Finance Minister Arun Jaitley's proposals on political funding reform could affect nearly 85% of Congress funding and 100% of the BSP's funding. But his proposed scheme allowing donations through bonds could shield corporate donors to some extent.
At the moment, political parties do not have to declare cash donations of less than Rs 20,000 each; donations over Rs 20,000 have to be in cheque form, and all details about the donor need to be disclosed. It is this loophole that FM Jaitley seeks to narrow; he has proposed that this limit be lowered to Rs 2,000, a recommendation earlier made by the Election Commission and endorsed by the non-partisan electoral watchdog, the Association for Democratic Reforms. While it can be argued that parties can circumvent this too, it will at the minimum increase their paperwork and accounting effort.
An analysis by the ADR of donations to political parties between 2004-5 and 2014-15 shows that 83% of the total income of the Congress during this period and 65% of the BJP's came in the form of cash donations under Rs 20,000 and were as a result from unknown sources. The BSP is the only party which has consistently claimed that it does not receive any funds over Rs 20,000 from an individual source; 100% of its funding during this period, as a result, came from unknown sources.
Additionally, FM Jaitley proposed "an amendment to the Reserve Bank of India Act to enable the issuance of electoral bonds in accordance with a scheme that the Government of India would frame in this regard. Under this scheme, a donor could purchase bonds from authorised banks against cheque and digital payments only. They shall be redeemable only in the designated account of a registered political party. These bonds will be redeemable within the prescribed time limit from issuance of bond." No further details were immediately available from the finance ministry. However, sources in the Election Commission who asked not to be identified, said that it seemed likely that such a scheme would mean that the details of who purchased the bond would be available with the RBI, but might not be easy to access by the public through the Right To Information Act or from the ECI. It would also allow the donor to avoid making public who the donations was for. "If it is framed in this manner, it will allow corporates to avoid scrutiny," the source suggested.
Former Chief Election Commissioner SY Quraishi supports the move to lower the bar on disclosure to Rs 2,000 but has questions about the proposed bond scheme. "We will have to wait for the details of the scheme, but hopefully the names of the people who purchase such bonds will be required to be made public, just as it is for those who donate more than Rs 20,000 through cheque," Quraishi said.