A Surya Prakash
Long years ago, concerned citizens identified muscle power and money power as the twin evils that were giving our democracy a bad name. Thanks to the sustained efforts of the Election Commission, massive deployment of security forces and painfully long-drawn election processes over many phases, the first of these evils – muscle power – has been substantially contained. However, the other problem – money power – continues to be the bane of our electoral system.
While there is justifiable pride in the vibrancy of our democracy and the fact that we have an institution (the Election Commission of India) to cater to a mind-boggling 814 million electors and to ensure voting through standardised fool-proof electronic voting machines, vulgar and reckless spending and naked bribing of electors – has not only persisted but assumed alarming proportions.
This was one of several key issues discussed at a recent National Consultation organised by the Election Commission on ‘Political Finance and Law Commission Recommendations’. One of the issues addressed by the participants was the funding of political parties and the prevailing law pertaining to collection of donations by parties and candidates.
One can gauge the extent of the problem when one realises that much of the funds flowing into political parties in the country come from unknown sources. The Association for Democratic Reforms, which has done pioneering work in educating the electorate on all matters pertaining to elections, has reported in a recent study on funding of political parties that donations above Rs20,000 from known sources constituted Rs435.85 crore – or just nine per cent of the total money that had come into the kitty of political parties. Other known sources of income amounted to Rs785.60 crore, or 16 per cent, but the amount collected by political parties from unknown sources of income amounted to Rs3,674.50 crore, or 75 per cent of the total money that flowed into political parties.
The Representation of the People Act does not impose a ceiling on the donations that political parties can accept from individuals or corporations. However, other laws impose certain restrictions on political parties and corporations. For example, while there is no upper limit to the collection of donations by parties, the law says companies cannot donate more than 7.5 per cent of the average net profit of the preceding three years to political parties. This too can be done only after ratification by the company’s board. Government companies are, however, barred from making such political donations.
Similarly, there is a law that prohibits political parties from accepting foreign contributions. Such restrictions are also there in the laws of other democratic countries. The Law Commission of India, which examined this issue in detail in its 255 Report on Electoral Reforms, has found that in the UK, while there is no ceiling on individual or corporate donations to political parties, foreign donations are banned. Japan too frowns upon foreign donors. The Political Fund Control Act of Japan prohibits foreign contributions to political parties and candidates.
Australia, on the other hand, does not impose any such ceiling on individuals or corporations. Nor is there any bar “on donations from foreigners, trade unions or Government contractors”. However, the law prohibits anonymous donations. The Law Commission has found that the restrictions are rather extensive in the Philippines, where political parties and candidates are barred from accepting donations from “corporates, foreign interests, anonymous donors and other financial institutions, educational institutions receiving state support and officials /employees of the civil service or Armed Forces”.
As regards corporate donations into political parties, this was initially prohibited in India. Thereafter, the law was amended to permit donations. But, as stated earlier, this is subject to a limit. In Japan, the PFCA imposes a ceiling on corporate donations to political parties. One of the clauses in this Act is that corporations which are in the red in the preceding years cannot make contributions to political parties.
The analysis of political funding by ADR shows the extent of the malaise. Unless this is addressed, the claim of free and fair elections will sound less credible. A major source of mischief lies in Section 29C of the Representation of the People Act, which enables a donor to remain anonymous if he donates Rs20,000 or less to a party. Political parties have had no qualms in exploiting this loophole and showing a huge percentage of their party funds as having come from small donors of this variety, whose identify need not be disclosed to the authorities. In fact, this clause is a conduit for the heavy flow of black money into the coffers of political parties and, thereafter, the electoral system.
Political parties have also exploited this clause to get the same individual to make multiple contributions of Rs20,000 or less to escape the law. In its latest report on Electoral Reforms, the Law Commission has strongly recommended amendment of this section to say that the treasurer of a political party will be legally bound to disclose the names of donors whose aggregate of contributions are in excess of Rs20,000 in a year. Even more significant is another amendment which says that, when contributions of less than Rs20,000 each add up to Rs20 crore or to 20 per cent of the total contributions, whichever is lesser, during a financial year, the political party will have to disclose the names of all such contributors.
