New Delhi

Since declared income by political parties forms only a fraction of the money power floating during elections, the Association of Democratic Reforms (ADR), a non-profit election watchdog, has termed the Rs. 2,000 cap on cash donations proposed in the Union Budget as ‘flawed’.

Terming the proposed reforms as “inconsequential” as political funding will continue to remain opaque, the ADR said in a statement that the proposal to cap cash donations was flawed on three counts – accountability, disclosure and political will.

As regards accountability, the Budget does not promise scrutiny of income declared by political parties from various sources and the corresponding measures of penalisation without which the electoral reforms will remain incomplete, said ADR, which has been pitching for scrutiny of accounts of political parties by a body approved by the Comptroller and Auditor General or the Election Commission.

On disclosure, the Budget does not propose that details of all those who donate above Rs. 2,000 be made available to the income tax department and/or an external body auditing the accounts of political parties.

“Even if the donors make donations by cheque/demand draft or electronic transfer, unless their complete information is available for audit scrutiny, the sources of donations below Rs. 20,000 to political parties will continue to stay hidden,” it added.

ADR said there was lack of political will in disclosing real income, and that political parties were “entitled to receive donations in cheque or digital mode” even before it was proposed in the Union Budget and, hence, the option of accepting donations in only such forms that can be traced to a donor always existed.

Also, the Budget, while promising transparency and accountability in political funding, does not spell out this would be implemented at the ground level.

Electoral bonds

On the proposal to float electoral bonds to be purchased by donors to be redeemed in the account of a registered political party, ADR said while the Budget proposes that these bonds would only be available on issuance of cheques or via digital mode of payments, the Government is yet to frame a scheme in this regard.

”It is hoped that the amendment to the RBI Act and the corresponding scheme of the government would take into account the necessity to abolish anonymous donations and provide details of all donors who opt to donate via electoral bonds,” it added.

ADR said there was nothing new in the proposal that political parties will be required to file their return of income within the prescribed time to enjoy 100 per cent tax exemption. The proviso to Section 13A of the IT Act, 1961, already provides that if the treasurer of a political party or any other person authorised by that party fails to submit a report under Sub-section (3) of Section 29C of the Representation of the People Act (RPA), 1951, for a financial year, “no tax exemption shall be available for that party for such financial year,” it added.

ADR pointed out that according to its analysis, in the past five financial years (FY 2010-11 and 2014-15), BJP defaulted in the submission of its audit report with the Election Commission by an average of 182 days, while Congress defaulted by 166 days on average.

ADR said for complete transparency, apart from digitisation of donations, the Government should also take immediate steps to implement electoral and political reforms proposed by the ECI and the Law Commission.

“The national and regional parties should, ideally, lead by example by filing complete and correct statements of donations to the ECI well in time for public scrutiny, so as to encourage financial transparency,” ADR added.

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