Daylight Assault on Democracy, Legalized Corruption and Company Raj

(The manner in which the Finance Bill 2017 was passed in the Lok Sabha was a complete violation of parliamentary democracy. Several key aspects of the Bill – now a law – are deeply dangerous for India’s democracy. It is all the more dangerous that this Bill could be enacted into law without any substantial discussion among Indian citizens, with most media houses blatantly washing their hands off the responsibility to inform the public about the implications of this law for their lives. What are the implications of the Finance Bill 2017 for Indian citizens and Indian democracy? Let us find out. – Ed/)

Undemocratic Process

(a) Last Minute, Secretive Amendments

It is important for the health of a democracy that members of Parliament as well as the general public should be fully informed, well on time, about proposed changes in any law so that the proposed changes can be fully understood and widely discussed and debates, both inside and outside Parliament. This principle was openly violated in the passing of the Finance Bill 2017.

The Finance Bill 2017 introduced by Finance Minister Arun Jaitley on February 1, 2017 during the Budget Session of Parliament had 150 clauses. On March 21, the very day before the Bill was put to vote the Finance Minister introduced no less than 33 new clauses in the Bill! Not only that, these new clauses were circulated among MPs only after MPs from the major parties had already spoken! So when the Bill was finally put to vote, most MPs were kept in the dark about the actual contents of the Bill.

(b) Non-Money Matters Bundled Into ‘Money Bill’ To Bypass Rajya Sabha

Under Article 110 of the Constitution, the Finance Bill is a money bill – and must contain no matters that do not relate to taxation or finance. Only the Lok Sabha is allowed to consider and vote on money bills. The Rajya Sabha can only give recommendations on money bills, that the Lok Sabha can choose to ignore.

BJP has an absolute majority in the Lok Sabha but not in the Rajya Sabha. So, it chose to bypass the Rajya Sabha by including 40 amendments in the Finance Bill, many of which have nothing to do with taxation or finance!

Rule No. 80 of the Parliamentary rule book states that only amendments relevant to the subject matter of a particular Bill can be introduced. Rule 388 allows the Speaker of the House to suspend any rule for a particular motion – so the Speaker suspended Rule 80 to allow the Finance Minister to introduce non-money matters in the money bill!

It is unconstitutional for the Finance Bill to include non-money matters, since Article 110 of the Constitution states clearly that “a Bill shall be deemed to be a Money Bill if it contains only provisions dealing with” taxation or finance. When an RSP MP raised this issue in Parliament, Jaitley actually argued that the meaning of ‘only’ is debatable!

Company Raj

Companies Can Now Secretly Donate Unlimited Amounts to Political Parties

Earlier, a company could only contribute up to 7.5% of the average of its net profits in the last three financial years to political parties. Now, this cap has been removed, allowing companies to donate unlimited amounts to political parties.

Earlier, a company would have to disclose the amount it has contributed to political parties, and the names of the political parties to which contributions have been made, in its profit and loss account. Now the company need no longer disclose the amount or the name of the political party, even in its own accounts!

The Bill also allows anybody including foreign sources to use electoral bonds issued by notified banks to donate to political parties anonymously!

So, on the one hand, the Government has put a cap on cash donations above Rs 2000, in the name of cleaning up political funding. But at the same time it is allowing Indian and foreign corporations and rich, possibly criminal individuals to donate unlimited amounts secretly to political parties!

Remember, last year also, the Finance Bill 2016 amended The Foreign Contribution Regulation Act, 2010 (FCRA) to allow foreign sources to make donations to political parties. The FCRA relates more to the concerns that come under the purview of the Home Ministry than to finance or money matters – and yet this amendment was bulldozed through in the Finance Bill to bypass objections of the Rajya Sabha. Moreover the 2016 Bill made this amendment applicable retrospectively; which means even donations taken by BJP or Congress in the past, when such donations were illegal, will now be considered legal! The Delhi High Court had in 2014 held both Congress and BJP guilty of violating FCRA regulations by accepting donations from the UK-based company Vedanta. The Finance Bill 2016 saved both Congress and BJP by changing the definition to magically turn Vedanta into an Indian company!

