Jaitley's Plans For Political Funding Reform Could Close One Loophole And Open Another

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.

Donations from unkown sources to national parties keep climbing

-500501001502002503003504004505005502004-052005-062006-072007-082008-092009-102010-112011-122012-132013-142014-15Donations from unknown sources (Rs. cr.)