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26 January 2017 Editorial


26 January 2017

Donations and disclosures

If you want to know how political parties raise funds in the country, you will only get a part of the answer. The known donors and sources of contributions to national and regional parties account for less than a third of their total income. An analysis by the Association for Democratic Reforms shows that 69% of funds and contributions received by political parties from 2004-05 to 2014-05 came from unknown sources. There cannot be a better case than this statistic for demanding greater transparency in political funding. Going by income tax returns and statements submitted to the Election Commission, six national and 51 recognised regional parties together had an income of ?11,367.34 crore during this period, but only ?1,835.63 crore came from named donors, while other declared sources such as sale of assets, bank interest, membership fee and sale of publications accounted for ?1,698.73 crore. This means a total income of ?7,832.98 crore came from unknown sources. Details submitted by the Congress held that 83% of its income came from unknown sources and the BJP said it raised 65% of its funds as anonymous contributions. The reason for these startling numbers is that under the present income tax law, parties need not disclose the names of those donating up to ?20,000. To enjoy income tax exemption, they need to maintain records only of those who donate sums above this. This provision effectively gives parties the required cover to pass off sizeable donations as small contributions from anonymous donors.

Political parties in the legislature make far-reaching decisions, and their donors could have a bearing on policy. In 2013, the Central Information Commission ruled that political parties were covered under the Right to Information Act. It was pointed out that they got tax exemptions, land allotments and free airtime on state-owned media, in effect benefiting significantly from the exchequer. The order, however, is yet to be accepted by parties. Bringing them under the ambit of the RTI Act is definitely a step in the right direction. It would mean the list of donors, regardless of size of contribution, is open to public scrutiny. For this, parties would have to maintain records of small donors as well. State funding, perhaps partial, of elections is another solution to reduce the dependency on contributions, though the financial implications of this needs careful consideration. A more practical mechanism is to have a regulatory authority to receive authentic reports on political funding, scrutinise them and put them in the public domain. Transparency in funding is essential to ensuring clean, democratic governance. 

Towards clarity on Brexit

The condition the U.K.s highest court has stipulated for London to trigger Article 50 of the European Union treaty removes any shred of doubt about the legislature being bypassed in giving formal shape to the Brexit vote last June. The crux of the majority opinion is that there needs to be parliamentary endorsement in the form of primary legislation, not merely a ministerial decision or action, for the activation of the exit provision. In arriving at this position, the justices relied on the reasoning that Britain’s domestic laws would be significantly and substantially altered as a consequence of the impending termination of its membership of the EU. The stance of Prime Minister Theresa Mays Conservative government, which appealed an earlier ruling, was that once the people had spoken their mind in the June vote on whether to remain in or leave the EU, the executive could exercise the royal prerogative on matters of foreign policy. The opposition, on the other hand, had emphasised the propriety of a parliamentary consultation process before taking the country out of the EU, in the same way that its entry to the European Economic Community in 1973 was duly authorised by legislation. Ahead of the vote last year, the Leave campaign had alleged a serious erosion of national sovereignty within the bloc on account of the process of law-making initiated in Brussels, unmindful of scrutiny by a directly elected parliament across the bloc. It therefore seems only proper that members of Parliament are taken into confidence while the government sets out to give effect to the popular verdict in what was, after all, a legally non-binding referendum.

In the U.K. there is little political appetite remaining to attempt a reversal of the June vote, evident from the oppositions intent to press amendments rather than challenge the Brexit legislation that has now become imperative. Thus, as Ms. Mays March deadline to kick-start Article 50 approaches, there is more clarity over the shape of the U.K.s withdrawal from the bloc. British and European businesses may see Londons move to leave the single market as unpalatable, but the near-term future is far less uncertain. Ms. May, in her landmark speech last week, was quite explicit that national controls over immigration from the EU and independence from the jurisdiction of the European Court of Justice were redlines for her government. It remains to be seen how London and the EU strive to strike the best possible bargain in the months ahead to promote their mutual interests. For, as Ms. May has emphasised time and again, the U.K. is leaving the European Union, not Europe.




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