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Political Parties Get Lower Donations in FY16
Dec 21, 2016


Demonetisation has been a huge economic disruptor in 2016 impacting the common man. While the exercise is touted as a tirade against black money and terror funding, but it remains incapable to crack a whip on money laundering that happens in the name of political funding.

Donations received by political parties fell by a steep 84% in FY16. But these essentially are donations above Rs 20,000 that have to be declared by political parties in the form of an affidavit to the Election Commission. It excludes cash donations below the threshold limit of Rs 20,000. And political parties have been making hay by utilising this loophole. Reportedly, the cash contribution received by political parties increased from 0.14% in FY15 to 1.42% in FY16. This despite the notification made by the Election Commission in August 2014 that disallows tax benefits on cash donations made to political parties.

So while the government seems earnest in its efforts to put an end to the black economy, its efforts will not fructify it it leaves this hole for political parties to sneak away. My colleague Vivek Kaul has a very interesting insight on this anomaly that can undo the benefits of demonetisation. This is what he had to say

    Also, it is extremely unfair that the citizens need to show an identity proof while depositing their old Rs 500 and Rs 1,000 notes into a bank account, whereas political parties can continue to receive donations of up to Rs 20,000 in cash and need not declare who gave those donations. This includes the leading political party of the country which in 2014-2015 got half of its donations from unknown sources.

    In fact, as I have been saying repeatedly, the issue of black money cannot be tackled seriously, without making political funding transparent. This needs simple majority in the Parliament. The BJP has a majority in the Lok Sabha and can take the first step towards this. It is likely to be supported by some parties in the Rajya Sabha as well. Even without a majority, the party did manage to get the Goods and Services Tax passed through the Rajya Sabha. So, what is holding it back on this front?

    In fact, the Election Commission has suggested that "anonymous contributions above or equal to the amount of Rs two thousand should be prohibited." But why even allow a window of Rs 2,000? Political parties should move towards a totally cashless way of taking donations.

Data Source: Business Standard, Association of Democratic Rights

This Chart Of The Day was published in The 5 Minute WrapUp - Seedhe Mann Ki Baat...

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