Dr. Syama Prasad Mookerjee Research Foundation

State funding of polls may not be popular once rolled out: FM Arun Jaitley

“It (state funding of elections) is a possible suggestion. But I will add only two caveats. It should not be read that I am critical of it,” said Jaitley.

Finance Minister Arun Jaitley on Wednesday said state funding of polls needs to be debated as cynics may question why people should be taxed extra to fund elections and there is “no guarantee” that outside money will not find its way into campaign financing. Jaitley was all for financing of political parties through ‘Electoral Bonds’, which he proposed in his budget speech. The bonds will open for sale a little before every election and donors can buy the bearer bonds from scheduled banks and donate to parties of their choice.

“It (state funding of elections) is a possible suggestion. But I will add only two caveats. It should not be read that I am critical of it. “Many are going to question in long run in India given the level of cynicism in public opinion as to why people should be taxed extra in order to fund political elections,” he said at a discussion on ‘Campaign Finance Reform in India’.

Also, in this model, where the government gives funds to political parties or candidates for contesting elections, there is “no guarantee” that only the money received from the state will be utilised and no outside funds will be spent, he argued. “The argument is you can’t spend within that limit and obviously you take some from the state and then you go hunting elsewhere,” he said. “It (state funding of elections) is a slogan. I am not too sure if it’s going to a be a popular one once it is rolled out.”

Jaitley said while political parties have floated this idea, none have seriously discussed the two caveats. “I’m not saying I will rule out the state funding idea completely… Let’s have it for discussion on the table… Let us discuss because even the present model is a experimental model because if it has taken us 70 years to reach a solution, you have to discuss all the models,” he said. The state funding model, he said, is dependent on whether candidates spend within the prescribed norm. “There is an uneasy feeling that it’s not true,” he said.

Also, a political party’s expenditure, which includes that on staff, vehicles, planes and advertisements, will be outside the scope of what the government will fund. “Surely you don’t expect the government to fund parties having aircraft and helicopters. I’m sure if my understanding of India’s public opinion is what it is, there will be a hue and cry if we have that model,” he said.

The Finance Minister said state funding is being mentioned as an attractive model but the government can only fund what the candidate has to spend officially. “Beyond that… there is a huge world of expenditure outside that. I don’t think the Indrajit Gupta Committee (on state funding of elections) envisaged the system getting so costlier,” Jaitley added.

Jaitley, who had in his Budget for 2017-18 proposed the ‘electoral bond scheme’ to clean up poll financing, said the bearer instruments can be purchased from authorised banks by cheque and will be redeemable within 3-4 weeks of purchase. The bonds, which will resemble a promissory note and not an interest-paying debt instrument, will be sold by authorised banks and can be deposited in notified accounts of political parties within the duration of their validity. “This idea of electoral bonds has been closely debated in the government. Now how do these bonds function? These bonds have to be authorised under a particular scheme under the Income Tax Act. The scheme will be announced once the Finance Bill is passed (this month),” he said.

The bonds will provide confidentiality to the donor but the money so routed will be clean tax-paid money. “That scheme will have the following features. It will only open for a limited period of time during elections or maybe a little before the elections. The life of a bond will be very short, maybe a few days,” he said.

The duration is being kept short as the government does not want them to become an instrument for laundering money or become a parallel currency, he said. “It will only be available for a few days. The bond can be purchased by any donor by cheque payment from an authorised bank. You can only donate these bonds to political parties. And these will be redeemable within a period of three or four weeks of the purchase of the bond in only one bank account of a political party,” he added. Asked if there is an assessment as to how much of unaccounted money is pumped into campaign financing, Jaitley said: “Compared to the entire size of the economy, it is not very large. Compared to the entire size of cash economy, although there are no estimates, I think it is exaggerated and

Explaining the process, he said during an election, parties get finances from various levels, besides the funds that the candidate collects. “There is a collection that takes place at every level and therefore I don’t think to have a clear estimate is really possible,” he said.

(This Report was published in The Indian Express Nation on 8th march 2017)