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16.11.2016
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IF the NDA is genuinely committed to making a bonfire of black money, it should plug the Rs 20,000 loophole in the IT Act and force political parties – the BJP included – to reveal the source of their funding. The IT Act and the Representation of People Act (RPA) 1951 both must be suitably amended to facilitate transparency in funding.

Every year, on Guru Purnima, swayamsevaks line up in front of the Bhagwa Dwaj at their nearest RSS facility. Each one reverentially places a plain envelope at the foot of the flag. This is the guru dakshina – an anonymous offering of cash, anything from a few coins to a few lakhs. The money covers the expenses of the sangh facility, including the allowances of the RSS pracharaks. Prime Minister Narendra Modi, during his long tenure as a pracharak, would have availed of this allowance.

The colour of the money inside the envelope doesn’t matter – it could be black, white or as salmon pink as the new Rs 2,000 note. The spiffy new RSS HQ coming up in Jhandewalan in central Delhi is doubtless funded largely through those well-stuffed envelopes. But given the NDA’s war on black money, shouldn’t the RSS now insist on plastic transactions, or cheques?

While on the subject, shouldn’t political parties do the same? Under existing laws, any donation of Rs 20,000 or less to a political party need not be declared. Section 13A of the Income Tax Act states: “In respect of each such voluntary contribution in excess of twenty thousand rupees, such political party keeps and maintains a record of such contribution and the name and address of the person who has made such contribution”. In other words, if the donation is less than Rs 20,000, it can be anonymous.

The majority of funds raised by political parties is through the sale of coupons, printed and sold by the party in question. The Election Commission and the IT department cannot question the source of funds, because each coupon sale is for less than Rs 20,000. The “cash” garland with which netas are honoured at public meetings, likewise, need not be declared if they are worth less than Rs 20,000. When Bahujan Samaj Party chief Mayawati was hauled up by the apex court in a disproportionate assets case, she explained away her massive income by saying her huge army of followers had contributed a few rupees each!

Political parties are compelled to file income tax returns as of 1996, following a Supreme Court order to that effect. They also have to submit accounts to the EC. After all, donations to political parties enjoy 100 per cent income tax exemption. However, the political establishment appears to be in desperate need of competent chartered accountants. A study by the Association for Democratic Reforms (ADR) found that most parties had failed to submit proper accounts. In many cases, the PAN numbers of contributors were not available, or the party claimed it had paid money to electoral candidates who denied having received it and money received by cheque was not accounted for. Political parties claim this is because they want to protect the privacy of their donors. After all, rival parties may target the donors if their identities are known.

The end result is that political parties have access to enormous wads of unaccounted cash or “black money”. So reluctant are they to reveal the source of their funds that they have defied an explicit order of the Central Information Commission (CIC) to that effect. The matter is now before the apex court. Any other organisation in the country would have been prosecuted, but the CIC in this case was helpless to enforce compliance.

The war on black money cannot be fought on demonetisation alone. If the NDA is genuinely committed to making a bonfire of black money, it should plug the Rs 20,000 loophole in the IT Act and force political parties – the BJP included – to reveal the source of their funding. The IT Act and Representation of People Act (RPA) 1951 both must be suitably amended to facilitate transparency in funding.

Why the secretiveness? If the great Indian public knows how much an Ambani or Adani has contributed to a political party, it will also be aware of the payback, when policies favourable to the aforesaid corporates are instituted by the party in question. It is this conflict of interest that political organisations would like to keep well hidden.

As the PM has acknowledged, demonetisation has caused horrible inconvenience to the public. To honour the sacrifices being made by citizens of India in a laudable cause — cleansing the economy of black money — the least his government can do is to force political parties to come clean.

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