More Opacity - With Legal Backing Too

The budget proposals on political funding are not enough. They will only make it more secretive.

- Venkatesh Nayak

While presenting the budget, the finance minister made an announcement about making donations to political parties more transparent. If the proposals to amend the relevant laws are approved by parliament, from April 2017 donations to political parties can be made in cash only up to ₹2,000; payments of higher value will be only through cheques or digital mode and donors will be able to buy ‘electoral bonds’ that will be sold through commercial banks under the regulations made by the RBI. some commentators have hailed this as a major step forward, while some of us have been sceptical.

If the amendments are approved, political party funding is likely to become largely opaque in future. Here is why this is a very real possibility.

The finance bill proposes to amend the reserve Bank of India Act, the Income Tax Act, and the representation of the People Act. The RBI Act is sought to be amended to allow for the issuance of electoral bonds. The IT Act is sought to be amended to exclude donations received by these political parties through ‘electoral bonds’ from being reported to the IT department every year in order for them to continue to avail the exemption from paying income tax.