Budget 2017: The move towards transparent funding is the first step towards electoral reform | analysis | Hindustan Times
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Budget 2017: The move towards transparent funding is the first step towards electoral reform

The reduction of cash donation limits in the budget is a formal adoption of an election commission proposal that the prime minister had recently accepted publicly

analysis Updated: Feb 03, 2017 06:47 IST
A file photo of the Election Commission of India.  Several recent measures of Prime Minister Narendra Modi seem to lead towards electoral reforms.
A file photo of the Election Commission of India. Several recent measures of Prime Minister Narendra Modi seem to lead towards electoral reforms. (Harikrishna Katragadda/Mint Photo)

It is good to see in the budget an attempt to increase transparency in electoral funding. While my first reaction is indeed positive, I do feel that though it may be a good beginning, it does not go far enough.

The most significant fact is the finance minister acknowledging that transparent method of funding political parties is vital to the system of free and fair elections and that even 70 years after Independence the country has not been able to evolve one. He also rightly acknowledges that political parties continue to receive most of their funds through anonymous donations which are shown in cash.

The finance minister goes on to say, “An effort, therefore, is required to be made to cleanse the system of political funding in India.” Yes, quite an effort! The question is whether the steps proposed are commensurate with the gravity of the problem as acknowledged.

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The reduction of cash donation limits by any individual from Rs 20,000 to Rs 2000 is most welcome. But people are asking why not every transaction which is expected of a vegetable vendor and auto driver? It is good to see at least one proposal of the election commission getting approved. Normally, EC’s proposals keep gathering dust on government’s tables, if they are not rejected outright. The inclusion of this reform in the budget is in fact a formal adoption of a proposal which PM had recently accepted publicly.

The only other step is the proposal to issue electoral bonds which the donors could purchase from authorised banks. These bonds will be redeemable only in the designated account of a registered party. Whether these donations will be in public domain is not clear. Till now, all donations above Rs.20,000 are disclosed by the political parties to EC. Hopefully donation through bonds would be disclosed to EC as well. The operational details would be known only after the scheme is framed by the government of India. The devil, as they say, is in the detail. Hope none is hidden here.

I take these two measures as the first small step. For me the most significant thing is the government putting electoral reforms, especially transparency of political funding, high on its agenda. The ideal solution would be to set up a National Electoral Fund to which all donors can openly contribute without expressing any preference for any political party. The funds could then be allocated to all registered political parties in proportion to the votes obtained. This will also address the donors’ concern for secrecy.

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Will this fund be enough for political parties? It can be ensured that all political parties end up getting as much as they are receiving now from the present opaque and often dubious means. By a simple calculation, Rs.100 for every vote obtained would generate nearly 6000 crore after every election. Once public funding of political parties is ensured, private donations must be totally banned. And since public funds will be involved, there must be an annual audit by CAG or an auditor approved by it.

Several recent measures of the Prime Minister seem to lead towards electoral reforms. First it was the PM’s call for simultaneous elections in view of the repeated overwhelming costs. Then came demonetisation with the stated objective of rooting out the monster of black money from the economy. Then the direction to all his party legislators to disclose all their bank transactions. Beginning withhis own party sends a good signal.

Let the prime minister take his express concern for political corruption to its logical conclusion with complete range of electoral reforms. He will have the nation’s support.

SY Quraishi is former chief election commissioner and the author of An Undocumented Wonder - The Making of the Great Indian Election