Law ministry

EC writes to the Ministry of Justice; seeks to limit cash donations to political parties

The electoral commission has proposed to increase anonymous political donations from Rs 20,000 to Rs 2,000 and cap cash donations at 20% or a maximum of Rs 20 crore to clean up election funding from black money.

Chief Election Commissioner (CEC) Rajiv Kumar has written a letter to Union Law Minister Kiren Rijiju recommending a series of amendments to the Representation of the People (RP) Act, sources within the government.

The proposals seek to bring about reforms and transparency in donations received by political parties, as well as expenses incurred by candidates trying their luck at hustings, they said.

The move comes against the backdrop of the polling panel which recently deregistered 284 defaulting and non-compliant Unrecognized Registered Political Parties (RUPPs), declaring more than 253 of them inactive.

The Income Tax Department recently raided a number of such entities across the country for tax evasion after the EC shared its report with its administrative authority, the CBDT.

Under the new proposals, the polling panel fought to lower the threshold for cash donations made to political parties from Rs 20,000 to Rs 2,000.

In accordance with the rules currently in force, political parties must disclose all donations above Rs 20,000 through their contribution report which is submitted to the EC.

Sources said that if the EC proposal is approved by the Ministry of Justice, all donations above Rs 2,000 will be flagged in the contribution report, improving the transparency of funding.

The Commission found, according to the sources, that while donations reported by some political parties were zero, their audited financial statements showed receipt of huge sums, proving large-scale cash transactions, below the Rs 20,000 threshold.

The EC has also sought to limit cash donations to 20% or a maximum of Rs 20 crore of the total funds received by a party, whichever is lower.

As part of the transparency of spending by individual candidates running for election and to remove the “fungibility” of such spending, the EC has called for digital transactions or payee account check transfers to be made mandatory for all expenses above Rs 2,000 to a single entity. /the person.

Government sources said that once this amendment – to Rule 89 of the 1961 Election Rules – is implemented, a candidate should maintain a separate account for election-related receipts and payments and that this should be disclosed transparently. to the authorities, as an account of election expenses.

Currently, maintaining a separate bank account for election expenses is part of the instructions, but EC would like it to be part of the rules for the conduct of elections.

The EC also wants each candidate to open a separate bank account for election purposes, channel all expenses and receipts through this account, and provide these details in their election expenses account.

The EC has also called for “election reforms” to ensure that no foreign donations slip into party funds, as stipulated in the PR Act and the Foreign Contribution Regulation Act of 2010 (FCRA).

The sources said that currently there is no mechanism to specifically segregate foreign donations at the initial stages, and the current contribution report format is “not equipped” to seek additional information.

The Commission therefore wanted a broad discussion on the subject between the various ministries concerned in order to propose a mechanism to identify and deter prohibited foreign donations.

Another area of ​​concern that has been identified by the EC is breaches of foreign exchange regulations, they said.