The government will soon launch the electoral bonds scheme to fund political parties as proposed in this year’s Budget, Union Finance, Defence and Corporate Affairs Minister Arun Jaitley said on Sunday.
The Minister said the government has sought suggestions from all parties on the contours of the scheme, including whether such bonds should be issued only during elections.
‘Easier decision making’
Speaking at the ‘Breakfast with Business Line’ event held at the ITC Maurya Hotel here, Mr. Jaitley defended the decision to lift the cap on corporate funds to political parties and said it was an improvement from the current situation where companies siphon funds from their business activities to fund parties with ‘unclean money.’
Dismissing the notion that recent electoral victories of the BJP are a referendum on its bold move to scrap high-value currency notes last year, the Finance Minister, however, said, “Decision making in 2017 is far easier than it has been in the past as there is a lot more public support to decisions.”
“The fear that reforms have a political cost… we have crossed that stage,” Mr Jaitley said in conversation with Business Line Editor Raghavan Srinivasan.
He stressed that the reforms to electoral funding, initiated by the government through the electoral bond scheme, and the amendments to the Companies Act introduced in the Finance Bill were aimed at giving ‘some protection to identities (of donors), expanding the constituency of donors and encouraging clean money’ coming into politics.
“Till the 1970s and the early 80s, the bulk of political funding in India used to come from political workers going from home-to-home, shop-to-shop, cutting out vouchers for small donations of ₹10, ₹50 and ₹100. That amount now, because of inflation, can increase. If you were to ask me which is the ideal method, I think it is to go back to that,” the Minister said.
“Now people don’t want to put in that kind of labour because everybody is pre-occupied with their own jobs. But now you have the instrument of technology available, where large parties can always tell their support base, ‘fund us online’. From ₹10 to ₹10,000 or even a lakh of rupees, you can pay online,” Mr Jaitley said.
Stressing that a system where large parties would get thousands and millions of supporters giving donations online would be the cleanest way, the Finance Minister said, “I have suggested it to my party to start an online campaign and get at least a million people to donate – that will be a large corpus with small donations. That’s the system that President Obama followed in his first election. There are no quid pro quos and no obligations of anyone.”
Widening appeal
The top cabinet minister asserted that the BJP’s ability to get votes from the weaker sections of society has significantly improved as is evident from the recent election outcomes in tribal districts of Odisha, the slums of Mumbai as well as Uttar Pradesh.
“In several of these areas, the impact of the Congress party was quite high in the past even when they lost elections,” he said, highlighting the quality of gains for the saffron party.
“Essentially, money will come from where money is available. As it is, corporates are giving (money to political parties) and they are giving unclean money. They are siphoning it out of their businesses in order to donate. This will at least prevent that abuse,” Mr Jaitley said about the amendments introduced in the Finance Bill that abolish the funding cap of 7.5% of previous three years’ net profits under the Companies law.
FCRA amendments
These changes, Mr Jaitley said, need to be seen in conjunction with the amendments to the Foreign Contribution (Regulation Act) made last year to change rules that labelled an Indian company as a foreign source of funds if it had some NRI or foreign shareholders.
“Now when sectoral caps have been lifted in almost every sector to 74% and 100%, you won’t find ten donors in India who won’t get covered by that definition. So, for instance, a telecom or tobacco company doing business in India — Indian company doing 100% business in India, but within the meaning of FCRA would be debarred,” he pointed out to explain the need to widen the definition and increase the constituency of donors.
“Similarly, in the Companies Act, a new company can’t give, a company with so much profit can’t give, so each of these changes were narrowing the constituency of donors and pragmatically, if you narrow the constituency of donors, you won’t have five donors left. This doesn’t mean that donations won’t come, it only means that donations will come in cash,” the Minister said.
