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Electoral Trusts Mostly Benefit Ruling Parties, Need to Cap 'Donations' for Transparency

With the introduction of electoral bonds, Electoral Trusts are no longer required to reveal the name(s) of the party to which donations are given. If a government makes policy, budget allocations or tax rules that favour donors over the public, we will not even know who the donors were.

Trilochan Sastry |

Updated:January 31, 2018, 4:08 PM IST
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Electoral Trusts Mostly Benefit Ruling Parties, Need to Cap 'Donations' for Transparency
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Behind all the debates on election funding, electoral bonds and black money, we often ignore one simple fact — the increasing role of money power in elections. Those who fund politicians and parties, ultimately control the government and its policies. So it is not the voters who call the shots, except for that one time in five years, but the donors.

We are currently publicly debating only one of the aspects of the finances of elections – ruling out black money through electoral bonds.

However, the more important aspect of controlling undue influence on the government is by putting a cap on funding apart from making it not only transparent, but widely known to the voters and these are not being discussed. Such laws are there in several other democracies but not in India.

There are many technical details, and politicians have made several statements on these issues. All of these tend to make things even more confusing for the so called ordinary voter.

So, it is important to look at the essential details shorn of rhetoric and interpretation. The previous government allowed the setting up of Electoral Trusts that can donate funds to political parties. They are required to donate at last 95% of their funds to political parties, while the donors get a 100% tax exemption, as do the political parties. NGOs, trusts and so on almost always get only 50% tax exemption.

With the introduction of electoral bonds, Electoral Trusts are no longer required to reveal the name(s) of the party to which donations are given. If a government makes policy, budget allocations or tax rules that favour donors over the public, we will not even know who the donors were.

The publicly stated logic of introducing electoral bonds is to remove black money and protect donors from harassment. Apparently, those who donate to political parties have complained that they are harassed by other political parties and even Income Tax authorities.

However, voters are not responsible for the actions of rival political parties or that of the authorities. Their right to know has been done away with and so far, not one person has been jailed for black money.

It is impossible that the government does not know who has black money. It is a well known fact that after demonetisation, black money continues to flow in state Assembly elections. In any case, these electoral bonds do not prevent black money donations.

Currently, the Opposition is against these bonds because 90% of the donations from Electoral Trusts have gone to the ruling party.

The Opposition fears that with these bonds, even this information would not be available and they are not fighting for the citizen’s right to know, but for their political results.

It is to be noted that all political parties favour less transparency. When the Central Information Commission (CIC) ruled that political parties come under the RTI Act, they unanimously defied the CIC, irrespective of their being in power or opposition.

Earlier, all political parties came together to try and overturn a Supreme Court judgment mandating disclosure of financial and criminal records by candidates in elections. Later, all of them fought tooth and nail to prevent the CIC from directing Income Tax authorities to release the audited financial statements of political parties.

The source of information of various reports on Electoral Trusts, including the ADR report is partly based on that CIC ruling. Of course the political parties refuse to give more details of their finances – except what they have to file with the Income Tax authorities.

On the other hand, citizens need bank accounts, land khatas, property documents, ration cards, driving licenses, credit cards and so on. There is a move to digitalize all of these and link everything to their Aadhaar numbers. It gives the government (and Google) full knowledge of all activities of an individual. Yet, political parties refuse to follow the RTI and are making funding more and more opaque and unknowable, and regularly flout the spending limits in elections. Hardly anyone is ever prosecuted.

There are long queues for citizens while politicians get VIP privileges at every public facility. The citizen has little protection from harassment by authorities – whether Income Tax, police or other inspectors. On the other hand, both the UP and Karnataka governments recently withdrew thousands of cases against politicians saying they were “motivated”.

The government continues to flout the Supreme Court directive that there is no need for government permission to investigate and prosecute senior civil servants and politicians. This means they do not trust the courts to deliver justice to them but expect citizens to depend on the court system. This is a British colonial law and does not exist in other countries.

In short, the government has the power to know everything about the voter and punish him, but the voter cannot know everything about political parties who keep themselves a little above the law.

Shades of Animal Farm? Surely this is no democracy.

However, the remedy is very simple. Political parties can simply declare to voters that they will not accept black money, will keep to the spending limits and make their accounts transparent.

After all, most citizens do the right thing, not because of the law but because they want to do what is right. In the absence of intent, we need to follow the best international practices and laws not only in market reforms, FDI, FII, Davos and international diplomacy, but also in elections and campaign funding reforms.

This clearly means full transparency and accountability in funding of political parties and candidates.

It also means that conflict of interest should be addressed meaningfully. For example, in the US, both the public prosecutor and special counsel — Kenn Starr and Preet Bharara — took on the rich and powerful fearlessly, because they are independent and protected by the law. In India, the conviction of politicians is very rare and happens only when he/she is not in power.

So, will electoral bonds address these issues? Surely not. In fact, it is a regressive step. We have miles to go before we sleep.

— Author is Chairman and Founder of Association for Democratic Reforms (ADR). He teaches at IIM Bangalore.

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| Edited by: Sanchari Chatterjee
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