The Hindu Business Line : Trust vote as a turning point

The sordid events surrounding the trust vote last month did not exactly cover our democracy in glory. Yet, we could learn from it and convert the trust vote into a turning point to usher in a better style of politics, says N. VITTAL

Accounting of funds of political parties should be accurate, audited and placed before the Election Commission.

Out of evil cometh good. The trust vote won by the UPA Government on July 22, 2008 was certainly not a matter of glory for our democracy. The cynical horse-trading of MPs and display of currency note bundles showed to what low levels our democracy has sunk. Nevertheless, with a little imagination, the trust vote can be converted into a turning point for ushering a better style of politics in our country.

Three points were highlighted by the trust vote exercise:

Democracy involves a lot of money and there is a close interplay between money power and political power;

Equally important is the display of inefficiency and impotence of the government agencies, especially those connected with tax collections, that have allowed a free flow of unaccounted black money in the system.

The support from criminals who were elected MPs and who were released from jail to participate in the vote.

But merely taking note of these points is not enough. Can anything be done to change the situation? If so, by whom?

Let us begin with the money power. Technically, in every democracy, money plays a vital role. Funds are needed to run political parties and fight elections. For this, donors are sought after by every party. Instead of denying this reality, we can move to bring greater transparency into the system insofar as fund-raising by parties is concerned.

Political fund-raising

Let us remove all restrictions on individuals and corporates on donation of funds to political parties. The only condition must be that both the donors and recipients must account for this in their records and disclose the same to the tax authorities. As of now, only contributions by individuals to political parties are tax free. The same concession may be extended to corporate donations also.

We could try to reproduce the system of political fund-raising as in the US, though that system too is not perfect. The very transparency will bring about more accountability in the conduct of political leaders.

One suggestion is that funding for political parties may be done by the Government, from public funds. This practice prevails in some countries. This may help parties that are financially weak but ultimately lead to abuse. In Germany, there is a public funding system for political parties. However, there were instances where political parties resorted to illegal additional fund-raising. This resulted in the former chancellor, Mr Helmut Kohl, who helped unite Germany, leaving office under shameful circumstances.

Accounting of funds of political parties should be accurate, audited and placed before the Election Commission. But who will initiate this change? The Election Commission may make a suggestion regarding the rules under the Representation of Peoples Act. If this is challenged the issue can be decided by the Supreme Court.

In the interest of conducting free and fair elections, the Election Commission can take the lead, using its powers. NGOs can help mobilise public opinion, as happened in the case of candidates declaring their wealth and criminal records.

Black money

We may next consider the problem of black money. The money power in politics, highlighted by the trust vote, shows the relative slackness and lack of interest of our tax authorities in checking black money. I had a sad experience of this as Central Vigilance Commissioner when, on March 13, 2001, a tehelka.com sting operation was telecast on many TV channels. A contractor, Mr Jain, was shown claiming that he had made a profit of Rs 1 crore on a Defence contract.

On March 15, 2001, I wrote a letter to the Revenue Secretary and the Chairman, Central Board of Direct Taxes, asking them whether this profit amount was declared in the tax return of Mr Jain and, if not, was any raid on him contemplated. I was shocked that neither of the two dignitaries responded to my letter and the matter was given a quiet burial.

The recent display on TV channels of currency notes worth Rs 1 crore being held up in Parliament should have alerted the tax authorities to study how such a large amount of money was mobilised and check if it was legally accounted income or black money. So far, there is no report of such action.

In fact, the excessive growth of black money is standing proof of the sense of helplessness or the lack of commitment on the part of the Revenue authorities entrusted with the task of tackling the black money issue effectively.

Although the Government passed the Benami Transaction Prohibition Act 1989, the rules for implementing the Act and seizure of Benami properties are yet to be framed, even after 19 years.

The trust vote can be a turning point for better governance if the authorities redouble their efforts to unearth black money and follow the audit trail sincerely. The forest of exemptions in the Income-Tax Act must be removed. There must be no income-tax on individual income up to Rs 5 lakh per annum. Any amount above Rs 5 lakh should be taxed at a uniform rate of 20 per cent. This will check black money generation and increase the government’s tax revenue.

The Benami Transaction Prohibition Act, with the necessary rules in place, must be implemented. The Prevention of Money Laundering Act 2003 must be amended to include Income Tax, Sales Tax, Excise and Customs, and so on. These measures, if implemented seriously, will curb the growth of black money.

Criminal MPs

Now, the issue of criminalisation of politics. One simple method to check this is to amend the Representation of People Act in such a way that any candidate against whom a criminal charge-sheet is framed in a court of law should not be permitted to contest the election till his name is cleared by the court.

Unfortunately, the inordinate delay in the disposal of criminal cases enables the tainted candidates to contest and become MPs or MLAs. Law-breaking criminals enter politics to gain power and use the same power to protect themselves.

To remedy the situation, the suggested amendments to the criminal law to bar candidates who are facing criminal charge-sheets in courts of law from contesting elections would be really effective.

If the bar is introduced, the very criminal candidates will ensure that their cases are decided faster and that the judicial system moves faster. The delay in the criminal justice process helps only the criminals.

All the three negatives of our system can be the turning point for initiating change and moving towards a better, cleaner political system.

(The author, a former IAS officer, has held the posts of Chairman, Telecom Commission and Central Vigilance Commissioner. Responses to blfeedback@thehindu.co.in)