Unlimited Corporate Funding: Subversion of Democracy

THE Modi government has taken another surreptitious step to harness corporate funding for the BJP and to subject the political system to the sway of big money.

While presenting the Union Budget, the finance minister had announced that the government would introduce “electoral bonds” as a means of funding for political parties.  According to this concept, anyone wanting to contribute money to a political party can, through a bank, purchase an electoral bond for a specified amount.  This bond can then be put into the account of a political party.  The noteworthy feature of this bond is that the donor’s identity will not be revealed.  The political party also need not identify from whom they have received the bond in their returns to the Income Tax Department. 

Such an anonymous transfer of fund through bearer bonds will facilitate big money, including black money, being laundered through electoral bonds to political parties. The Finance Bill, when originally presented, had amendments to the Income Tax Act and the Representation of the People Act to bring about such a change in political funding.

But before the Finance Bill was to be considered by the Lok Sabha on March 22, less than 48 hours before, the government moved a host of amendments to the Finance Bill.  This literally gave no time for the house to study the amendments which were to be taken up for adoption along with the Finance Bill.

One of the amendments was to the Company Law. At present, companies can give funds to political parties upto 7.5 percent of the average of the net profits earned in the last three financial years.  The amendment was to remove this limit of 7.5 percent.  Secondly, the current law provides for disclosure of the name of the political party to which the company makes the contribution. The amendment has sought to do away with this requirement too.

The net result of this amendment, which has now been adopted by the Lok Sabha, is that companies can give unlimited amounts of money as contribution to a political party.  The limit of 7.5 percent of the net profit has been removed, nor will the company accounts have to show to which party the donation has been made.  This will open the way for companies to be set up to funnel unaccounted money to a particular political party.

This change has been made to facilitate corporate funding to the ruling party, the BJP.  Companies will have now the incentive to provide huge contributions to the ruling party to earn its favour.  The ruling party has another advantage.  The donations made through electoral bonds will be through a bank.  Though the identity of the company or donor will not be disclosed publicly, the government will have the means to find out the details of such donations as bank data can be accessed through governmental authorities. No company or big donor will risk the ire of the ruling party and government by giving donations to the opposition parties. 

The Modi government has also opened the way for legitimising bribery and corruption. Upto now, a company which wins a contract would pay a bribe through black money under the table.  Now all such kickbacks can be made legally. Suppose a company get Rs 500 crore contract from a government agency, a commission of 10 percent would amount to Rs 50 crore.  Earlier this would have been paid as a bribe with illegal money.  Now with this amendment, a company can pay Rs 50 crore as a donation  to the ruling party with no questions asked.  The transaction will be kept anonymous and it will be legal.

With this one step, the Modi government has opened the floodgates for corporate money flowing into the ruling party’s coffers. It also signifies the height of neoliberal politics where the nexus of corporates and political parties is legitimised. 

Last year, through the Finance Bill of 2016, the government had amended the Foreign Contribution Regulation Act (FCRA) to treat contributions by Indian subsidiaries of foreign companies as funding from Indian sources.  With one stroke, foreign corporate funding of political parties was legalised.  Now in this Finance Bill, all limits to corporate funding of political parties has been removed. 

The Modi government has set another dangerous and anti-democratic precedent in the manner in which the Finance Bill has been utilised to make amendments to various laws which have nothing to do with the budget provisions or a money bill.  Amendments to existing laws which have no connection with the budget have been tacked on to the Finance Bill.  Since the Finance Bill is a money bill, these amendments to the laws cannot be scrutinised and voted upon by the Rajya Sabha.  Since the ruling alliance has no majority in the Rajya Sabha, it is getting legislative amendments which have no connection with the money bill adopted in this way.

Most of the amendments that were presented to the Finance Bill have no relation to the budgetary provisions. One of the amendments was to make Aadhar mandatory for filing income tax returns; the other was to make the PAN card linked to Aadhar; other sweeping amendments were for abolishing and merging certain regulatory tribunals.

All these measures make a mockery of parliamentary democracy and the powers of the Rajya Sabha in legislation making. 

More and more, the Modi government seems to be facilitating a corporate takeover of parliamentary democracy and the political system, of course, in full connivance with the Hindutva forces. 

(March 29, 2017)


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