Why political party reforms are vital
May 11 2014
In India, there is no law or comprehensive code that institutionalises the structure, funding and functioning of political parties. There was no mention of political parties in the constitution of India when adopted. The political party is mentioned for the first time under 62nd amendment of the constitution in the year 1985. The ECI is mandated under section 29A of the Representation of the People Act, 1951 (RPA) with the power to register political parties. As per notification of ECI in 2012, there were 1,334 registered parties, out of which, six were recognised national parties and 53 recognised state parties. Recognition of national and state registered parties after the initial process of registration is made in the Election Symbols (Reservation and Allotment) Order, 1968 based on the percentage of votes polled.
There has been a spurt in the number of registered political parties since 1989. It rose from 251 in 1989 to 1,334 in 2012. This proliferation is largely attributed to privileges granted to political parties. All contributions received from individuals and companies in excess of Rs 20,000 by the political parties qualify for tax relief. There is a specific performance obligation to qualify for this entitlement. Apart from declaration of the contributions received, it is incumbent on the political parties to submit their audited financial statements to ECI within six months after the end of each financial year.
As per the ECI, only 174 registered political parties submitted an annual audited financial statement for the year 2010-11, and approximately 90 per cent of the registered political parties flouted the mandatory guidelines. The submission of annual contribution report of donations in excess of Rs 20,000 was dismal, as mere 8 per cent of all registered political parties had complied with ECI’s mandated requirement. The ECI did not make any specific recommendation for action to the tax collecting agencies or the foreign donation division of the home ministry. Providing mere routine information was of no significance.
A report published in April states that the ECI has written to the Central Board of Direct Taxes (CBDT) now regarding the failure of political parties to submit their mandatory expenditure contribution reports. The ECI thus has now moved into action for getting the cancellation of tax benefits by the CBDT. The process of issuing notice and determination of tax liability by tax authorities could take years in terms of conclusion.
Another important reason for this plethora of parties is the flaunting of authority by displaying flags and names of the office-bearers thus influencing the local administration. It is also a licence for interfering in the work of the district administration.
The larger question is that the ECI seems to be helpless in ensuring the compliance of mandatory requirements provided under the guidelines as issued by the ECI under section 29A of the RPA, 1951. The reason is that the ECI has no powers to deregister political parties confirmed through various judicial pronouncements. Only under certain set of circumstances, the ECI may take those political parties off the list of registered parties which have not contested elections continuously for six years. In 14th Lok Sabha election, only 230 political parties had contested. In 15th Lok Sabha, the number of political parties having contested elections was 363. Thus, there is a strong case to delist political parties. Delisting was done only in 2000 when 208 political parties were delisted. It is also noteworthy that the commission has asked the defaulting political parties to submit annual audited account of party funds for the first time in July 2011.
The ECI has been interacting with the law ministry for more than ten years to enforce accountability at the level of political parties. It has suggested that legal provisions be introduced to regulate the functioning of political parties and the commission should be empowered with registration as well as deregistration of such parties. In 2002, the Supreme Court held in a judgment that the ECI has no power to deregister a party on the ground of non-compliance of undertaking given at the time of registration.
Further, since the failure of the political parties to submit the accounts does not attract any punishment, the commission has been reluctant to issue show cause notice. The proposal of ECI in this regard is also pending in the law ministry.
An important suggestion by ECI is that income tax exemption for donations should be given only for those parties which contest elections and win seats in the parliament or state legislatures. This suggestion is also gathering dust along with several other recommendations on electoral reforms and political party reforms.
There is no transparency and absolute lack of contest in conducting the affairs of the political parties. It was in August 2013 that the ECI initiated consultation with the political parties for formalising guidelines on transparency and accountability in party funds. The process is still on. The outcome is a foregone conclusion. Unless the parliament enacts a law for giving powers to the ECI in terms of deregistration of political parties and also ensuring compliance of transparency and accountability in party funds, the fledgling performance of the ECI will not improve. It is difficult to appreciate and understand the reasons for inaction at the law ministry level regarding this very urgent fundamental reform.
(The writer is ex-chairman of TRAI and director of Public Interest Foundation)