How could banning cash donations up to ₹2000 impact transparency and political funding in India?

The issue of political funding in India has long been associated with lack of transparency and potential misuse of anonymous cash donations. Currently, political parties can accept cash donations up to ₹2000 without disclosing the donor’s identity. The Supreme Court is considering whether banning even these small cash donations could improve transparency and accountability.

• Increased Transparency: Banning cash donations up to ₹2000 would require all contributions to be made through traceable banking channels like cheques, bank transfers, or digital payments. This would make it easier to track the source of funds and reduce the scope for anonymous or black money donations.
• Reduction in Unaccounted Money: Cash donations are difficult to audit and can be used to channel unaccounted money into political parties. Eliminating cash donations would make it harder for parties to accept illicit funds and would promote cleaner political financing.
• Impact on Small Donors: Many genuine small donors, especially in rural or less-banked areas, may find it difficult to make digital or bank donations. This could discourage grassroots-level financial participation in politics and potentially hurt smaller parties or candidates with less access to digital infrastructure.
• Administrative Burden: Political parties would need to maintain detailed records of all donations, increasing administrative work but also ensuring better compliance with financial regulations.
• Level Playing Field: Larger parties with better digital infrastructure may find it easier to adapt, while smaller parties might struggle, potentially impacting political competition.
• Public Trust: A move towards fully traceable donations could help restore public confidence in the political funding system and reduce the perception of corruption in politics.