What are the major issues in India's political finance regime? To what extent, the current government efforts fix these issues? Discuss in the light of two amendments to the Finance Bill, 2017.

Published: September 21, 2017

India has a parliamentary system of government. Representatives are directly elected by the people. Indian political system in spite of being a successful democracy has been grappling with major issues like:

  1. Expenditure in elections exceeds the limit provided by Election commission, even Supreme court has made this observation in PUCL v/s Union of India case.
  2. Lack of transparency in contribution
  3. Use of black money for funding elections used for cash distribution, liquor sale etc
  4. Corruption erodes performance and compromises governance
  5. Disclosure for contribution only necessary for Rs 20,000/- and above, below this payment in cash allowed. Thus several donations in smaller denomination allowed.
  6. There is no independent audit of the accounts

Finance Bill, 2017 provides for amendment to some of the provisions:

  1. Limit for cash donations has been lowered to Rs 2000/-, thus more donations would be disclosed now and more transactions through other channels like cheque would bring transparency
  2. Removal of limit for corporate funding which was earlier as proportion to profit 7.5 %. This will allow more accounted flow from corporate
  3. Provides for electoral bonds for making donation through banks, these can only be redeemed at a designated bank account of a registered political party for which the bond is purchased.

The amendments thus fail to solve the issues as:

  1. Cash limit has been lowered and not disclosure limit
  2. Electoral bonds will make funding more opaque

 These steps are inadequate to bring about the desired level of accountability and transparency in political funding pre-requisite for responsible and accountable governance. Recommendations of law commission  like improved disclosure norms, implementation of RTI, disclosure of all contribution up to Rs 20 Crore can be taken at priority.

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