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3 February 2017 Editorial

 

3 FEBRUARY 2017

Neither transparent nor accountable

In the public mind, political corruption is the source of most forms of corruption. No doubt, Finance Minister Arun Jaitley was seeking to address this concern about the lack of transparency and accountability in the funding of political parties when he announced measures in the Union Budget to cleanse the process of making donations toward election expenses of parties. But his proposals are doomed to fail, not because they do not go far enough but because they go in the wrong direction. The ceiling of Rs.2,000 on cash donation by any individual to a party, slashed from the existing Rs.20,000, might inconvenience parties to some extent but is unlikely to stop the disguising of huge, off-the-books cash donations from corporate houses and vested interests as small contributions from ordinary party workers and sympathisers. All that the parties will now have to do is find more people to lend their names to these donations, or better still, find more names of unsuspecting people to be listed as cash donors. The proposal does not disrupt the flow of illicit political donations but only channels it differently, and will not reduce the proportion of cash from unverifiable sources in the total donations received. If Mr. Jaitley was indeed intent on getting the political class to truly account for their donations, he should have placed a cap on the amount a party may receive in cash as a donation. In any case, the declared income is only a small part of their funding, much of which is spent during elections and mobilisation efforts without coming under the radar of the Election Commission or the Income Tax Department.

The proposal to allow donors to purchase electoral bonds from banks against cheque and digital payments to be given to registered political parties for redemption, meant to cater to donors’ need to remain anonymous to rival political parties, hardly contributes to transparency. Indeed, donors should not enjoy any anonymity, before tax authorities or the general public. The absence of such anonymity, of course, will bring down the level of contributions from corporate houses and other entities to parties, not such a bad thing. Far from aiding transparency, the proposal only clouds the funding process. The Budget makes it mandatory for political parties to file returns within a time limit, but in the absence of extreme penal provisions compliance is likely to be low. Mr. Jaitley, while raising visions of a crackdown on illicit funding, seems to have left the issue untouched in real terms. Half-measures will not go even halfway in achieving the purpose of bringing about transparency and accountability in political donations.

H-1B visa in the spotlight

There are disconcerting signals from the Trump White House and Capitol Hill of likely changes to the  H-1B non-immigrant visa programme in the U.S. for skilled workers in tech jobs. Indian IT firms have been among the top recipients of the 65,000 such visas made available annually via a lottery system, in some years garnering well in excess of 80% of them. However, President Donald Trump, driven by his campaign promise of “Buy American, Hire American”, now has this “specialty occupation worker” visa in his crosshairs. Shares in Indian IT majors took a nosedive last week when an unconfirmed draft executive order leaked to U.S. media houses appeared to call for reform of immigration rules for skilled foreign workers that would raise the salary eligibility for such visas to $130,000, reverse the extensions granted by the Obama administration to the Optional Practical Training programme for foreign graduates in the U.S., and institute a rigorous monitoring system for companies employing L-1 visa holders, intra-company transferees. Any hope that India Inc. may have of such executive orders not gaining the requisite support in Congress is likely to come to naught: at least two bills with bipartisan backing were introduced in the House of Representatives last month, both urging tightening of conditions for skilled-worker visas that are, in the government’s view, costing Americans jobs.

Notwithstanding the shadow of protectionism that it would cast on the bilateral relationship with New Delhi, this visa crackdown in the making raises troubling questions for the U.S. tech sector and the broader economy as well. Any significant hike in the minimum salary levels for the specialised jobs held by H-1B visa recipients will hit not only Indian IT firms but also the tech titans of Silicon Valley, including Microsoft, Google and Facebook. This will inflict pain on the U.S. economy. Similarly, unless skill-based criteria are used in addition to wage-level restrictions, numerous U.S. firms will struggle to fill mid-level jobs with qualified Americans. Indian firms have for years been the most rapidly growing investors in the U.S. economy. If IT companies within this group are impacted by onerous new restrictions, they would likely prefer to entirely offshore their operations to India. Ironically, that could lead to job losses for American workers. While Mr. Trump was elected into office campaigning for economic revitalisation and job-creation for Americans, his administration would be wise to think through all the possible outcomes that could result from ham-fisted policies in the immigration space.

 

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