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Country longitude: new ways of political funding

Context
The dates of general elections in the country have not been announced but political parties have started preparations for the elections. Before the elections, the parties are not only going to use new methods of communicating with the public, but are directly requesting the public to raise the fund. Bharatiya Janata Party and Aam Aadmi Party have started the campaign to raise money by communicating with the public directly through social media. The BJP has appealed to activists, supporters and beneficiaries to donate money on Narendra Modi’s app. At the same time, the Congress has started ‘Door to Door’ contact campaign in which he is also demanding election from the people along with the election fund. So regional parties are not behind this exercise.
How did the political calendar begin?
  • About 40 years ago, all political parties were given receipt books for the workers, whom they used to collect from their homes. At that time, the money that was found in small amount was important.
  • Later, there were times when those who funded, thought that if we win the candidates of these parties on our own, then why should we not win the elections by ourselves? And from the beginning, the advent of people in money started in politics.
  • Now millions of big corporate political parties donate millions of rupees and then try to run the government with a remote, which has become quite common in today’s era.
  • At that time there was not even much awareness about the donation and there were not many questions. But the funding of elections and the internal structure of political parties has always been an issue. There were intellectual and academic debates on these, but in addition to revealing superficial concerns, the parties never paid more attention to it. Even today, he gives attention only to the pressures of public opinion.
  • The change gradually came and the pressure was made on the parties. The Supreme Court and the Election Commission also played a role in that they constantly show their accountability towards people with transparent, democratic and funding.
  • Now we are seeing a new round in the treasure. It can be said that there is crowd funding in politics.
  • The question is: the money which comes in the election of thousands of crores of rupees, and the money that comes out of it, is a kind of corruption of Gangotri. It is not possible to put an effective ban on it in our present system.
Whose political party can donate?
  • According to section 29 B of the Representation of People Act, any political party in India can donate to everybody, that is, they can donate from personal and corporate.
  • Political parties can also donate to foreign nationals. They can not donate only with the government company or the foreign company. Parties can not take donations if foreign companies are present in India.
  • According to Section 3 and 4 of the Foreign Exchange Act, 1976, Indian political parties can not donate to foreign companies and companies located in India, which are operating by foreign companies.
Cash limit
  • There are different types of provisions about how companies can pay for political parties.
  • For example, a company less than three years can not give political donations and according to Section 293A of the Companies Act, any company can give the amount up to five percent of its annual profit as a donation.
  • On the other hand, there is no limit to funding for political parties. According to Section 13A of Income Tax Law, political parties are exempted from income tax.
The vulnerabilities of India’s political finance system
Today, India’s political finance system is suffering from three major weaknesses.
  1. A steady stream of documentless uncontrolled cash to political parties
  2.  

  3. There is virtually no transparency in respect to political contributions. For example, we are unaware of the identification of both the donor and the receiver.
  4.  

