Among the more high-profile budget provisions and tax concessions in Pranab Mukherjee’s budget was listed a proposal to offer 100 per cent exemption to donations made by electoral trusts to political parties. Mukherjee prefaced it with the somewhat tepid observation that the House would agree to the need to make political funding transparent and said that this move was a step towards that. An understatement if ever there was one.
It is interesting that Mukherjee should have zeroed in on trusts. Many industrial houses are not comfortable making direct contributions to political parties even though the law allows company directors to take such a decision. In 2003, Parliament passed the Election and Other Related Laws (Amendment) Bill, 2003, that legitimised political funding.
Some companies have openly given donations, but by and large the corporate sector is somewhat chary of giving money directly from a company’s own funds. They create trusts through which they route this funding. The finance minister recognised that and the tax exemption is a gesture to acknowledge it.
The corruption which defines the political system in the country has mainly to do with electoral expenditure which has been expanding at exponential rates over the years. In 1980, it was estimated that a candidate needed Rs5 lakh to fight a parliamentary seat.
Today it runs into crores of rupees. The election commission’s ceiling on expenditure for a parliamentary seat is Rs25 lakh. The glaring gap is covered through anonymous funding, which also goes mostly unaccounted, thus generating corruption. Even though this proposal will not solve all the thorny issues involved in political corruption, politicians will get one more legitimate source of funds for elections. The trusts provide the buffer zone between the politician and the industrialist, where a legitimate public cause is served and neutrality is maintained.
But Mukherjee’s move is not the magic wand that will wave away corruption in politics. It will also be a while before companies come forward and show their hand as to whom their trusts prefer. Yet it is definitely a step towards making the whole process of political donations more transparent. In the long run it could have a beneficial downstream impact.
Comments