Budget 2017: Can lower cash limit make political funding transparent? Critics divided

Lowering the limit for anonymous cash donations from Rs 20,000 to Rs 2,000 will not help bring about transparency in political funding, experts and critics said on Wednesday.

The reactions came as Finance minister Arun Jaitley on Wednesday announced new rules for greater transparency in political funding in the country during presentation of the Budget for 2017-18.

Founding member of the Association of Democratic Reforms (ADR) Professor Jagdeep Chhokar and psephologist and Swaraj India President Yogendra Yadav felt that lowering the cash limit will not help bring about transparency but only divert attention from the problem.

However, sociologist Dipankar Gupta hailed the government’s decision.

Chhokar said that parties that do not want to declare the source of their money will now convert their incoming donations into even smaller amounts.

“Earlier, those who did not want to declare donations used to issue receipts for Rs 19,999. Now they will do the same for Rs 1,999. The business will run as usual,” Chhokar told IANS.

Read: Budget 2017 in videos: Highlights of FM Arun Jaitley’s announcements

An ADR report on sources of political funding had last month revealed that over two-thirds of the funds received by national and regional parties were from ‘unknown’ sources.

Chhokar, a retired IIM Ahmedabad professor, said the law never barred political parties from declaring donations below Rs 20,000.

“The law was that the political parties were bound to declare donations over Rs 20,000. It did not mean that they could not declare donations below that amount,” he said.

“So those who want to hide the source of their donations, still have a way out.”

In his budget speech on Wednesday, Jaitley announced that political parties receiving donations of or above Rs 2,000 will now have to disclose the identity of the donor.

Earlier, political parties were allowed to receive anonymous donations of upto Rs 20,000 in cash.

Chhokar said if the government was sincere, it should have completely done away with cash donations which, he said, was the only way to bring transparency into political funding.

“Like they say that rickshaw drivers and small shopkeepers should also take money through digital means. Then what is the need for political parties to take up to Rs 1,999 in cash? Why can’t they take it through digital media,” Chhokar asked.

Read: Budget 2017 highlights: Jaitley says steps taken to honour honest taxpayers

What if those donating small amounts do not want to disclose their identity fearing political wrath, as Jaitley mentioned in his Budget speech?

Chhokar said: “Political parties should not take donations from those sources who do not wish to declare their identity. They have a choice not to accept such donations.”

Swaraj India President Yogendra Yadav also said that lowering the cash limit for anonymous donations will only divert attention from the problem instead of solving it.

“Earlier, if political parties showed a given donation coming from 10,000 people, they will now show the same donation coming from 1 lakh people,” he said.

Yadav added that the move will not affect the actual amount of unaccounted cash but only the way it is channelled.

Dipankar Gupta, however, hailed the government’s decision and said that Rs 2,000 limit will make it very difficult for political parties to accept large sums of unaccounted cash donations.

“Just like if you have small denomination notes, it becomes very difficult to keep all the money in cash. Likewise, to give Rs 1,999 time and time again will be very difficult and troublesome,” Gupta told IANS.

However, he added that parties should still keep records of all the donations.

“The move will definitely make political funding more transparent, but the more important thing is the symbolic goal we have scored.”

“Since political funding has been accepted by all parties as a relevant issue in curbing black money and stopping corrupt politicians, no one can deny that Prime Minister Narendra Modi has done something which should have been done long back,” he added.

Political analyst Amulya Ganguli said that lowering the cash limit may make political funding even less transparent than before.

“This is a very unrealistic attempt to curb black money in political funding. I think that larger sums will now remain unannounced,” Ganguli told IANS.

Read full Budget 2017 coverage here

Ganguli said that parties, which earlier disclosed a larger part of their funding on the record, will not even do so now.

“They will take more money but will show only Rs 2,000 on paper leaving out the larger sums. This will, in turn, create more black money,” he added.

“It shows that the government is not very serious on the issue of black money finding way into funding of political parties.”