These changes in political funding are a direct legalization of corrupt practices. A senior officer with the CAG office, quoted in The Telegraph, 23 March 2015, sums up the situation best: “This means, for example, that an infrastructure firm could theoretically pay up to 50 percent of its net profits to a single party as donation without anyone getting wiser as to which party has been paid… this throws open the possibility that an order to build a highway or a railway bridge could be given to a firm and that firm could pay the donation to the party in power which placed the order with it…The beauty is that if this happens, it will be legitimate and no questions can be asked by any ethics committee of Parliament or by any CAG audit.”

“He who pays the piper calls the tune” – if companies are allowed to fund political parties secretly, they can buy and control the entire political system. In the Radia tapes, Mukesh Ambani declared that Congress was “apni dukaan” (my own store/shop); and Radia tapes were seen as evidence of political and corporate corruption. Now, companies can legally and secretly have political parties as their ‘apni dukaan’!

Draconian Powers For Income Tax Officials

Under the amended Finance Act 2017, Income Tax officials can knock on your door, raid your home and attach your properties any time – without having to give a reason for the raid to any tribunal! In other words, the person being raided will no longer have any right to approach an appellate tribunal to challenge the reason for the raid. This means that any Government can use these draconian powers to harass individuals or political rivals or NGOs who are raising their voice against the Government. Corrupt IT officials also will be able to use these powers to raid the homes of honest persons who fail to cooperate with corruption.

Under Section 132 of the Income Tax Act, IT officers have the right to raid businesses or individuals, break down doors or locks etc if they have “reason to believe” or “reason to suspect” that they are involved in tax evasion. The person or business being raided can approach the Income Tax Appellate Tribunal, which could ask the IT officers to disclose what “reason” they had to believe or suspect the person of tax evasion. Now the amendment in the Finance Act 2017 declares that IT officials will no longer have to disclose any reasons for conducting raids or seizing properties. Moreover this amendment will apply retrospectively.

Such unlimited powers have ample scope for political and institutional misuse: the “IT Raid” is an easy “legal” way for the Government to conduct a Emergency-style “midnight knocks” on anyone it wants to harass.

Government Gains Control Over ‘Independent’ Tribunals

The Finance Bill 2017 merges eight tribunals – the Competition Appellate Tribunal, Airports Economic Regulatory Authority Appellate Tribunal, Cyber Appellate Tribunal, Copyright Board, National Highways Tribunal, and Appellate Tribunal for Foreign Exchange – into other existing tribunals.

Tribunals are meant for dispute resolution and they function like courts. Earlier, members of these tribunals were chosen either through judicial recommendations or by special steering committees. Since the Government might itself be a litigant before a tribunal, it follows that the Government ought not to be able to choose tribunal members since this would be a conflict of interest. In 2014, the Supreme Court had also held that appellate tribunals have powers similar to that of high courts and so the Government must not have powers to determine appointment/reappointment or tenure of tribunal members. Now, the Finance Bill allows the Central Government to choose members for tribunals that are on this list, through a gazette notification! Moreover it allows the Government the power to bring even more tribunals under this list without prior approval of Parliament.

Government Bypasses Supreme Court Orders On Aadhaar

The Supreme Court has over and over clarified that Aadhaar will be voluntary and will not be mandatory or compulsory. By making Aadhaar Cards mandatory for filing income tax returns and rendering PAN cards invalid under linked with the Aadhaar Cards, the Finance Bill 2017 is basically defying the Supreme Court.

The Aadhaar Card itself has no security features. The Aadhaar scheme only allows the Government to collect biometric data about citizens. It has no secure means of storing this data – the data would be available for misuse by corporations as well as Governments that want to violate the privacy of citizens.

