Sunday , 23 September 2018

Need For Transparency In Political Funding


In her ‘Atlas Shrugged’ Ayn Rand says “Money is the scourge of the men who attempt to reverse the law of causality – the men who seek to replace the mind by seizing the product of the mind.”

Earlier this week, I saw the two biggest political parties, the BJP and the Congress, finally file their financials with the Election Commission for the year 2016-17 (four months behind schedule). By the way, in these days of ‘digitisation’ which both these parties swear by, they need seven months to publish their financials while in our corporate world, we take just a month. And even after the seven months, our ‘role models’ for ‘ideologies’ take four months ‘extra time’ to ‘shape’ their accounts suitably for the citizens and voters to read.

Accounts of parties

I went through the two accounts for 2016-17. Whilst I found both, the Contributions Received Statement and the Financials of the BJP (4 months late), I found only the Financials from the Congress (hopefully still ‘shaping’ up the Contributions even after 11 months). I decided to take a look at the numbers of the parties we reposed our faith and money in – purely as a lay voter. But before I go to the Financials, let me explain here that political parties are required under the Representation of People’s Act (the RoPA) to declare donations (which come to them tax-free), donations above Rs 20,000 (now Rs 2,000) each in a year before the 30th of October next year. If they don’t, they have to forgo the tax reliefs.

The BJP and the Congress did not file their reports by October 30. It has to be seen whether they lose those tax exemptions (till now they haven’t ever). Moreover, The Institute of Chartered Accountants of India mandates, “Political parties should maintain their accounts and present them in the Accrual Basis” (NOT Cash Basis). But these guidelines perhaps apply to everybody excepting the BJP, which proudly proclaims in its Financials: “SYSTEM OF ACCOUNTING: All Incomes and Expenses have been accounted for on cash system of accounting by the party.”

The BJP has declared an income of Rs 1,034 crore (up by 81 per cent over last year and comprising 67 per cent of incomes of all national parties together) of which it says, it received Rs 997 crore from corporates and individuals as ‘voluntary’ contributions. But then in its statement of contributions above Rs 20,000, it lists out contributions totalling Rs 533 crore only. So the balance of Rs 464 crore I deduce must have come from cash donations each less than Rs 20,000. Is that possible? Because we are the same people who run a government that professes cashless economy?

The report itself speaks volumes on quality. The government which produces a magnificent paper like the Economic Survey, the same party running it, files a paper – a constitutional requirement, in abysmal quality; some papers illegible, some upside down, no reference, no summary – all this gives the impression that the voter is an unwanted reader. And out of the Rs 1,034 crore, it spends Rs 600 crore on elections and Rs 100 crore on establishment. This was in a year when only two large states and three small states had elections. Now just imagine what the bill would be next year when 29 states and seven Union territories visit the hustings. Out of the Rs 533 crore that came from donations, around Rs 300 crore came from only three ‘Electoral Trusts.’ So nobody is wiser which corporates were the real benefactors. So now, out of the total Rs 997 crore, Rs 760 crore comes faceless. That is how we speak of governance and transparency.


Can anybody explain why a political party should require thousands of crores for elections? The RoPA allows a candidate in a larger state to spend only upto Rs 28 lakh in an assembly election. With that logic, the maximum amount admissible if all seats were contested would have been Rs 108 crore. The staggering Rs 606 crore is simply baffling. Why does a corporate donate hundreds of crore to political parties? Do they suddenly discover the virtues in Guru Golwalker’s philosophies? If not, can there be a free lunch ever? What sort of level-playing field is this? For example, the CPI fetches an income of just Rs 2 crore against BJP’s Rs 1,034 crore? Why should the donors’ names be kept studiously under wraps, yet both donor and donee enjoy full tax exemptions at the cost of ordinary taxpayers? It is rather amusing to see both parties standing together like a solid rock on this single agenda – MONEY!


Bring political parties under the Right to Information Act or RTI Act (It is ludicrous to claim they are not ‘public authorities’). Make Aadhaar mandatory both on the voters’ card and on statement of contributions which should display ALL contributions and not only those above Rs 2,000. Scrap Electoral Trusts. Political donations should be taxed both in the Donors’ hands (non-business expenditure) and in the party’s hands (normal professional income). De-recognise parties and disqualify candidates who do not furnish complete legible information on time or those who exceed limits prescribed. Stop candidates from contesting from multiple seats. Canvassing in any constituency should be limited to candidates and voters of ONLY that particular constituency.

In all of this, I pity the Election Commission. They go about accepting all of this mediocrity, seemingly announcing poll dates only after the last sop is doled out or expelling MLAs without even hearing them out and then getting mouthfuls from the High Court. I miss people like SP Sen Verma, SL Shakdhar and TN Seshan, who proved their worth.

For a democracy to function, the institutions have to function and do their jobs, not dream of cushy post-retirement posts. The causality as Rand describes can never, in my opinion, be in the long run reversed by money as the tool. At the end, people’s will shall prevail invariably.

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