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The joke over political funding

Reduction in the cash donation cap to political parties and introduction of electoral bonds are just smokescreens

Published: 07th February 2017 04:00 AM  |   Last Updated: 07th February 2017 07:39 AM   |  A+A-

The chink in the BJP’s self-righteous armour widened into a loophole on the first of this month with Finance Minister Arun Jaitley’s anaemic declaration about reduction in the cash donation cap to political parties to Rs 2,000. This is rubbing salt into the wounds of the tens of millions who have spent the better part of their lives in ATM and bank queues since November. We had expected better from a government which as recently as on December 31 promised reforms in election funding. Most columnists have commended this step, but when one is scraping the bottom of a barrel, one is grateful for any morsel.

The BJP’s double standards are self-evident now: the destitute MGNREGA labourer is expected to get his wages only through a banking channel but political parties can continue to amass their lucre in cash. Every Tom, Dick and Hari is expected to go digital but not our political parties. The reduction of the cap from Rs 20,000 to Rs 2,000 is a sick joke which only Chartered Accountants will appreciate—they just have to find ten times the names they had to earlier. With a population of 1,300 million that shouldn’t be too difficult.

The magnitude of this continuing improbity cannot be overstated if the figures put out by the ADR (Association of Democratic Rights) are anything to go by. The total income of the six national parties between 2004-5 and 2014-15 was Rs 9,278 crore; of this Rs 6,612 crore or 71 per cent came from unknown sources (contributions below Rs 20,000). The position is only marginally better for the 51 regional parties: Of Rs 2,089 crore received by them in the same period, Rs 1,220 crore or 58 per cent was from such sources. (And this is only the declared income).

This level of unaccounted wealth not only defiles the electoral process, it also corrupts the administrative systems, and provides a convenient route for money laundering (as the demonetisation “stings” by some channels have exposed). Were these not the precise evils that the government had promised to slay with its demonetisation move? Then why stop half way? Why punish every section of society except the politician?

The most common and pathetic excuse held out is that the government needs to build a consensus and move gradually. Both are fake. There can never be a consensus among political parties on banning cash donations: No turkey will ever vote for Thanksgiving, after all. As for gradual steps: why this compassion for their own tribe when no such consideration was shown for the common citizen on 8/11 ?

The additional announcement of issue of Electoral Bonds and a National Election Fund are smokescreens intended to blind the public and ensure a quick getaway from any criticism.

The Electoral bonds shall only be a conduit for clandestine corporate funding as the details of the donor shall be kept confidential by the banks.Their names will not be made available to the Election Commission, nor will they be mentioned in the accounts submitted by the political party to the Income Tax Department. These money may be “white” but will make the whole transaction totally opaque. The public will never know who contributed the money, hence there shall be no transparency.

Genuine transparency demands that the public (and not just the government) should be able to access the information. The talk about a proposed National Election Fund and state funding of elections is just that: idle talk. The first is a non-starter and the second is neither affordable nor feasible, as I had pointed out in an earlier article.

In his Budget speech, Jaitley revealed shocking figures about just how narrow our direct tax base is and stressed on the need to widen it. But he, like all his predecessors, shied away from an obvious option available to him: Tax on agricultural income. This has been a holy cow since independence and has now become the elephant in the room. There is no logical reason why the well off in the agriculture segment should not be asked to pay income tax. In fact the government’s Chief Economic Advisor had suggested in last year’s Economic Survey that this should be done. As many as 2,746 individuals/assesees have declared agricultural income of more than `1 crore but are not required to pay any tax on it, whereas a non-agriculturist who earns `5 lakhs has to pay up!

Jaitley even helpfully pointed out that as many as 1.25 crore cars have been sold in the last five years: surely he has seen the thousands of SUVs that dot the rural landscape?

Out of the total 250 million households in the country, about 150 million are agricultural households. Should the government not be bringing the richer among the latter group into the tax net, instead of squeezing only the remaining 100 million, year after year? Furthermore, surely he is aware that “agriculture income” is a convenient and safe medium for politicians, bureaucrats and others to park their illegal wealth. It is not a coincidence that practically all politicians possess some agricultural land or the other!

The government’s double standards are on full display, and the government’s much touted boast of eradicating black money is under serious question. If it is unwilling, or unable, to tackle the political parties or the rich landowners, then it should descend from the moral high ground it has tried to make its own for the last three years. But wait! The government may be smarter than any of us give it credit for; maybe appearances are more real than reality. I am reminded of this quote from George Burns about the formula for political success: You’ve got to be honest—If you can fake that, you’ve got it made!

(Avay Shukla served in the IAS for 35 years and retired as Additional Chief Secretary of Himachal Pradesh. Email: avayshukla@gmail.com)

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