At the stroke of midnight on November 8, when the world sleeps, India will be awake and counting 500 and 1000 rupee notes, one of the memes said after the Prime Minister announced demonetization at around 8.00 p.m. It has been one month since the demonetization was announced and even though it has disrupted the Indian economy in a very tangible way, causing an utmost degree of inconvenience to the people as they stand for hours in queue to withdraw their own money, majority of the population, ranging from a rickshaw wallah to a retired bank employee seem to stand with the Prime Minister’s decision of demonetization. This is because of one simple reason; people see it as a radical step that has hit the black money hoarders very hard. While it remains a debatable question as to how much of the black money earned is kept in the form of cash, there is an obvious consensus that the hoarders have been hit, the intensity of which remains a mystery.
While the Prime Minister is delivering speeches and sermons on the need to tackle black money asking people to bear some inconvenience, he seems to forget that one of the safest and high-yielding return investment avenue for the black money hoarders have been the political parties. As Huffington Post India reported: “In India, a political party can take donations up to ₹20,000 ($290) anonymously, and there is no cap on the amount that a political party can receive in cash. For amounts above ₹20,000 a party has to record the donor’s name, address, PAN number, mode of payment and date of donation. These details must be furnished to the Election Commission every year to retain the exemption from income tax, but incomplete details seem to attract no penalty.”
A report from Association of Democratic Reforms proves that around 75 percent of funding received by the political parties between 2004 and 2011 were from unknown sources meaning that out of every ₹100 received by any political party, ₹75 came from unknown sources as this sum of money is paid in the cash stock that values less than ₹20,000. This opaque way of receiving donations paves way of usage of black money in the elections and allows the laundering of money. The best way to tackle the use of black money as a source of political funding could be tackled by bringing the political parties into the ambit of Right to Information Act, 2005, which has been opposed by every political party including the current dispensation.
The usage of black money during elections not only allows for laundering, it also has other serious economic and political costs attached to it. It leads to a political support to corruption and crony capitalism. It allows for criminal-political nexus as the extortionists and goons are able to buy party tickets and therefore, the law-breakers become the lawmakers in our country. The use of black money for campaigning during the election season creates an unequal playing field for honest, independent candidates as they heavily fall short of the funds required for extensive campaigning and advertising. If the use of unaccounted money is eliminated in the funding of political parties, it will pave the way for creating a more level playing field between candidates.
If the Prime Minister is actually serious about tackling the menace of black money, he should bring the political funding under the ambit of RTI Act, 2005. He must bear some inconvenience and ask other political parties to do the same. People of India have enthusiastically responded to his call on the elimination of grey economy despite all the inconvenience they have to bear; now it is the turn of our political parties to bear the inconvenience.