If Narendra Modi is serious about his promises to tackle black money, making political funding more transparent and accountable is an excellent place to start.

A garland made of cash. Credit: Reuters

                 A garland made of cash. Credit: Reuters

If you really want to clean your house, start cleaning at the top. “Jhadu uppar se lagai jaati hai” is the common Hindi saying.

The prime minister wants to eliminate corruption and black money from the country. However, as former BJP general secretary and a veteran politician who has run various elections campaigns, he should have known that political parties sit at the top of the ladder of black money.

Politics paise waalon ka khel hai (politics is a game for the rich) is a common belief.

Politicians and black money go hand in hand. In north Indian states likes Uttar Pradesh, Madhya Pradesh, Rajasthan and Bihar, MLAs move around in a fleet of SUVs, with a host of lackeys in tow. Each minister is a parallel economy unto himself, his cronies entirely dependent on him for survival and more.

Who finances their politics? Most government contracts – for roads, bridges, liquor and so on – are cornered by cartels controlled by the legislators themselves. These contracts generate cash in abundance to keep the political cycle of an average legislator lubricated. Many ministers and MLAs are strongmen – extortion, protection money, supari and other kinds of crime proceeds add to their well of black money.

A large part of the black money thus generated goes to party funds. The deeper the war chest of a party, the more power and influence it has and greater are its chances of winning an election.

In addition, parties are funded by contractors and corporations. Bigger the party, bigger the corporations financing it. Departments like public works, urban development and irrigation make major contribution to party funds. Contracts are awarded in government departments, but decided in party headquarters.

Accounting for cash

So how do the political parties account for all this cash received?

Section 29c of the Representation of the People Act, 1951 says that political parties are required to submit details to the Election Commission of only those donations received from a person or company that are in excess of Rs 20,000. Taking advantage of this rule, major parties like the Congress, BJP and Nationalist Congress Party, between 2004 and 2015, have shown more than three-quarters of their funds as cash received from unnamed sources, with each separate transaction being less than Rs 20,000.

The Aam Aadmi Party (AAP) is the sole exception to this rule. As per a report released by the Association for Democratic Reforms and National Election Watch, AAP was the only major political party to declare details of donations received below Rs 20,000, in 2014-15. The BSP, on the other, had showed all its donations as below Rs 20,000.

Once the ill-earned money is camouflaged as cash donations, comes the question of how to harness it to win elections.

Under rule 90 of the Conduct of Election Rules, 1961, the Election Commission prescribes the upper limit of the total election expenditure that an individual candidate can incur. Violation of the ceiling amounts to a corrupt practice under section 123 (6) of Representation of the People Act, 1951 and disqualification for six years. At present, the upper limit of election expenditure for an assembly constituency in bigger states is Rs 16 lakh and for a parliamentary constituency is Rs 40 lakh.

But there is no cap on party expenditure. Since the party can spend as much money as it wishes to, the objective behind capping individual candidate’s expenses is defeated. This distortion was in full display during the 2014 Lok Sabha elections. Arguably, the prime minister ran the most expensive election campaign in the history of Indian parliamentary democracy.

But since now he is firmly in the saddle and has undertaken the great purge, it is time he strikes at the very genesis of black money.

“Flags go up, walls are painted, and hundreds of thousands of loud speakers play-out the loud exhortations and extravagant promises. VIPs and VVIPs come and go, some of them in helicopters and air- taxis. The political parties in their quest for power spend more than one thousand crore of rupees on the General Election (Parliament alone), yet nobody accounts for the bulk of the money so spent and there is no accountability anywhere. Nobody discloses the source of the money. There are no proper accounts and no audit. From where does the money come nobody knows. In a democracy where rule of law prevails this type of naked display of black money, by violating the mandatory provisions of law, cannot be permitted,” noted the Supreme Court in Common Cause vs Union of India in 1996.

If the court were ruling today, it would have added the following to its list of naked display of black money: 3D holographic projection technology, full page ads in leading dailies, TV commercials, LED mobile vans, orchestrated social media campaigns and so on.

The time for reform

But the prime minister has a historic opportunity. The scrapping of high-denominations notes has inconvenienced millions of ordinary citizens across the country. It’s time to cleanse the country of black money.

The prime minister should amend section 29c of the Representation of the People Act and make it mandatory for parties to declare the source of all their donations, even if it is of a single rupee. Further, he should bar parties from taking donations from corporations with an annual turnover of more than Rs 50 crore. This will exclude oligarchs from controlling parties and governments. In addition, he should immediately put a ceiling on the election expenditure of political parties as well. It can be made at par with the cap on individual expenses.

Modi should also grant greater autonomy and powers to the Election Commission. To begin with, he should take the appointment process of election commissioners out of the hands of the government. A panel comprising of the Chief Justice of India and two eminent jurists chosen by him may appoint commissioners henceforth. In January this year, the Election Commission had submitted a proposal for complete independence from government control, including constitutional protection for all three of its members as opposed to just one at present. The prime minister should immediately accept that proposal.

He should make necessary amendment in the RTI Act to make all political parties, including the BJP, comply with the Central Information Commission (CIC) order dated June 3, 2013 that says all recognised national parties should be brought under the Right to Information Act, 2005 as “public authorities”.

The CIC order had declared six national political parties, namely the INC, BJP, CPI(M), CPI, NCP and BSP to be “public authorities” under section 2(h) of the RTI Act. All parties have been resisting this order and, as of today, are in breach. The previous Lok Sabha tried to change the RTI act to exclude political parties from the ambit of public authorities. But the bill lapsed.

The prime minister should ask his government to make the necessary change in the definition and include political parties in its ambit. He should also make it mandatory for political parties to disclose for public scrutiny the complete details of their income, expenditure, donations and funding including details of donors.

Under the Representation of the People Act, only those who stand for elections have to disclose their assets, liabilities and criminal history before the Election Commission. Additional clauses can be added to the Act to make the disclosure clause applicable to all party office bearers, whether occupying central, state or district posts in the party.

These would be the first few steps in cleansing the political arena of black money.

One more thing. In 2014, the Delhi high court found both BJP and Congress guilty of taking foreign funding and violating the provisions of the Foreign Contribution Regulation Act and directed the home ministry and Election Commission to take action against the two parties within six months. Both the BJP and Congress had taken large donations from the foreign mining corporation Vedanta. But in April this year, the Centre, through a retrospective amendment in the FCRA, let both parties off the hook by saying that donations from foreign companies with an Indian subsidiary are okay. The prime minister should revoke this amendment and instruct the home minister to initiate action immediately.

The bottom line is those who generate black money are able to do it only because of political patronage. It’s a vicious cycle. Black money finances politics and politics, in turn, shelters the crooked. Only by breaking this cycle can the country be made free from the scourge of corruption and kala dhan.

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