Now reform political funding

If we have the will, here’s how to make a lasting impact on black money
By Baijayant ‘Jay’ Panda – Sure, the currency portion of illicit assets is relatively small, with much more held in gold, real estate etc. But being by far the most fungible, cash is the most crucial part of the black economy. And it is by no means insignificant, with an estimated Rs 3 lakh crore ($43.66B) and perhaps more now expected to be extinguished.

This one-time flushing of a chunk of black money is a significant blow to its users, but a lasting impact requires several other steps.

The good news is that unlike 1978, when the last demonetization saw black money get hit but come roaring back, the ground realities are very different now. Mandatory linkage to PAN and Aadhaar cards for most transactions will be one of the fundamental ways to check the re-generation of black money. But the single biggest step would be to start cleaning up political funding.

The most important aspect of election finance reform is to shift the focus from limiting campaign expenses to rigidly enforcing the legitimacy and traceability of the money trail. Our decades’ long, utopian thrust on capping campaign expenses has not worked, it has only pushed money under the carpet. This is the root cause, the motivation for black money, and for the mechanisms that generate it. more>


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