Poll funding concerns

With less than two weeks to go for the general elections, the Election Commission (EC) has raised serious objections to the use of electoral bonds, touted as a poll reform measure. It was putting forward its view in a case filed by the NGO, Association for Democratic Reforms ( ADR vs Union of India ), against electoral bonds. The EC has reiterated its objections spelt out in its May 2017 letter to the Union Law Ministry, written months after electoral bonds were introduced. It had then observed that by removing the cap on donations, of 7.5 per cent of the average net profit of the three preceding financial years, electoral bonds could open the “possibility of shell companies being set up for the sole purpose of making donations to political parties.” An electoral bond can be purchased from the State Bank of India, with no name of the donor on it, and given to the political party or leader, who in turn deposits it without reporting the transaction to the I-T authorities or the EC. Similarly, the donor does not need to declare the beneficiary’s name in his books. A suitably opaque entry ‘purchase of electoral bonds’ would suffice, with a 100 per tax deduction too coming the donor’s way. This arrangement makes not just a mockery of transparency in electoral funding, but also of the ₹20,000 threshold under the Representation of Peoples Act, 1951, after which contributions have to be accounted for.

After the 2017-18 Budget, it was incorrectly assumed that the limit on anonymous cash donations had been reduced from ₹20,000 to ₹2,000. But there was been no change in the RPA to this effect. It now appears that election funding is as opaque as ever, despite the Centre’s avowed commitment to cleaning up the system through measures such as demonetisation. The EC’s cash seizures, while signalling its intent, are just a drop in the ocean of electoral funds floating around. If the 2014 elections are believed to have resulted in an expenditure of $5 billion, there could be a huge spike this time.

Election expenses too are famously fudged, with the candidate ceiling of ₹28 lakh and ₹70 lakh respectively for Assembly and Lok Sabha elections being circumvented by showing the expenditure as the party’s, or for the campaigning of prominent leaders whose expenses are exempt from the ceiling. However, it makes more sense to scrutinise revenues than expenses from a political economy point of view. Meanwhile, crowdfunding options have shown promise. Even as the Supreme Court takes stock of the situation, voters need to be aware of the shadowy role of money power as they exercise their franchise.

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