In a major and unprecedented move to clean the politics of black money used to fund the political parties, finance minister Shri Arun Jaitley slashed the donation to political parties in cash from earlier Rs 20,000 to just Rs 2,000. Now, any donation above Rs 2000 to any political party can only be made via cheque, draft or electronically. The Election Commission had proposed the central government to cap the cash donation to political parties to Rs 2000 and Modi government, clearly determined to clean the political system, accepted the suggestions.
In the budget, finance minister Arun Jaitley also announced proposal of an amendment to the RBI Act which will enable issuance of electoral bonds. These bonds can be redeemed by the political parties in their registered accounts within a specific time frame till the bonds are valid. “The government will make a scheme. There would be a notified bank. Anyone would be, through cheque, digital payment, able to purchase bonds from there. These bonds would be bearer bonds and will have to be encashed within a short stipulated time, for instance 30 days. Every registered party will have to give details of one account to the EC—one party, one account,” said Arun Jaitley when asked how would the bonds function.
As per a study conducted by Association of Democratic Reforms (ADR), 69% of the total income of national and regional political parties in the 10 year period of 2004 to 2015 is from anonymous sources and cannot be traced. In terms of figures, a sum of Rs Rs 7,832.98 crore of the total Rs 11,367.34 crore donated to the political parties is unaccounted for. All these unaccounted donations are those which are paid to the parties in cash.
Mayawati’s BSP is the only party to consistently declare receiving ZERO donations above Rs 20,000 in the period 2004-14, which means that 100% of the party’s donations came from unknown sources. The total income of the party, however, increased by 2057% from Rs 5.19 cr during FY 2004-05 to Rs 111.96 crore during FY 2014-15. The income of National Parties from unknown sources increased by 313%, while the income of Regional Parties from unknown sources increased by 652% in the same period. Samajwadi Party gets 94 % of its total income from unknown sources. The capping of political donations in cash at Rs 2000 is a massive blow to the parties, especially parties like Mayawati’s BSP, Mamata’s TMC and Yadav family’s SP, which solely depend on black money for their survival and to fund the elections.