‘wreazo19 CChanakya's View: Democracy
PAVAN K VARMA
The writer, an author and former diplomat, is
a member of the JD(U).
Chanakya’s View: Democracy
Published Mar 27, 2016, 12:34 am IST
Updated Mar 27, 2016, 12:47 am IST
When parties take money from ‘unidentified’ donors, they
work for tax evaders.
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A few days ago the Delhi high court made an important
judgment relating to political parties and funding. The court
was dealing with a case of the Congress Party regarding tax
exemptions for the year 1995-96. Without prejudice to the
merits of this case, the pronouncements of the court are
significant because they deal with the critical issues of
electoral reform and the deadly nexus between
unaccounted money and politics.
Election Commission
titps:wiwn deccanchonice.com/opinion/columnists/2703 18/charakya-s-view-democracy Nin 8“Money power”, the court observed, “should not be allowed
to distort the conduct of free and fair elections. This will, in
turn, infuse transparency and accountability into the
functioning of the political parties thereby strengthening
and deepening democracy”. According to the learned
judges, political parties must maintain “properly audited
accounts” of income received through voluntary
contributions, and unless this is done parties cannot claim
exemption on income tax. The sum and gist of the
judgment was that the time has come to implement an
“effective check over the influence of money in electoral
politics”.
It is apparent to everybody that India needs a substantive
and comprehensive electoral reform bill for changes in our
democratic system. But the task is easier said than done.
The record bears this out. The Goswami Committee on
electoral reforms was set up 22 years ago in 1990.
Subsequently, there have been a host of other committees
and reports, including the Vohra Committee in 1993,
Indrajit Gupta Committee on state funding of elections
(1998), Law Commission Report on the reform of electoral
laws (1999), National Commission to review the working of
the Constitution (2000), Election Commission of India
Report on proposed electoral reforms (2004), and the
Second Administrative Reforms Commission (ARC) 2008.
None of these have been able to bring about
comprehensive change; they have remained confined to
titps:wiwn deccanchonice.com/opinion/columnists/2703 18/charakya-s-view-democracy Nin 216proposals, ideas and intentions. Some matters of electoral
reforms have also been pending before the Supreme Court
for years.
The blame, however, does not rest at the threshold of the
Supreme Court. The blame rests primarily with political
parties and politicians who have no overriding motivation
to change the current system because they are the biggest
beneficiaries of it. According to the Association of
Democratic Reforms (ADR), a widely respected NGO, 85 per
cent of donors to political parties are faceless.
Informal estimates indicate that actual collections are as
much as ten times that which is disclosed. The nexus
between black money and political parties is the principal
cause of all corruption in India. If those who are supposed
to make laws against corruption are themselves the
products of a corrupt system, how can the rest of society
be clean? When parties take money in cash from
“unidentified” donors, they work for tax evaders.
When candidates illegally soend many times the prescribed
limit on elections, their first priority is to milk the state to
recoup their “investment”. India is among the lowest
scoring countries on political finance regulation according
to the Global Integrity Report, scoring a zero out of a
hundred on implementation and disclosure of political
party and candidate financing. India also scored a zero on
the effectiveness of party financing regulations.
titps:wiwn deccanchonice.com/opinion/columnists/2703 18/charakya-s-view-democracy Nin a6What practical and theoretically doable preliminary steps
can be taken to remedy this unfortunate situation? First,
the current law that allows parties not to identify donors
contributing less than * 20,000 must be scrapped. This is
the principal (but not only) channel for parties to collect
vast amounts of undeclared funds. Every paisa given as
donation to political parties must be accounted for and
transacted through auditable and transparent bank
transactions.
Second, all payments made by political parties exceeding
Rs 20,000 must be made by crossed account payee
cheques or bank transfers. The Core Committee on
Electoral Reforms, sponsored by the Election Commission
(EC) and the ministry of law and justice, have strongly
recommended this. Concurrently, the EC must harness our
vaunted prowess in IT to devise an online accounting
framework leaving as little place as possible for political
parties to hide income and expenditure.
Third, all political parties must compulsorily make public
their audited accounts every year. Currently, candidates
are required to disclose their assets and liabilities but not
political parties. As far back as 2004, the EC recommended
that “political parties should be required to publish their
accounts annually for information and scrutiny of the
general public and all concerned, for which purpose the
maintenance of such accounts and their auditing to ensure
their accuracy is a prerequisite. The auditing may be done
titps:wiwn deccanchonice.com/opinion/columnists/2703 18/charakya-s-view-democracy Nin 46by any firm of auditors approved by the Comptroller and
Auditor General (CAG). The audited accounts must be
made public”. My personal view is that they should also be
brought under the ambit of the RTI.
Fourth, careful thought needs to be given to strengthen the
enforcement and regulatory role of the EC in such matters.
Currently, political parties merely obtain a certificate from
the EC that they have submitted their annual audited
statement of accounts. Perhaps the time has come for the
EC, strengthened by experts from other financial
enforcement agencies, to be authorised to issue
showcause notices at any time to any party where there is
verifiable evidence of expenditures exceeding known
sources of income. Of course, an impartial and
independent EC is a sine qua non for such powers.
With these measures in place, the state funding of
elections, as recommended by the Indrajit Gupta
Committee in 1998, may not be necessary. State funding
would only add an unnecessary burden on the exchequer
and not succeed in inhibiting parties and candidates from
illegally deploying funds over and above what is provided
by the state. Given past experience, a far more practical
way would be to stringently implement the monitoring,
surveillance and deterrence measures mentioned above.
titps:wiwn deccanchonice.com/opinion/columnists/2703 18/charakya-s-view-democracy Nin 56It is not enough for India to be merely labelled as the
world's largest democracy. We must also be a credible
democracy in every sense of the term.
Currently, the magnitude of illicit money power in the
hands of political parties diminishes our democratic
credibility. It is time for all political parties to voluntarily —
and urgently — rectify this situation.
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