Transparent politics needs total cash ban

While presenting the 2017-18 Union Budget last week, finance minister Arun Jaitley made a big bang when he announced measures to place a limit on cash donations political parties can receive, and also the issuance of an electoral bond by amending the RBI Act. However, it appears unlikely that our political parties, which are rightly deemed to be one of the most important reasons for the generation of black money, will in any way be straightened out by Mr Jaitley’s proposals. Indian democracy is thus likely to remain a somewhat tainted creature in the foreseeable future. The most striking was the idea in the Budget that parties will now be able to collect a maximum of Rs 2,000 in cash from individual donors, against the earlier Rs 20,000 limit. How this can be deemed a reform measure is hard to fathom.

The existing practice is that parties collect in hard cash crores of rupees from corporate entities and wealthy individuals, but pass these off as block donations of Rs 20,000 from crores of individual supporters. This process has only been made marginally more tedious by the finance minister’s proposal, for the party bosses will now have to cook up 10 times more names of ghost donors. That appears to be the extent of the proposed reform. Not much is known about the issuance of electoral bonds by the government, for details about the scheme are yet to be formulated. However, there are fears that donors — who will typically be large companies — buying bonds will stay anonymous. That will defeat the very purpose of transparency as anonymity implies that bond purchases will be transacted in cash, not through cheques or digitally.

In order to pay parties, individual powerful politicians, and other top bosses in the system, including powerful or influential civil servants and other carpetbaggers, many companies are forced to devise innovative ways to stock cash. This is typically done by cheating on taxes and resorting to other fraudulent means. Cleaning up political parties will go a long way in ending the sloshing around of cash in the system. It will cleanse our democracy and the spirit of political parties. Unscrupulous characters will then not be drawn toward the parties and the political system in order to make money at the cost of honest taxpayers and individual citizens. If the government means business, all cash donations should be made illegal. Only digital payments should be accepted against digital receipts just like ordinary people have had to do now. Tax exemptions on donations can be permitted only if these are made to a national democracy fund formed to receive such funds.