There is high probability that significant chunk of cash mobilised by Indian political parties for election funding and other expenditure are black money transactions

After much persuasion, the Swiss authorities have released a list of black money holders in their local banks. From India, there are five names so far, which include industrialist, Yash Birla, Gurjit Singh Kochhar, a relative of late liquor baron Ponty Chadha and a three others (individuals linked to businesses).

Surely, the naming would expose the alleged tax-evaders, but one needs to wait and watch whether the process would be a big step towards bringing back black money to the country. Prima facie, chances for a major recovery appears difficult for a few reasons.

Technically, maintaining accounts and depositing money with any bank, anywhere in the world, is not a crime. In order to book someone guilty, the investigators have to establish the trail of the ill-gotten money and prove that tax evasion has indeed happened at all stages. The problem arises only if the money is made through illegal means or the taxes haven’t been paid on the funds.

And at the first sign of the danger, those with ill-gotten wealth would have taken the booty to safer locations. There is no reason to believe that why a Swiss banker, whose primary business is safeguarding his customer’s wealth, wouldn’t do that first, before building a better world.

Also, the recently passed black money bill (The Undisclosed Foreign Income and Assets (Imposition of Tax) Bill, 2015) offers a one-time window for those with unaccounted assets to pay the taxes plus penalty to escape prison. Hence, whether the names are disclosed or not, black money holders can use this lifeline, provided the government hasn’t already lodged a case against them.

As far as India is concerned, the bigger problem lies somewhere else, embedded deep within the basic building blocks of the political set-up — the lack of transparency in funding of political parties. That’s where the evil of black money takes birth and receives nourishments. Politicians and corporate are endlessly engaged in a ‘give and take’ relationship.

It is unwise to expect an honest, decisive action from any politician against businessmen who have stored black money abroad, when the same politician accepts black money with both hands back home for his own survival.

The facts

At present, 75 percent of the source of the funds to political parties is unknown, according to a report by National Election Watch and Association of Democratic Reforms. India is probably among the very few countries, where political funding is not transparent.

In most other countries — Bhutan, Nepal, Germany, France, Italy, Brazil, Bulgaria, the US and Japan - the complete details of the donors to political parties are publicly available.

The devil lies in the details. For the period 2013-14, a total of Rs 60.78 crores (36 percent) was declared as donations by the Bharatiya Janata Party (BJP) from donors whose addresses were not declared. Such contributions were made through 923 donations without providing the details of addresses of the donors.

Going by the report, due to lack of complete information about the donors, the state from which the donations were made and the details of their business houses could not be verified. As per the 2013-14 report, the BJP received total donations of 171 crore in that year, the Congress received Rs 59 crore, NCP Rs 14 crore, CPI about Rs 1.22 crore and CPM Rs 2.09 core.

“There is ambiguity in cash donations from 17 donors declared by the BJP which amounted to Rs 24.77 lakhs in fiscal year 2013-14. The party has not included any remarks though it is part of the prescribed format of the Election Commission of India. Thus, there is a need for clarity in large amounts of cash donations by individuals/ business houses,” the report said.

What is the significance of the above numbers? Considering the huge black money hoard, this is a pittance. But, these numbers tell us that the offence is the same — that the same politicians who promise us to fight against black money, doesn’t practice it.

To be sure, the ADR report for 2013-14 doesn’t give the total income details of political parties but just donations, which forms only a fraction of the total income. The remaining came from other channels such as sale of coupons and voluntary donations in the form of cash donations, where the identity of the donor is difficult to establish for taxmen.

But, according to its previous reports, the total income of national parties between 2004-05 and 2012-13 stood at Rs 5,890.66 crores. These numbers exclude funding of regional parties and also only include the declared income, which typically constitute less than a quarter of the total income of the outfit.

Of the total declared income of national political parties in 2013 (Rs 991 crore), declared donations formed only a fraction — just 10 percent.

Thus, there is high probability that significant chunk of cash mobilised by Indian political parties for election funding and other expenditure are black money transactions that take place right under the nose of the government, central bank, taxmen and a myriad of investigative agencies.

If the Narendra Modi government is indeed serious in tackling the black money menace, it should show the willingness to overhaul the process of political funding and make it transparent. Until then, the government’s fight against black money wouldn’t be a convincing one.