need to reveal the donor’s name for contributions above 20,000, provided these are in the form of electoral bonds.

·         Electoral bonds have the potential to favour ruling party heavily.

·         E.g. Banks have to report RBI about the electoral bond transactions which, in turn, are subject to the Central government’s will to know.

·         So, only the ruling party can ascertain which companies donated to the Opposition parties. It might be a serious threat to democracy.

·         Thus, electoral bonds fortified the already opaque funding process.

Solution

·         The best alternative worth exploring will be a National Electoral Fund to which all donors can contribute without expressing any preference for any political party.

·         The funds could then be allocated to all registered political parties in proportion to the votes they obtained.

·         Not only would this protect the identity of donors, it would also weed out black money from political funding.

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

·         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.

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The recently introduced electoral bonds which allows individuals and corporates to donate money to the political parties anonymously can compromise the already poor transparency in political funding.

·        With the introduction of electoral bonds, the Representation of People Act, 1951 is also amended to allow anonymous donations to political parties through electoral bonds. In tandem with this, the Companies Act has also been amended to get rid of the maximum limit on donation by the corporates. This will make it easier for corporates to donate large sums to parties in the expectation of return on that investment in terms of political favors.

·        The electoral bond system is skewed in favor of the incumbent political party. If the independence of RBI is future curtailed, the government can peek into who the anonymous donors to the opposing parties are. This can be a way to harassing and sabotaging the corporate that favor the competitors.

The issue of political funding is at the core of a democracy. With several amendment to RP Act, FCRA, Companies Act, IT Act to allow easier funding through domestic and foreign sources, the electoral bonds seem to be retrograde act. The justification given for their introduction is to prevent the donor from harassment as the electoral bond allow anonymity but keeping in view the shortcoming, alternatives need to be thought of.