  5. Political parties are not subject to any independent audit, making their designated accounts imaginary or unrealistic and ridiculous.
  • It has also been seen that 75 percent of the funds of political parties are not known. Trying to cover crores of rupees by showing a small donation. Need to keep an eye on this.
  • After the Prevention of the Election Commission, in 2010, the Expenditure Monitoring Division was created in the Election Commission, where the senior director of the Election Commission was made the Director General.
  • It was said that the role of money expenditure in elections will be monitored.
  • Earlier, for two weeks or three weeks of election, an officer of the revenue department was called as an Expenditure Observer and he would go on giving his report by observing it in three weeks and no follow up was done.
What does the government want to do against this backdrop ?
  • According to the provisions, it is possible to find out its source with a donkey, but due to it, it is practically difficult.
  • It is not necessary to tell the Election Commission about the donations of less than Rs 20 thousand rupees. It has reduced the amount of cash donation to political parties.
  • Broadly, it has been seen that political parties tell the maximum amount of their funds received from unknown sources.
  • It is also possible that the party can get a donation in the backdate from many people within the limit of Rs 20,000 rupees. Then, by placing a part, it can tell black money white.
  • However, if the Election Commission shows stubbornness, such a disturbance of political parties can come out and it can also damage the public image of the party special.
What is Electoral Bond ?
  • If we talk about Bond, then it is a debt security. The mention of election bond was first made in the General Budget of 2017.
  • In fact, it was said that the RBI will issue a bond and the person who wants to donate to political parties will buy bonds from the bank first and then whatever political party they want to donate, can give bond as a donation is.
  • The political parties will sell the sale of these election bonds to the authorized bank and during the validity period, the amount will be deposited in proportion to the purchase of bonds in the bank accounts of political parties.
  • Significantly, the election bond will be like a promissory note on which no interest will be given. It is worth mentioning that the election bond can be purchased only through check or e-payment.
Electronic Bond: Major Facts
  • The objective of the election bond is to stop the movement of cash and secret funds given to political parties. When the amount of cash is given in cash, then there is no information about the source of wealth, about the donor and where the money was spent. Therefore, transparency in the present system will come from election bond.
  • Earlier, in the last year’s budget, the government had reduced the limit of cash limit from 20 thousand to only 2 thousand rupees.
  • In order to fund political parties, interest-free bonds can be bought from State Bank of India. Electoral bonds will be available for a thousand rupees, ten thousand rupees, one lakh rupees, one million rupees and one crore rupees.
  • These bonds will be sold for four months of January-January, April, July and October for 10 days. During this time they can be bought. Bond purchase facility will be available for 30 days in the year of general election.
  • Donors will be able to donate these bonds to any party by buying from SBI branches. Donors can donate to the same political party registered with the Election Commission, the parties who have secured at least 1 percent of total votes in the last elections.
  • The amount of money received from Bond will be credited to the authorized bank account of the concerned party. The validity of the electoral bond will be only 15 days. The purpose behind keeping Bond valid for a short period is to prevent the misuse of it and simultaneously curb the use of black money in providing finance to political parties.
  • Through this, transparency can be ensured. On one hand, the bank will be aware of who bought an election bond and secondly, the buyer of the bond should also mention it in his balance sheet.
Team Vision Input
What can be a transparent system in the political parties?
  • After a boundary, a transparent process can be adopted in a system like India, but the fundamental thing is that the parties themselves do not want them to be transparent.
  • Many such cases have been seen in Parliament also. For example, the case of criminalization of politics, the issue of exposing the criminal background of people who have won the election. Even in implementing such a basic process, all parties in the Parliament have obstructed. Eventually the matter came through the Supreme Court and the Election Commission.
  • As long as there is no pressure and will power within the political parties, it is not possible to do anything until we make ourselves accountable and transparent.
  • The other problem which is as big as that of the donor and taker to the large amount in the form of a donation Transparency is difficult to come by the time the takers and the giver do not want that the system is okay.
  • Instead of changing the economy of the number two (black money) we will complete clean elections, it would be impractical to expect.
  • There should be a limit for election expenses. Significantly, the Election Commission has fixed the limit for the expenses incurred during the election campaign for every candidate for the Lok Sabha and Assembly elections, but it is often seen that the candidates are spending outside this limit. It is not easy for the Election Commission to take action against them, because it is difficult to prove theoretically.
  • We often cry out that politics is a bog in which elections can be won only by the use of black money, although the truth is that none of us wants to spend part of our legitimate income on politics.
  • It is a bitter truth that ‘political donation’ has become an important means of making white money white. Therefore, we need to do something so that we can create an atmosphere of clean political donations and this can be done by the government through funding of elections.
Forward path
  • Actually, the concept of the government funded election is determined that if the government allotments to the parties once the private funding will be stopped in the elections.
  • Money flowing like water will be curbed. Significantly, we have already made laws that during the elections talk about curbing the excess of the requirement, but we are not successful in it.
  • Therefore, the first attempt should be made to curb the illegal money received by the political parties. If the parties do not have the funds to spend, then the money flowing in the elections will be automatically closed.
  • Actually financing the elections is more important than financing political parties. We have to understand that there is a difference in funding of elections and funding of parties.
  • After every general election, political parties should be paid on the basis of the votes they receive and any other donation should be fully banned if any kind of donations. This step would be more practical.
Conclusion
Nearly 1900 parties have been registered before the Election Commission in India. Normally, it seems that India is the world’s largest democracy, so it is good to have such a number of political parties, but as soon as we look at the fact that there are hundreds of such parties that have never contested elections. So it becomes clear that something is wrong.
Actually, the registered political parties of the country get exemption from income tax under section 13A of the Income Tax Act, 1961. There is no fixed limit for donation or donation for them. They have to present only the details of the transaction to the Election Commission, which is 20 thousand or more, no less than the amount of money they have to pay. Taking advantage of this, all political parties have been accused of whitening black money and spending unaccounted black money in elections. This is the reason that hundreds of groups do not fight elections but are registered as political parties.
Any party that comes to power by spending unaccounted money in elections can never be a part of promoting public welfare policies, hence it is a need of the hour to overcome the financial irregularities of political parties. However, it can not be ruled out that whatever efforts have been made in this regard have proved to be inadequate.
Updated: January 3, 2019 — 5:58 am

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