Unless politics is funded by clean money and parties, in turn, pick clean candidates, the system will remain hostage to corrupt elements in society

Although India is the largest democracy in the world and has over 815 million individuals on its electoral rolls, it is way behind other democracies when it comes to regulation of political parties and transparency in the funding of political parties and election spending. As a result, while one can see democracy at work from the village to the national level, one can also see that vulgar impact that dirty money is having on the working of political parties and on the electoral system. Some years ago, the Association for Democratic Rights (ADR) had estimated that 70 per cent of the funds flowing into political parties came via cash donations from unknown sources.

Further, notwithstanding the frugal limits set by the Election Commission on election spending, candidates in the Lok Sabha and state assembly elections are known to routinely flout these directions. Until 1974, the limit set by the Election Commission for campaign spending in a Lok Sabha constituency in the big states was Rs  1.5 lakhs. 

However, we were told that all serious contenders in the fray spent around Rs  20 lakhs. Later, this limit was enhanced to Rs 4.5 lakhs. Currently, the legal limit for election spending in a Lok Sabha constituency in the larger states is a fairly reasonable Rs  70 lakhs — more than what an “average” aspirant can muster to give a good fight — but successful MPs tell us that their election cost them Rs  5 to Rs  10 crore! 

In other words, electoral spending has completely spiraled out of control and is now beyond the reach of ordinary citizens. Needless to say, unless politics is funded by clean money and political parties, in turn, pick “clean” candidates and provide them financial support, the system will remain hostage to the most corrupt elements in society and make good governance an unattainable dream. 

The absence of transparency and accountability in the working and funding of political parties has been commented upon by the judiciary and various institutions over the years, but no one at the top has pondered over these issues and suggested corrective measures. Prime Minister Narendra Modi has been pressing for electoral reforms for some time now to bring down election spending. He has suggested that we restore the system of simultaneous elections to the Lok Sabha and the State Assemblies. Another small but important step taken by his government in this regard is the introduction of electoral bonds to fund political parties. 

The electoral bond scheme announced by the government this month may not be the panacea for all ills dogging the political/electoral system, but it's a beginning. The Interest-free electoral bonds can be purchased from State Bank of India for 10 days in the months of January, April, July, and October. They are available in various denominations including Rs  10 lakh and Rs  1 crore. Finance Minister Arun Jaitley announced this scheme during his budget speech last February. A donor can buy these bonds and give it to registered political parties. The parties can redeem them through their designated bank accounts and the identity of the donor is protected. 

Alongside this measure, the government has taken a few more steps to cleanse political funding. It has banned cash donations of over Rs  2,000 to political parties (the earlier limit was Rs  20,000 and was the source of huge inflow of black money into political parties) and also amended the law to ensure that companies are not required to disclose the names of the parties to which they make donations.

Explaining the scheme of electoral bonds, Jaitley has said that all such bonds can be encashed in a pre-declared account of a political party and all parties have to declare the amount of donations received through such bonds. “As against a total non-transparency in the present system of cash donations where the donor, the donee, the quantum of donations and the nature of expenditure are all undisclosed, some element of transparency would be introduced” in as much as all donors declare the amount of bonds they purchased and all parties declare the quantum of bonds they received. However, how much each donor has given to a political party would be known only to the donor. Defending this amount of secrecy that is built into this scheme, the Finance Minister says this is necessary because once this disclosure is made, past experience has shown that donors do not find the scheme attractive. It is a substantial advance on the present system of substantial cash donations which involves “total unclean money”, he added.

 The minister has also promised that the government will consider further steps to cleanse political funding in the country.

(The writer is Chairman, Prasar Bharati)

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