The time is ripe to push for reforms to curb the flow of black money in politics. We have the Government’s support and the EC is ready with legislative measures needed to end the menace. What are we waiting for?

A detailed analysis of the sources of funding of political parties in India between 2004-2005 and 2014-2015 by the Association of Democratic Rights (ADR) and National Election Watch has thrown up sufficient evidence to strengthen the argument that there is need for stricter laws to inject transparency into funding of political parties and to make them far more accountable to the tax authorities and the Election Commission of India.

The ADR analysis has come up with some startling findings. The total income of national and State parties in the country during this period was Rs11,367 crore, but as much as Rs7,833 crore came from “unknown sources”!  Among the national parties, the Indian National Congress, which headed the coalition that ruled the country for a decade from 2004, collected as much as Rs3,323 from unknown sources, constituting 83 per cent of its total income.

The Bharatiya Janata Party (BJP) on the other hand earned Rs2,126 crore, which made up for 65 per cent of its total income, from anonymous sources. The donations received by the Communist Party of India (Marxist) CPI(M) and even the Aam Aadmi Party (AAP) was way above 50 per cent of the funds collected. Among regional parties, the Samajwadi Party in Uttar Pradesh did very well for itself, collecting Rs766 crore during this period, but the bigger worry was that close to 94 per cent of this money came from unknown sources.

The analysis has thrown up several more disturbing facts: The income of national parties from unknown sources increased by 313 per cent from Rs274 crore in 2004-2005 to Rs1,131 crore in 2014-2015. During the same period, the income of regional parties from unknown sources shot up by 652 per cent from Rs37 crore to Rs281 crore.

Even more worrying is the fact that the Bahujan Samaj Party (BSP), which raised such a hue and cry over demonetisation, “was the only party to consistently declare” that it received no donations above Rs20,000. As a result, 100 per cent of the donations which came to the party during this period, came from “unknown sources”, although the party’s total income jumped from five crore rupees to Rs112 crore since 2004. This constituted a rise of 2057 per cent in the party’s income and all of it from anonymous donors!

These conclusions are indeed damning and provide proof, if proof were needed, to show that political funding is the fountain head of corruption and generation of black money in the country and that the problem is now getting out of hand. Prime Minister, Narendra Modi’s drive against corruption and black money can get an impetus only if this issue is addressed honestly by the political establishment.

Prime Minister Modi has indicated more than once that he is willing to take the bull by the horns, by stating publicly that he wants transparency in political funding. The Election Commission has flagged this issue and argued for tougher legal measures to regulate the funds of political parties.

Chief Election Commissioner Nasim Zaidi has suggested amendments to the election law to put an end to anonymous donations. The problem exists because currently, the law permits a political party to protect the identity of any person who donates less than Rs20,000 to the party’s coffers. Since parties are not required to disclose the names of such donors, most of them have exploited this loophole in the law.

The gross misuse of this provision can be seen in the humongous amounts of cash deposited by parties in their bank accounts by just stating that these funds are the aggregation of small donations from party supporters. The accounts of political parties for the years 2013-2014 and 2014-2015 which have been analysed by ADR, show that as much as 71 per cent of funds collected by political parties in India came from undisclosed sources.

Another indicator is that donors generally tend to become more generous when a party is in power. For example, the total funds collected by the BJP in 2013-2014 — the period during which the political winds began blowing in its favour — was Rs674 crore or 44 per cent of the funds collected by political parties. This rose to Rs970 crore or 52 per cent of the total in 2014-2015 when it was well entrenched in power. The Congress on the other hand collected Rs598 crore in 2013-2014 (39 per cent) and Rs593 crore (32 per cent) in 2014-2015, the year in which its Lok Sabha tally slumped to 44.

Since as much as 71 per cent of the funds fall in the anonymous category, it is reasonable to presume that most of this is generally “black” money, which has been earned illicitly by the donors. These are payments made by businessmen and industrialists and contractors to their favourite political parties and it is fair to presume that this is given either in the hope of securing Government contracts or as an expression of gratitude for contracts secured.

This is indeed the fountainhead of political corruption and must be addressed if the political system needs to be cleansed.  The Election Commission has suggested that the upper limit for anonymous donations be slashed to Rs2,000. Even this may provide an escape route for parties, but this suggestion can be considered to begin with. Side by side, as Zaidi has suggested, there is need for stricter norms in regard to maintenance of accounts by political parties and audit of accounts.      

On December 31 last, the Prime Minister said political parties must respect the feelings of honest citizens and understand their anger. They must shun the “holier than thou” attitude and work towards transparency in political funding. Earlier, at a political rally in Kanpur, Modi asked the  Election Commission to pursue the issue and said whatever the outcome, the Government would take this forward.

The Election Commission’s proposals have been received well by political parties. The Congress announced that it supported any step which increased accountability of political parties. Taken together, this should be a win-win situation because for the first time the country has a Prime Minister who is aggressively pushing for reforms to curb flow of black money into politics and this has been endorsed by all the major political parties.

Further, the Election Commission is ready with legislative measures needed to end the menace and this initiative has the fullest backing of the Law Commission and judiciary. Therefore, this is a propitious moment to strike. What are we waiting for?

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