The Big Story: Show us the money

The Election Commission is reportedly planning to write to the Central Board of Direct Taxes, informing it of its decision to de-list 200 political parties that have not contested elections since 2005 and exist only on paper. These, the commission concluded, could be nothing but money laundering operations and should not be entitled to tax benefits extended to serious political parties. The Election Commission seems to be gently nudging the government towards addressing the elephant in the room: black money poured into political funding. Ever since the prime minister rolled out demonetisation last month, pitching it as a bid to cleanse the system of black money, the manner in which political parties raise money has become an elephant that cannot be ignored.

Political funding remains a vast and murky world, skewing electoral processes and outcomes, even shaping key policy decisions. Among other things, it is believed to be a direct conduit of the influence that big business has on government. Previous attempts to bring transparency to this process have failed, resisted both by parties and business houses. In 1998, the Tatas introduced a corpus fund to finance political parties, presided over by a board of neutral citizens who could decide how the money would be distributed. The scheme “failed spectacularly”, observers have commented, because most political donations were made in black money.

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Political parties, on their part, have steadily defied attempts to make them reveal their sources of income, even though donations of above Rs 20,000 have to be recorded and disclosed. None of the national parties complied with the 2013 judgment passed by the Central Information Commission, dictating that political parties should be subject to the Right to Information Act. With good reason, perhaps: according to analysis by the Association for Democratic Reforms, between 2004 and 2013, 73% of national parties’ income came from undisclosed sources. Governments have steadily built more protections around themselves. Earlier this year, the Lok Sabha cleared legislation that would exempt parties from the provisions of the Foreign Contributions (Regulation) Act, 2010, a law happily wielded by government to crack down on non-governmental organisations that it does not like.

Shedding light on this political economy would mean breaking with the default mode in which our electoral system has functioned for years. The recent zeal for cleaning out the augean stables has prompted various politicians, including Prime Minister Narendra Modi, to speak gingerly of the need to discuss “state funding” for political parties. But using demonetisation to crack down on the existing irregularities in party funding may still be a bridge too far.

The Big Scroll: Scroll.in on the day’s big story

Jagdeep S Chokhar on why the war on black money should have started with party funding, not demonetisation.

Political pickings

  1. A day after the Reserve Bank of India announced deposits of high-value currency notes worth more than Rs 5,000 would be subject to scrutiny, Finance Minister Arun Jaitley said no questions would be asked of one-time deposits, however large the amount, but repeated deposits would be examined.
  2. In an astounding show of efficiency, Uttar Pradesh Chief Minister Akhilesh Yadav inaugurated 5,500 projects in 13 different places in Lucknow, all within six hours on Tuesday.
  3. The National Green Tribunal has ruled that airlines will have to pay a fine of Rs 50,000 for emptying their toilets mid-air.
  4. Five years after then Human Resources Development Minister Kapil Sibal had nudged the Central Board of Secondary Education into making Class 10 board exams optional, they have been made mandatory again.

Punditry

  1. Even after the exit of Cyrus Mistry, the Tata Group will have to answer questions on corporate governance, writes Omkar Goswami in the Indian Express.
  2. In the Hindu, Josy Joseph writes that the Centre alone is not to blame for scuttling existing norms to appoint the new army chief: the army itself has betrayed signs of nepotism.
  3. In Livemint, Hamsini Hariharan and Priyadarshini Ravichandran write that development for the North East cannot be an incidental benefit of India’s Act East policy, it needs particular attention.

Giggles

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Maria Bach on how the concept of economic development was adapted for India in the late-19th century:

“Finally, like many of the Indian Political Economists in the late 19th century, Gokhale used Western economic categories to argue for economic policy that would counteract the British deindustrialisation of India that was emerging in the late 19th century (industrial activity and capacity was being reduced without the simultaneous growth of a modern industry in the same line of production to compensate). For instance, Gokhale argues that if the automatic adjustment assumed in free trade theory (that a commodity should be produced where the comparative cost of its production is the lowest and consumed where the relative price is the highest) has not occurred, then any agency who promotes the dismembering of the impediment would be following the interests of free trade (ibid). In other words, Gokhale legitimises the promotion of domestic production through the boycott of British goods and capital investment in the name of free trade – their rulers’ preferred policy. This example shows an instance of how ideas can be picked up far from its original geographical location and be interpreted to suit the destination’s circumstances.”