Political Marketing: Political Funding A Big Issue To Clean Politics

 Political Reform: When we are sick, we want an uncommon doctor....and when we are at war  we want an uncommon general. Only in politics we are satisfied with common man.

The controversy over donations by dubious entities to the Aam Aadmi Party shows up both the murkiness of election financing in India as well as the double standards of the major political parties.

The facts of the case are probably too well known by now to bear repetition. What has been established is that four companies, which donated a combined Rs 2 crore to AAP, apparently gave fictitious addresses and have little to show by way of revenue.

We would not have known of these donations in the first place if AAP had not put a list of all its donors — even those who donate a sum of Re 1 — on its party website. This radical move by AAP has made the party’s funding transparent, but it has not been replicated by anyone else.

Obviously, in this instance, the move to greater transparency has boomeranged on AAP since it had not done adequate checks on its big donors, something expected of a party that purports to be an example of probity. But more than that, this incident shows the lacunae in election financing regulation in India and the duplicity of all major parties, particularly Bharatiya Janata Party and Congress.

A brief history of election financing regulation in India would show that it’s been largely ineffective. The link between black money, about which the BJP government seems so vexed, and political funding had been noted very early on by both the Santhanam Committee (1964) and the Wanchoo Committee (1971). In between these two reports, PM Indira Gandhi banned corporate donations to political parties which, according to her detractors, was aimed more at her political rivals than a cleanup of the system.

Subsequent government panels, such as the Dinesh Goswami Committee and Indrajit Gupta Committee, recommended partial state funding of elections and the establishment of a separate election fund. While the latter has remained a non-starter, limited state funding in the form of allocation of free airtime on state-owned television and radio networks was put in place in 1998.

The two most significant developments in election financing occurred via a court judgment in 1996 and a legislative amendment in 2003. In 1996, the Supreme Court in the Common Cause judgment ordered all political parties to file income tax returns. This would not have happened without a court order since, prior to the ruling, no political party had ever submitted their accounts.

The other development was a legislation passed by the National Democratic Alliance government making corporate and individual contributions to a political party fully tax deductible under relevant sections of the Income Tax Act. It also made it compulsory for parties to submit to the Election Commission a list of donations of Rs 20,000 and above.

While these measures introduced some accountability to election financing, there are far too many escape routes for parties. One of the most important gaps in the law is that, unlike countries such as the US, parties do not have to report small contributions. This potentially means that a contributor can remain anonymous by donating any number of times an amount below Rs 20,000. Indeed, till the 2009 general elections, the trend was that the bulk of donations to BJP and Congress was below Rs 20,000, meaning that a host of donors remained anonymous. This trend, has, however changed.

According to figures compiled by the Association for Democratic Reforms, for the 2013-14 financial year, 90% of donations to national parties were from business houses. These numbers did not include BJP because it had not submitted its list of donors to EC by the prescribed deadline. This has led to worries about the hold of corporate groups on political parties.

The Bahujan Samaj Party is the only exception since it claims to have got no donations over Rs 20,000. This means that we are in the dark about the identity of BSP’s donors.

While election financing remains a grey area, campaign spending is even murkier. Though the cap on campaign expenditure has over the years been raised substantially, it is accepted that most election candidates spend well over the limit. Loopholes in the Representation of the People Act allow a political party and its supporters to spend on election campaigns without it contributing to a candidate’s spending limit. Besides, even candidates admit privately that they under-report their spending.

Revelations about dubious donations to AAP have rightfully ignited a debate about election financing. But that should not detract from AAP’s efforts to make its finances open to the public. All other parties still have much to hide despite having been forced by the courts and civil society groups to reveal their accounts.

It is no accident that BJP, which is locked in a tight contest with AAP in the Delhi polls, has had the most to say about the illegality of the donations to AAP. At the same time it has had very little to say about the myriad problems afflicting election financing. That the common voter is on the side of transparency is evident from the fact that there has been a spike in contributions to AAP, much of it in small amounts, despite the donation controversy.

Ref: http://blogs.timesofindia.indiatimes.com/ronojay-sens-blog/the-cost-of-democracy-controversy-over-dubious-donations-to-aap-shows-up-the-double-standards-of-bjp-and-congress/