Fact Check

What Slipped Through The ₹ 20,000 NET


The black box

The Indian Express, June 5, 2017

While arguing that the government must address the concerns raised by the Election Commission about recent amendments to the Representation of the People Act and the Companies Act, the editorial makes an assertion of its own. It asserts that the earlier system, whereby political parties had to disclose details of donations above Rs 20,000, “made it possible to track the identity and volume of contributions received by every political party.”


The editorial, implying at one place that cash donations may indeed be difficult to track, ends up making an argument in favour of the earlier system. While this is an apparent contradiction in its own logic, the editorial also overlooks all the evidence and argument in favour of curbing cash donations that still stand, irrespective of the EC’s concerns — pertaining to the amendment exempting political parties from disclosing amounts received via electoral bonds — which is a different issue.


Let us take a closer look at a few relevant facts:

  • Earlier, the limit on cash donations made to political parties from a single source was Rs 20,000
  • So far,parties would report only donations above Rs 20,000 to the IT Department. This would allow multiple donations in cash from the same source and in smaller amounts
  • Budget 2017 has now capped cash donations from a single source at Rs 2,000 — a 90% cut
  • Any donation above this limit will be by cheque/ electronic mode, for which parties must file IT returns
  • Total cash transactions have been capped at Rs 3 lakh
  • The curb on cash donations is as per the EC’s recommendations
  • It is also in keeping with the concerted effort to promote a digital economy and institutionalise monetary transactions

In the earlier system, when the limit on cash transactions was Rs 20,000, transactions above this limit were possible, given the donors would reveal their identities. This did not restrict the overall cash transaction process. The new move not only lowers the limit on cash donations drastically, it also makes sure that any donation above the limit goes through an institutionalised banking process, with IT returns duly filed, all of which ensures there is more transparency and traceability. The limit is as per the Election Commission recommendations as well.


For a detailed analysis, please read TTP’s article “Political Funding: Disabling the Enabler