Political funding

At a time when the Reserve Bank is tightening rules for common depositors in crediting junked Rs 1000 and Rs 500 notes into their bank accounts, political parties continue to sit pretty. Revenue Secretary Hasmukh Adhia has announced that parties are exempted from restrictions on depositing old currency notes in their accounts. In other words, political parties will not face any tax scrutiny or investigation; the exemption comes under Section 13A of the Income Tax Act, 1961 which gives immunity to parties (provided they have been filing tax returns annually) on income from house property, capital gains, voluntary contributions and other sources. Unsurprisingly, the Central government’s reiteration of this exemption amidst demonetization pains is triggering an outcry about double standards. After all, it is the uccountable, opaque ture of political funding and the rampant use of black money in elections that has given license for a parallel economy to hold this country hostage. Can it be that the government is wary of angering some political parties further, seeing the manner in which Parliament was not allowed to function over demonetisation? Suspicions have been voiced that the currency flushout move caught some parties uware, pushing them on the backfoot before crucial assembly elections next year. Meanwhile, opposition parties have alleged that the ruling BJP was in the know about the government’s intention, and parked party monies and sympathizers’ funds in banks in the July-to-September quarter to escape the cash ban fallout. Prime Minister rendra Modi has hit back, saying that ‘political leaders behind multi-crore chit fund scams’ are attacking him — an obvious reference to the Saradha scam taint on Mamata Banerjee’s Trimool.

Not wishing to let go of the high moral ground now, Mamata Banerjee is questioning the reason for exemption to political parties, whether the government has a ‘motive’ in showing up some parties in different light from common people and thereby creating a rift. Aam Aadmi Party (AAP) supremo Arvind Kejriwal has raised the rhetoric further, demanding an independent commission to examine the bank accounts of political parties and probe their sources of funding. According to the NGO ‘Association for Democratic Reforms (ADR)’, more than 60 percent of the total income of parties in 2014-15 was from unknown sources, and in cash. Most political parties simply refuse to furnish details to the Income Tax department about contributions; the common refrain is that small donors (putting up less than Rs 20,000 individually) have contributed to their beloved parties. In similar vein, major political parties have been hitherto reluctant to furnish audited accounts to the Election Commission. It remains to be seen how political parties respond to the EC’s recent recommendation to slash the limit for accepting anonymous dotions to Rs 2,000 from the current Rs 20,000. PM Modi has already voiced his support, assuring measures to prevent black money infiltrating the electoral process. His government should also support another EC proposal — that income tax exemption should only be extended to political parties that contest elections and win seats in Lok Sabha or assembly polls. This will help weed out political parties formed only with the motive to avail of income tax exemption benefits. When the common man is being pushed to leave a clear money trail for taxmen to follow and open his bank account to their scrutiny, political parties must not get any more leeway to explain away funds under miscellaneous income or meless donors. The cosy arrangement of ‘you scratch my back and I’ll scratch yours’ between political parties when it comes to their funding, is not something people should tolerate any longer. They are already getting to see how some political leaders are gaming the system to beat the cash ban and even profit from it.