India is still “very hush hush” when it comes to how political parties raise funds but the government clampdown on the cash economy will help make these transactions more transparent in future, finance minister Arun Jaitley said on Friday.
Political funding in India remains a deep mystery, with most parties skirting disclosures under rules that make naming the source mandatory only when donations cross Rs 20,000.
With the government draining out 86% of all cash in the economy to fight corruption and black money, many experts suggest this could help change the way political parties raise funds. The move has also revived a debate over the benefits of state funding of elections, and a simultaneous vote for state assemblies and parliament, a plan Prime Minister Narendra Modi has often backed.
“The current move will create a situation where funding will become far more transparent,” Jaitley told the 14th Hindustan Times Leadership Summit.
“End of day, donors will say where do I bring this money from? The only donation I can give is legitimate cheque donation.”
“End of day, donors will say where do I bring this money from? The only donation I can give is legitimate cheque donation”
Jaitley’s response came to a question on the impact of demonetisation on political parties preparing for state election, including in Uttar Pradesh.
He said the BJP was already “ahead in the race” in Uttar Pradesh and the government crackdown on corruption had only made it “all the better” for the party because of the positive public opinion.
“For the BJP, to be projected as a party on the right side of technology, trying to represent an India that is more aspirational and wants to grow faster, for our opponents to take a retrograde position is a polarisation that suits us,” he said.
Asked if the BJP will be the first party to accept donations in cheque and not cash, he said that as the law minister in the Atal Bihari Vajpayee government he had initiated such a move.
“We amended the Companies Act to give a maximum 5% of profits as political donations. We modified the Income Tax Act to allow this,” he said but added all this wasn’t enough to make political funding transparent.