While the common man is being subjected to
infinite scrutiny and daily changing rules, the political parties enjoy to have
a free-run at not disclosing a large part of their income, running into
thousands of Crores. As long as the political parties continue to enjoy this
exemption, the menace of black money cannot be said to have been tackled.
In one of the most unprecedented decisions
in the Indian history that was taken on 8th November, 2016, the Prime Minister
Shri Narendra Modi, suddenly announced the cancellation of Rs. 500 and Rs. 1000
notes with a view of “eliminating black money”. Over the last seven weeks, the PM has regularly reiterated this
stand, and called Demonetization a “war on black money” through his speeches at various election rallies, the survey on his
mobile app, and most recently in his “Mann ki Baat” program on Sunday. However, Mr. Nasim Zaidi, the Chief Election
Commissioner of India, recently expressed that “many political parties are being
used as conduits for siphoning off black money”.
As per the Representation of the People
Act, 1951 (RP Act), political parties are not required to report the names of
the individuals or organizations from whom they have received donations of
amounts less than Rs. 20,000. A study by Association for Democratic Reforms
(ADR) has shown that these ‘unaccounted donations’ form a large part of political parties’ income. In the year 2014-15 alone,
BJP declared an income of 505.26 Crore from unknown sources, while Congress
received a sum of 445.22 Crore from unknown sources during the same
time-period. At present, there are over 1700 registered political parties in
India, and many political parties may have been misusing this exemption to
convert their black money, as voiced by the Chief Election Commissioner.
Following the uproar caused by the
statement of revenue secretary, Mr. Hasmukh Adhia, about political parties
being exempted for deposits made into their own accounts, the Finance Minister,
Mr. Arun Jaitley was quick to bring out a press release, stating that no
exemptions had been given to political parties ‘after’ demonetization. What he
conveniently chose to ignore was that the political parties have long been
enjoying these exemptions from ‘before’ demonetization. At a time when the rules for common man are being
changed every day, why is the government not showing any intent to change the
rules for the political parties? In fact, at his rally in Kanpur, the Prime
Minister proclaimed that the laws regulating the funding of political parties
were made by the Congress & the present government has “not altered
even a ‘comma or a full stop’ in that.” The question which arises then, is that, if the Prime Minster
considers Demonetization to be a war on Black Money, why has he not made any
effort to change these rules which are helping the political parties to siphon
off black money despite a warning from the CEC?
In the same press release, Mr. Arun Jaitley
also said that “Under Section 13A of IT Act 1961, Political parties have to submit
audited accounts, income & expenditure details and balance sheets.” However,
further research of the documents analyzed by Association for Democratic
Reforms in this matter shows that the reality is far-different from what is being
projected by Mr. Jaitley. While, it is true that political parties are required
to get their accounts audited by the Chartered Accountants, they are not
required to disclose the details of donors giving less than 20,000 rupees to
either the Election Commission or the IT Department. This is also evident from
the Income-Tax returns filed by BSP for the year 2013-14. Moreover, can the IT
Returns of the political parties make them accountable for their expenditures?
A close look at the IT Returns of BJP for the year 2014-15 reveal that the
party spent 2.1 Crores on ‘Entertainment’ within one year. If no red-flags were raised on this, who is to
stop a political party from spending 21 Crore or 210 Crore on ‘Entertainment’ in the
upcoming years? Such unchecked income and expenditure, can easily provide a ‘legal’ pathway to
convert black money to white.
Another analysis by ADR reveals that out of
1703 registered political parties in 2013-14, only 69 parties submitted reports
of donations (above Rs. 20000) to EC, while only 14 parties submitted their
audit reports. The status of income and expenditure of remaining 1620 parties
(~95% of the registered parties) remains largely unknown. Thus, if 95%
political parties can go unquestioned about their finances, can Demonetization
really be called a “war against black money”?
Recent revelations of an Enforcement
Directorate probe which revealed that the Bahujan Samaj Party (BSP) deposited
105 Crores into their party account in 1000 and 500 rupee notes after
demonetization only reinforce the need for making the political donations
accountable. BSP's supremo, Mayawati has since explained that they received this
amount in small donations from all over India since August 2016, and is
therefore under the ambit of law. This is consistent with the income-tax
returns submitted by the party to the Election Commission over the last 10
years, where BSP has not received a single donation over 20,000 rupees in the
last ten years, as per the analysis of ADR. At a time, when the common citizen
is being questioned for even depositing 5000 rupees in their personal account
(Non-KYC compliant accounts are still required to provide a satisfactory reason
to two bank officials), should the political parties be given a free-run to
deposit hundreds of crores into their accounts without declaring the sources,
while also enjoying 100% tax-exemption?
When according to the Prime Minister, the
beggars are also using swipe machines, and he is urging the whole country to go
cashless, why is he not leading from front by mandating the BJP and other
political parties to go cashless? Why is the Modi government which enjoys clear
majority in the Lok Sabha, not showing any intent to curb black money, by
amending the RP Act, or bringing an ordinance to remove the 20,000 Rupees
limit, despite suggestions by the EC? In the presence of this evidence, it is
abundantly clear that unless the laws which allow political parties to freely
deposit hundreds of crores in their bank accounts are amended, it would be
grossly inaccurate to call Demonetization a war on black money.
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