Is Modi Going To Ban Cash Donations To Political
Parties?
Prime Minister Narendra Modi, in an impassioned campaign
speech in Kanpur on December 19th , some six weeks before a slew of
state assembly elections are expected,
has put the cat amongst the pigeons.
He hinted at motivated opposition to his moves, and not only
for the ‘notebandi’.
He said the Opposition also appeared to be against curbing
cash funding of political parties, and holding all state elections together with
the general elections once every five years.
The Prime Minister’s remarks on reforming political funding assume
special significance, coming almost immediately after the Election Commission’s
suggestion of restricting anonymous cash donations to just Rs. 2,000 each
instead of the current cut-off at Rs.20,000.
Was the Prime Minister raising the topic because he may be
thinking of amending the Income Tax law with regard to cash donations to
political parties?
That this will resonate very well with the public is certain
as most analysis indicts political funding as the main generator and depository
of black money.
In his Kanpur speech, Narendra Modi said that the Opposition
disrupted the functioning of the entire Winter Session of parliament so that no
discussion on these important topics could take place.
By this he indicated his preference for consensus on such
important changes, but with an opposition determined to back the status quo,
the NDA may well have to use their majority in the Lok Sabha instead.
Also, it will be easy to implement as a money bill amendment
to the relevant section of the IT Act.
In the tumultuous session of parliament just concluded, the
government did manage to get a section added to the Income Tax Act, again as a
money bill, with regard to people depositing black money after the
demonetisation, and it being taxed at 50%.
The Finance Ministry also recently reacted to false news
reports that all political donations were tax free, and their deposits into the
bona fide bank accounts of political parties, even in the discontinued notes,
would not even be scrutinised.
The government clarified that the tax exemption for
political parties was in terms of the existing and relevant clauses in the
Income Tax Act. But, even in this old provision, all political parties had to
maintain books of accounts for every donation in cash or cheque, and records of
its expenditure, duly certified by a chartered accountant.
Without this, the tax exemption would not apply. However,
most commentators thought the special tax treatment to political parties and
others like trusts and NGOs should now be done away with.
And the Prime Minister may now be voicing the peoples’ will,
particularly with regard to the ending of cash donations to political parties.
The BJP has meanwhile also asked all its MPs to internally
declare how much of the demonetised notes they had each deposited into their
individual accounts after the cut-off date of November 8th.
It appears, said the Prime Minister, that instead of working
for the honest citizen and the poor, the Opposition was more interested in
shielding the corrupt.
Prime Minister Modi said he was fully aware of the difficulties
being faced by ordinary people all over the country due to shortage of new
notes.
He reiterated that the situation would begin to ease after
December 30th , as promised by him, after a period of 50 days from
the initial announcement.
But while honest citizens were facing hardships, the Prime
Minister acknowledged, the corrupt had managed to ‘purchase’ bank officials to
convert their own money via the back door.
Here too, independent auditors have been called in at the
urging of the RBI and the Finance Ministry to look into irregularities and
pinpoint responsibility.
Prime Minister Modi positioned the BJP firmly against corruption
in all its forms and thanked the people for their patience. But by mentioning the sold-out bankers in his
speech, he implied that they would not be spared.
Clearly this is a time of transformation for substantial
gains expected by the government in the medium to long term. But benefits of
demonetisation and related initiatives were meant for the honest citizenry
only, said Modi.
He described many of the steps taken towards digital and
cashless transactions and how the government is incentivising such usage both
for the customer and the trader or service provider.
Modi was at pains to point out that the privileged and
corrupt had been exposed by demonetisation and the coming days would reveal
details of many of their financial misdeeds.
Many middle-men and facilitators such as jewellers are being
caught with illicit currency and bullion every day by the Enforcement
Directorate (ED), and other investigative agencies.
None of the corrupt would be spared, Modi said. And by this,
he meant the privileged political class, never targeted before, as well.
It is a political class that has been long used to shielding
each other from the laws of the land. This, whether they were in power or not,
in the government or the opposition.
Or even if they had lost their elections now, but had been
elected or nominated representatives of the people in the past.
To illustrate the point, the NDA government has had to evict
over a hundred politicians and senior officials who had hung on to palatial
government accommodation long after their terms in office ended. This they were
able to do because of the collusion of the previous governments.
There has always been, a different application of the laws
of the land for various sections. A lenient treatment was meted out to those
who had status, influence, and wealth. A heavier application of the laws
altogether was reserved for the poor and powerless. And there was a virtual
immunity for the mighty politician, bureaucrat, or judge, in, or out of office!
If Modi succeeds in changing this ethos, via his multiple
reforms, for a more egalitarian approach, he will certainly bring about a
revolution of modernity and enduring progress.
The public at the Kanpur rally seemed ecstatic with what Modi
was saying, but uncertain too, because this is all uncharted territory.
Never in the history of independent India has such a
cleansing been attempted.
The results to date are indeed unclear, but judging from the
enthusiastic crowds listening to the Prime Minister, people are most hopeful.
A transformation of the Indian economy, its practices, and
most importantly, the elected, nominated and official establishment, seems very
much on the cards.
Reports are also coming in on substantial income tax reliefs
for the middle classes in the forthcoming budget. While this may fall short of
the abolition of direct taxes, it is nevertheless likely to be welcomed by all.
For: Nationalist Online English
(1,103 words)
December 19th, 2016
Gautam Mukherjee
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