The indulgence shown to cash donations has encouraged enactment of an elaborate farce bordering on a charade by all parties. When the cap on cash donations was Rs 20,000, a hefty cash donation of Rs 2 crore from out of black money required invention of 1000 fictitious donors to hide the true identity of the donor. In 2017, the Income Tax Act was amended to tone down the leeway and put the cap at Rs 2000. This hasn’t fazed the political parties and their accountants a wee bit. Only they have to do a bit of extra work — instead of finding 1000 fictitious small donors so that each one on paper didn’t donate more than Rs 20,000, under the new dispensation they have to find 10,000 donors with each not contributing more than Rs 2,000.
In India, you give an inch and people take a foot. Any leeway or latitude is exploited to the hilt. Before KYC norms occupied the nation’s consciousness and linking of PAN with Aadhaar made mandatory, one with an income of Rs 1 crore would divide his income among 40 assessable units so that each had a taxable income of only Rs 2.50 lakh which is the tax-free threshold. Splitting and splintering then comes naturally to crooks, be it for income tax avoidance or to hoodwink people and the Election Commission of India (ECI).
In this day and age, why at all give concession to cash? With the advent of UPI, payment through mobile phones is fast catching on. Therefore, there is no reason why anonymous cash donations upto Rs 2,000 should be countenanced and condoned. There should be a complete ban on cash donations, period. It is surprising that the Supreme Court, which was outraged by the opaque electoral bonds enough to strike them as unconstitutional, hasn’t acted with the same anger against anonymous cash donations, given the fact that the latter intuitively play a greater role in political party funding. Will their Lordships of the Supreme Court be pleased to take a suo moto initiative in this regard? This is all the more necessary now that electoral bonds have been demonetised by the Supreme Court vide its February 15 order. In its wake, there is an apprehension that political parties would certainly revert back atavistically to anonymous cash.
There is absolutely no reason why all registered political parties should not be mandated to accept donations only through the payment gateways mentioned in their websites so as to leave a trail and digital footprint.
More realistically though it must be conceded that lion’s share of political donations emanates from corporate houses who would like to donate in return for exercise of discretionary power by the powers that be. So, let us not fool ourselves that political donations are given for ideological reasons or connect between the industrial house and a political party. The fear of reprisal argued by the government counsel before the apex court in the electoral bonds case if anonymity was cast asunder may be an exaggerated one given the political acumen of our business houses which know which side of the bread to butter and often butter both sides just in case! Be that as it may, whatever the theoretical compulsions for anonymity, it has no place in a democracy.
Incidentally, the EC as recently as in September 2022 had written to the then Law Minister Kiren Rijiju to remove the anomaly of the Income tax law and the Representation of People Act speaking in divergent voices — the latter still persisting with disclosure of donations in excess of Rs 20,000 quite oblivious of the reduction of the latitude to Rs 2,000 by the former. Concomitantly, it also proposed a 20% limit for cash donations as a percentage of overall donations. To wit, if a political party had received Rs 100 crore as donations in a financial year, only Rs 20 crore could be in cash. This may appear to be in the direction of weaning cash away from the electoral sweepstakes but deep down it raises the question — what happens if at the year-end cash exceeded 20% of the overall donations?
Half solutions or partial indulgence don’t work. Cash must be stamped out lock, stock and barrel. The Finance Minister Nirmala Sitaraman was right when she said while no system is perfect, electoral bonds at least had the virtue of leaving banking footprints which to the chagrin of the benefitting political parties has come home to roost. The Supreme Court could override the anonymity character of the electoral bonds and lift the veil of secrecy only because Late Arun Jaitley the then Finance Minister in 2017 whose brainchild it was thought (naively in hindsight) that no one would dare flutter the dovecotes of the political parties and the donors by demanding the banking footprint left by the purchasers of the electoral bonds and the political parties to be revealed and made public. Perhaps, he deluded himself in the lulling belief that the Supreme Court would not rate right to information above right to privacy. Electoral bonds were convoluted and circuitous — what could have been achieved by direct cheque payment was twisted into a grotesque bond. The purpose of the contrived convolution was to retain anonymity that cash donations conferred and confer even today. And BTW, those in the know were not fooled by the argument that electoral bonds emanated out of clean money given the fact that all bank deposits don’t ipso facto translate into clean money. After all, money laundering is all about making illicit money legit by bringing them into the banking mainstream. It is not only Swiss banks which harbor illicit money by not questioning their origins.
S Murlidharan is a freelance columnist and writes on economics, business, legal and taxation issues
