Indian Prime Minister Narendra Modi has moved to clean up political funding with limits on cash donations and new “election bonds,” but some politicians and election officials said the measures would have limited impact.
With several state polls about to begin that will help determine his chances of re-election in 2019, Modi’s administration sought to tackle widespread perceptions of vote buying by capping cash donations to political parties at 2,000 rupees ($30). Previously the ceiling was 20,000 rupees.
Announcing his 2017/18 budget, Finance Minister Arun Jaitley also unveiled a scheme under which donors could buy “election bonds” from a designated local bank and give them to political parties to deposit into their account.
Forcing donations through the banking system would mean the assets were declared and so could be traced.
The government also threatened action against political parties that did not file tax returns. They do not pay income tax, but filing returns could bring transparency to the system.
“This reform will bring about greater transparency and accountability in political funding, while preventing [a] future generation of black money,” Jaitley said.
The changes will not directly impact the elections getting under way, but the government is likely to see them as a way to burnish Modi’s credentials as a graft-fighter after he announced a series of measures to tackle illicit wealth.
In another move that could catch the voters’ attention in the big battleground state of Uttar Pradesh later this month, Jaitley has bolstered rural and infrastructure spending.
The government also cut the basic personal tax and taxes on small firms that make up most of India’s businesses, offering relief to those strapped for cash after higher value bank notes were scrapped in a radical move against undeclared wealth.