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Blatant Subterfuge On ‘Political Funding’ Hidden In ‘Budget 2018’

The proposed amendment to the already repealed FCRA 1976, tucked away in the last page of the Finance Bill, is akin to trying to conduct a heart or liver transplant on a person who has been dead for seven years.

In 2014, the Delhi high court found BJP and the Congress guilty of having violated the Foreign Contribution (Regulation) Act, 1976. Credit: Reuters/Amit Dave

“Once is happenstance. Twice is coincidence. Three times is enemy action,” Ian Fleming is reported to have written in Goldfinger . “Enemy action” is much too strong. Therefore, many other variations of the same are available. The one quote that I feel is the most appropriate is “Once is accident (or chance), twice is coincidence, third time is a pattern (or habit).”

This saying came to mind in the context of Section 217 of the Finance Bill 2018, introduced by finance minister Arun Jaitley in the Lok Sabha following his Budget speech on Thursday. This section reads:

“In the Finance Act, 2016, in section 236, in the opening paragraph, for the words, figures and letters ‘the 26th September, 2010’, the words, figures and letters ‘the 5th August, 1976’ shall be substituted.”

A simple, innocuous sentence, tucked away on page 52, the last page of the text of the Bill, and as Section 217 of a total of 218 sections.

One has to go to page 90 (of a total of 92 pages) to discover the intent of the section which is described as follows:

“Clause 217 of the Bill seeks to amend section 236 of the Finance Act, 2016 which relates to amendment to sub-clause (vi) of clause (j) of sub-section (1) of section 2 of the Foreign Contribution (Regulation) Act, 2010. The proviso to the said sub-clause inserted under the Finance Act, 2016 states that notwithstanding the nominal value of share capital of a company exceeding one-half per cent at the time of making contribution, such company shall not be deemed to be a foreign source, if the foreign investment is within the limit specified under the Foreign Exchange Management Act, 1999 or the rules or regulations made thereunder.”

“It is proposed to bring the said amendment with effect from the 5th August, 1976 the date of commencement of the Foreign Contribution (Regulation) Act, 1976, which was repealed and re-enacted as the Foreign Contribution (Regulation) Act, 2010.”

Since this proposed amendment is to the Finance Act 2016, hence the saying with which this piece begins came to mind.

In the 2016 Budget, the finance minister amended the Foreign Contribution (Regulation) Act, 2010 (Why did he do that will be discussed shortly). In the 2017 Budget, it was claimed that financing of political parties will be made transparent, and the instrumentality chosen was termed “electoral bonds” which, according to the finance minister himself “will be bearer in character to keep the donor anonymous.”

How anonymity and transparency go together appears to be a mystery that possibly only the finance minister can explain. And now, in the 2018 Budget, there is yet another attempt to amend an Act which stands repealed since 2010. That is three subterfuges in three Budgets in a row.

Back to the latest one. The story starts in 2014 when the Delhi high court in a judgment on March 28, 2014, pronounced the Bharatiya Janata Party (BJP) and the Congress guilty of having violated the Foreign Contribution (Regulation) Act, 1976 (FCRA 1976) and asking the government of India and the Election Commission of India (ECI) to “take action as contemplated by law” against the two parties “within a period of six months from date of receipt of certified copy of the present decision.” The ECI wrote to the home ministry that since the latter was the competent authority for implementing the FCRA, they should take action.

Not surprisingly, no action was taken and both BJP and Congress filed appeals in the Supreme Court against the Delhi high court judgment. The appeal remained pending in the Supreme Court.

Enter Budget 2016. The Finance Act 2016 amended the FCRA and changed the definition of a “foreign source” in such a way that it would let the BJP and the Congress off the hook of the Delhi high court judgment.

When the appeals came up for hearing in the Supreme Court on November 22, 2016, the lawyers for the two parties triumphantly claimed that since the FCRA had been amended, the case was infructuous. It was at that stage that it was pointed out that the very second paragraph of the Delhi high court judgment specifically said that (1) FCRA was originally enacted in 1976, called the FCRA 1976; (2) a fresh FCRA was enacted in 2010; (3) Since the contributions under question were accepted by the BJP and the Congress before 2010 when the FCRA 2010 was not in existence, therefore, the case will be decided on the basis of FCRA 1976. The exact wording of the Delhi high court judgment is given below:

“Since the writ petition drew attention to donations made to political parties for the period up to the year 2009, we record at the outset that our concern is not with the Foreign Contribution (Regulation) Act, 2010 which has come into force on September 26, 2010. Our discussion of the legal position would be with respect to the Foreign Contribution (Regulation) Act, 1976.”

At this juncture, the lawyers for the BJP and the Congress sought time to consult their clients, and on the next hearing on November 29, 2016, withdrew their appeals.

A petition for contempt of court against the Union of India was filed in the Delhi high court for not taking action against the BJP and the Congress as ordered by the court way back in 2014. That petition is still pending as the lawyers for the Union of India have been seeking adjournments for one reason or another.

This is the context of Section 217 of the Finance Bill 2018. This is yet another attempt to get the BJP and the Congress off the hook of being guilty of violating FCRA 1976, as held by the Delhi high court in 2014.

What shows the desperation is the attempt to amend an Act which does not exist. Clause 54 of the Foreign Contribution (Regulation) Act, 2010 specifically says that “The Foreign Contribution (Regulation) Act, 1976 (hereafter referred to as the repealed Act) is hereby repealed.” The fact, therefore, is that the FCRA 1976 is a dead Act. The proposed amendment of FCRA 1976 is akin to trying to conduct a heart or liver transplant on a person who has been dead for seven years. But since we are the pioneers of plastic surgery since ancient times, maybe our miracle-working government can actually pull it off. Who knows? #KhabarLive

About Raghuram Bhatt

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