Well before financial year 2017-18 begins, the Lok Sabha has signed off on the Budget with the passage of the Finance Bill of 2017. It includes multiple amendments proposed by the government that did not figure in Arun Jaitley’s speech of February 1, either in letter or in spirit. For instance, while the speech devoted 420 words to proposed measures to improve transparency in electoral funding, amendments have been made to the Companies Act of 2013 that actually turn the clock back on existing disclosure standards. Till now, companies could only contribute up to 7.5% of their average net profits in the past three financial years to political parties. They were required to disclose in their profit and loss accounts the amount of contributions and the names of political parties to which they were made. The ceiling has now been dropped, paving the way for a firm to deploy unlimited capital into political coffers irrespective of its own financial and operational health. Companies would still have to reveal the extent of their financing of parties, but no longer have to name their preferred parties. For the sake of argument, one could say the 7.5% limit was arbitrary and restricted willing and able corporate donors’ ability to influence political activity. But doing away with the limit makes firms susceptible to funding ‘requests’ from local, regional or national political formations while taking away excuses — such as it being a loss-making unit, or breaching the funding cap.
This would open up new opportunities in crony capitalism. Pressure could be exerted on a company awaiting government clearances, or a loan restructuring from public or cooperative sector financiers. Even a publicly listed company can set up subsidiaries just to fund parties. This removes any pretence of transparency in the process as the donor will not have to disclose who he paid; the recipient has no such obligation either. It is not surprising that India Inc. has remained stoically silent so far. This abandonment of the 7.5% requisite comes in tandem with the proposal to float electoral bonds to give anonymity to political donors. The scheme for such ‘bearer’ bonds is still being worked out with the central bank, but how this will meet the objective of transparency isn’t clear yet. The push for cashless modes for political contributions sounds worthy, but reducing the ₹20,000 limit on cash donations to ₹2,000 does nothing to guarantee that monetary muscle power will dissipate from electoral processes. Instead of, say, a lakh of such donors, a party can now share 10 lakh random names to justify cash holdings. Transparency is not synonymous with anonymous transactions, unlimited corporate donations, relaxed disclosure norms and the persistence of cash. The Budget’s promise of “reform to bring about greater transparency and accountability in political funding, while preventing future generation of black money”, truly rings hollow.