Government proposes Rs 2000 limit on cash donations to political parties to increase transparency

The government on Wednesday took another step to bring about transparency in political funding by capping the amount that can be donated to political parties in cash to Rs 2,000, a tenth of the previous limit.

Finance Minister Arun Jaitley, while presenting the Union Budget 2017-18, said that political parties can now receive only Rs 2,000 as donation in cash from one source.

For any donation above Rs 2,000, parties will have to disclose the identity of the donor, Arun Jaitley said.

The new limit is a sharp drop from the previous limit of Rs 20,000, which political parties were allowed to receive as anonymous cash donations.

Political parties, meanwhile, can receive donations in cheque, electronic mode and electoral bonds issued by the RBI.

Jaitley said the government has accepted the Election Commission’s recommendation to bring in transparency in political funding and political parties can take donations from donors through cheque and digital payments.

As an additional step, Jaitley said, the government proposes to amend the Reserve Bank of India Act for issuing electoral bonds that can be bought through cheques and will be redeemable in the registered account of a political party.

“This reform will bring greater reform in political funding while preventing future generation of black money,” Jaitley said.

“Even after 70 years of Independence, there is no transparency in political funding. Most donations are received in cash, and the donors too hesitate to disclose their identity,” the finance minister said.

The EC had asked the government, among other recommendations, to bring down this limit of anonymous donation to Rs 2,000.

The decision was also welcomed by Congress Vice President Rahul Gandhi, who stated that they would support the government in bringing about political transparency.