Calling for use of digital payments even for small donations made to political parties, as in other democracies, Finance Minister Arun Jaitley said the Budget proposals to reform political funding will ensure that the donor as well as the donee use clean money.
The schemes to cleanse political funding will make the economy cleaner and transparent at large.
The use of Electoral Bonds will ensure that the identities of donors making large donations are not revealed.
“These bonds will be bearer in character because if the names are disclosed and identities are revealed then it is the same as payment through cheques or the present status quo. Because of the present status quo, donors have preferred cash payment rather than disclosure of their names and identities,” Jaitley said at a press conference after the Budget.
As a part of the Government’s digitisation drive and initiatives to curb the use of black money, the Budget has proposed to make donations to political parties more transparent. Accordingly, Jaitley announced that cash donations to political parties would be capped at ₹2,000 per source. Contributions beyond this limit would be either through cheque, digital means or through electoral bonds.
The Finance Bill, 2017, has also proposed amendments to the Reserve Bank of India for the introduction of a scheme for electoral bonds. Explaining the scheme, the modalities of which have to be worked out with the RBI, the Finance Minister said that a notified bank would issue electoral bonds, which can be bought by any donor through cheque or digital payment. These can then be deposited in a notified account of a political party.
The donor and the donee will also get tax exemptions. However, political parties will also be expected to file annual returns on donations received, barring which they would lose their exemption, Jaitley warned.
“Every political party, recognised by the ECI will have to notify one account in advance and it can be only redeemed and encashed in that one account,” he said, adding that the time for redeeming will be decided later but the time would be kept as short as pragmatically possible.
A government official later said that the bonds would not carry any interest rate but would be of the face value.
Disinvestment targetJaitley also expressed confidence that listing of the five general insurance companies in the next fiscal will also aid in boosting revenues from disinvestment of public sector firms.
“Next year, the major item of listing is the GIC holdings. This will then have to be reduced to 74 per cent in line with SEBI guidelines,” he responded when asked about the high estimate for revenue from stake sale proceeds.
The Budget has targeted raising ₹72,500 crore from stake sales in public sector units, as compared to the Revised Estimate of ₹45,500 crore for this fiscal.
He also stressed that the merger of State Bank of India with its subsidiary banks and the privatisation of IDBI are “very much on the table”.
Noting that the Economic Survey always places some “futuristic ideas”, the Minister said its proposal for a universal basic income (UBI) is an agenda for future debate.
“Targeting assistance to the weaker sections and guaranteeing them a basic service is a great idea,” he said, but cautioned that with the resource constraints of the government, UBI would have to be an alternative to the current system of subsidies.