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Indian court takes aim at black money in polls

NEW DELHI: India's Supreme Court has plugged a loophole in election campaign-spending rules in a move analysts predicted on Friday would curtail the use of black money.

The far-reaching court ruling came as candidates prepared to step up canvassing for general elections, which begin on April 27 and end on May 30. Some 5,000 candidates in 543 constituencies filed papers by Wednesday's deadline.

Legal analysts said the judgment would force parties to account for election spending estimated at more than Rs.10 billion ($300 million) and prompt closer government review of parties' accounts.

"The judgement will have a salutary effect on curbing the use of black money in elections," The Pioneer newspaper said.

The court has spearheaded a drive against corruption, pressing federal police to speed up an investigation into an $18 million "hawala", or black money, scandal that has forced seven government ministers to resign.

A two-judge bench ruled on Thursday that parties that fail to keep audited accounts or file income-tax returns cannot take advantage of exemption from a spending cap.

The spending ceiling in the bigger states is presently 450,000 ($15,000) each candidate. It is as low as Rs. 60,000 ($1,800) in the union territory of Pondicherry.

The court's ruling means any spending on a candidate without an audited account will be treated as candidate's spending and thus capped.

The Election Commission recognises about 155 political parties for the coming polls, and there will be scores of candidates for parties not officially recognised.

"The parties, in their quest for power, spend more than 10 billion rupees on general elections, yet nobody accounts for the money and there is no accountability anywhere," the court said.

The court ordered the Finance Ministry to investigate parties that had not filed income tax returns. The Asian Age said court documents showed that as of last December, at least two major parties had filed no returns.

The 32-page ruling also authorised the federal Election Commission to order parties to submit spending accounts, and directed the Finance Ministry to investigate the federal income tax department for failing to enforce reporting requirements.

The ruling was in response to a petition filed in court by Common Cause, a registered society headed by civil rights activist H.D. Shourie. In his petition Shourie had sought strict enforcement of income tax laws on political parties.

Election Commissioner M.S. Gill welcomed the ruling. "This is what I and the commission have been saying, that there should be a reasonable ceiling for expenditure for a candidate," he said.

Shourie said political parties received large amounts of unaccounted money as donations from companies expecting favours.

"This type of naked display of black money, by violating the mandatory provisions of law, cannot be permitted," the court said, adding that use of black money often continued after candidates won office.

It said unless election funding was made transparent, "the vicious circle cannot be broken and corruption cannot be eliminated from the country".

The Observer said in an editorial: "The judgement is bound to receive popular acclaim as everyone will see it as... (a) most timely measure to cleanse national public life of the pernicious influence of black money."-Reuter