In March 2017 a letter written by the Ministry of Electronics and Information Technology admitted that Aadhaar data had been leaked online: “There have been instances wherein personal identity or information of residents, including Aadhaar number and demographic information and other sensitive personal data such as bank account details etc. collected by various Ministries/Departments… has been reportedly published online and is accessible through an easy online search.” The April 2011 issue of Liberation (‘What’s the ‘Aadhaar’ of the UID Scheme?’) had already explained how “Research commissioned by the CIA and US Security establishment in September 2010 had concluded that the current state of biometrics is “inherently fallible” and liable to develop major problems if used on a large scale.”

In Parliament when an opposition MP asked the Finance Minister, “If I do not make an Aadhaar card my PAN card will become invalid…You are forcing the citizen of this country to have Aadhaar which is still being disputed in the Supreme Court,” the FM Arun Jaitley replied quite openly, “Yes we are.”

Even beyond the Finance Bill, the Government is moving to link Aadhaar even to PDS rations, mid-day meal schemes for school children, gas connections and so on, in explicit violation of the Supreme Court’s injunction that essential services should not be linked to Aadhaar.

Media Smokescreen

How come most media channels did not inform people about the dangerous implications of the Finance Bill 2017? How come there were almost no debates or panel discussions when India’s democracy was being deeply damaged and undermined in this fashion?

The media – or most of it – was busy covering Yogi Adityanath’s speech in Parliament, as well as his daily diet, the number of cows he feeds, his pet animals and so on. As citizens’ attention and emotions were kept fixed on issues of whether or not their neighbours ate beef, the ruling party was able to pass sweeping undemocratic changes: legalize companies’ control over political parties, secret unlimited funding for political parties, and draconian powers to misuse IT raids, Government control over ‘independent’ tribunals, and making Aadhaar compulsory for filing tax returns.

Box

What’s the ‘Aadhaar’ of the UID Scheme?

(Excerpts from a piece by Gopal Krishna in Liberation April 2011)

“The national identity card scheme represents the worst of government. It is intrusive and bullying. It is ineffective and expensive. It is an assault on individual liberty that does not promise a great good…” – Theresa May (then British Home Secretary, now Prime Minister) announcing the complete dismantling of the UID project in the UK in June 2010….
…the UPA is promoting the UID project in India at a time when several countries in the world (including the USA, the UK, Australia, China, Canada and Germany) have scrapped similar projects.

According to the UPA Government, the UID will enable ‘inclusive growth’ and help the poor to better access social services by providing each citizen with a verifiable identity. The UID, we’re told, will ‘facilitate delivery of basic services’, and ‘plug leakages’ in public expenditure.

This claim is highly exaggerated: after all, exclusion from social sector schemes are rarely caused by the inability to prove identity – they are, in the main, caused by the deliberate exclusion of the poor from these services and by deliberate corruption by those entrusted to run these schemes. …

In fact, the introduction of UID is likely to go hand in hand with dismantling of the entire PDS mechanism (whereby the Government is responsible for delivery of guaranteed entitlements of food and fuel) in favour of ‘smart cards’ and ‘cash transfers’, under which the poor are likely to face even greater deprivation and exclusion.

…The UID scheme is being peddled as a system of foolproof biometric identification (i.e identification through fingerprints and iris scans as well as photographs.) But this technology is neither highly accurate nor suitable for large scale use on a population of India’s size. Research commissioned by the CIA and US Security establishment in September 2010 had concluded that the current state of biometrics is “inherently fallible” and liable to develop major problems if used on a large scale.

…The UPA Government has stressed that the UID would be a voluntary scheme. Nandan Nilekani, the former Infosys CEO heading the Aadhaar Project however spilled the beans when he said, “Yes, it is voluntary. But the service providers might make it mandatory. In the long run, I wouldn’t call it compulsory. I would rather say that it will become ubiquitous.” In other words, people will effectively have no choice but to register under the scheme because social welfare schemes and agencies like banks, insurance providers will insist on UID numbers. …

…The potential for the UID data to be leaked to market forces as well as for intrusions by the state into citizens’ privacy becomes enormous.