Govt fails to act on EC's concerns over political funding

govt fails to act on ec concern on funds [File] Representative image

It has been over a year since the Election Commission raised serious concerns over the Finance Act, 2017, which introduced amendments in other laws, especially the Representation of the People Act and the Companies Act, noting that the changes would have a serious impact on ensuring transparency in funding of political parties.

However, responses to an application made under the Right to Information Act reveal that no action has been taken on the concerns of the EC, barring an exchange of correspondence between different departments of the government.

The documents provided by the government to the RTI applicant, Commodore L Batra (retd.) show that on July 3, 2017, the Legislative Department wrote to the Department of Economic Affairs, seeking its views on the issues raised by the Commission. The Election Commission had written to the Ministry of Law and Justice on May 26, 2017, seeking reconsideration and modifications of the amendments brought about through Finance Act, 2017.

The Legislative Department sent a reminder to the DEA on August 18, 2017, asking for the response on the EC's letter to be expedited. However, the Legislative Department did not get any response from the DEA, and it sent another reminder to the latter on June eight, 2018.

The DEA, meanwhile, in response to the RTI query, stated that an office memorandum dated July three, 2017 was received from the Ministry of Law and Justice, and it was circulated to all concerned divisions in the department. It said no further information was available.

From the documents, it is known that the Budget Division stated that the matter concerns the Department of Revenue, hence the communication received from the Legislative Department be forwarded to them for appropriate action.

The Finance Sector Legislative Reforms Commission stated in its response that it agreed with the Commission, but it had no specific comments to offer.

The Election Commission had in its letter to the Ministry of Law and Justice stated that the amendment to the Representation of the People Act means that any donation received by a political party through an electoral bond has been taken out of the ambit of reporting under the Contribution Report. “This is a retrograde step as far as transparency of donations is concerned and this provision needs to be withdrawn,” it said.

It said that the changes brought about in the Companies Act open up the possibility of shell companies being set up for the sole purpose of making donations to political parties, with no other business of consequence having disbursable profits.

The Commission referred to a second change in the Act, which abolishes the provision that firms must declare their political contributions in their profit and loss statements. “... this requirement is now reduced to only showing a total amount under this head, which again, would compromise transparency,” the EC said in its letter.

The EC sought reconsideration and modification of the amendments brought about in the RPA and Companies Act to provide for transparent reporting of contributions received by the political parties through electoral bonds.