Political funding curbs in Budget 2017 add to NDA’s anti-corruption pitch
New Delhi: The Union budget presented by finance minister Arun Jaitley on Wednesday burnished the ruling National Democratic Alliance’s (NDA’s) anti-corruption credentials by unveiling a slew of measures including political funding reforms.
The budget capped anonymous cash donations to political parties at Rs2,000, one-tenth the current level, in line with a recommendation by the Election Commission. Jaitley’s speech mentioned a proposal by the Reserve Bank of India (RBI) to allow parties to issue electoral bonds to raise money.
Jaitley also announced a Rs3 lakh cap on cash transactions and said the government is contemplating a law to confiscate properties of offenders, including those suspected of economic crimes, who flee the country.
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The moves extended to the budget the government’s battle against black money and tax evasion which saw Prime Minister Narendra Modi on 8 November outlaw high-value banknotes, at one stroke taking out 86% of the currency in circulation by value.
“Demonetization seeks to create a new ‘normal’ wherein the GDP would be bigger, cleaner and real. This exercise is part of our government’s resolve to eliminate corruption, black money, counterfeit currency and terror funding,” Jaitley said.
“We are aware we need to do more for our people. Continuing with the task of fulfilling people’s expectations, our agenda for the next year is: ‘Transform, Energise and Clean India,’ that is, TEC India,” Jaitley said, adding that the objective is to clean the country of “the evils of corruption, black money and non-transparent political funding”.
The EC had recommended a reduced cap of Rs2,000 to check anonymous donations and curb parties that are formed only with “an eye on availing the benefits of income tax exemption” available to political entities.
In what could be a first-of-its-kind move, Jaitley added that an additional amendment has been proposed to the RBI Act to enable issuance of electoral bonds. Under this scheme, a political donor can purchase bonds from authorized banks but those securities can be redeemed only through registered accounts of a political party in a prescribed time.
“Bonds will be bought through cheque, and bonds will be encashed with banks. It will be clean money and... transparent, as the buyer is known,” Jaitley said. Political parties will be entitled to receive donations by cheque or digitally and will have to report them to the tax department in income tax returns.
“Reducing the cash funding of political parties to one-tenth of what it used to be and the introduction of electoral bonds are two significant steps in curbing corruption,” said A.K. Verma, a Kanpur-based political analyst.