Prime Minister Narendra Modi has stepped up his drive against corruption ahead of the Assembly elections to five states next month. Addressing the national executive of the Bharatiya Janata Party on Saturday, Mr Modi reasserted the need for greater transparency in political funding and pledged his party would be proactive in disclosing funds received by it. In the wake of his decision to demonetise high-denomination currency notes to unearth unaccounted income, there has been a growing unease over the continued preferential treatment to political parties with respect to disclosing their sources of funding. The PM’s move to take the bull by the horns should be wholeheartedly welcomed as it comes against the backdrop of his earlier statements arguing that campaign finance reforms have become an absolute necessity and that it is time the political class sheds its resistance to growing insistence for transparency in political funding. The PM is expected to call an all-party meeting in the coming days and possibly bring a Bill to this effect in the Budget session of Parliament.
According to the International Institute for Democracy and Electoral Assistance Handbook, in nearly 60 countries political parties are bound to disclose all contributions. India is not among them. Alongside there exists a ban on making anonymous donations to political parties in more than 45 countries. Again India is not among them. Given that the bulk of the funds received by political parties in India comes from opaque sources, the Bill proposed by the PM could look to address a broad set of areas in order to strike at the root of endemic corruption.
The first is to plug the loopholes that allow the corrupt to misuse the legal provisions for political parties to potentially launder black money. According to the Election Commission (EC), only 400 parties, of a total of 1,900 that are registered with it, have contested elections in recent years. It is an open question what purpose the other 1,500-odd parties serve. In response, the EC sought permission to de-register parties — a move that should happen — and also suggested that the limit of donations received by political parties that were not subjected to audits be reduced from Rs 20,000 to Rs 2,000. But there is no reason to stop at Rs 2,000 as this limit, too, can be easily gamed. What the Bill should do is to bar all cash donations to political parties and move to digital donations alone. Moreover, auditing of political parties should be done by third-party auditors. The Bill should also provide for strict penalties for politicians who furnish incorrect and misleading financial declarations.
A good starting point for political parties could be to comply with the Central Information Commission’s ruling and open themselves to queries under the Right to Information Act. Allied to this is the goal of empowering anti-corruption and grievance redressal bodies such as the Central Vigilance Commission, the Central Bureau of Investigation or the Lok Pal and providing them true functional autonomy. At present, such agencies are either running headless or are seen to be tools in the hands of the ruling party to achieve political goals. A case of misuse of powers was also evident when the government quietly absolved political parties, which were clearly in violation of the Foreign Contribution (Regulation) Act, 2010, by retrospectively amending the law, thus legitimising financial contributions to leading political parties by companies of foreign origin. The continuing presence of politicians with criminal antecedents is also a sobering reminder of how far existing laws have been successful. The PM has shown his resolve to clean up political funding; hopefully, others will follow suit.