The parliamentary standing committee on personnel, public grievances, law and justice has noted that "even genuine transactions of the traders are seized" during polls.
In its 149th report on demand for grants by the legislative department, the nodal office for the Election Commission, the panel hinted that this was because any large transaction that is not digital comes under the scanner.
The report, tabled in Parliament on Thursday, says: “The committee is given to understand that whenever the elections are announced in states, the model code of conduct comes into place immediately on announcement and trade gets hit.
"Though digital transactions have made a huge impact, still a large portion of the country’s economy is cash economy. On the pretext of implementation of the model code of conduct, even the genuine transactions of the traders are seized which impacts the trader and the economy.
"The committee desires that ECI should have a mechanism to verify the purpose for which the money is being transacted. On verification, if it is found to be for legal purposes then the entire money should be released immediately."
The poll panel’s 2015 instructions on the release of seized material mandate a three-member committee of district officials to examine seizures, and, "where the committee finds that no FIR/complaint has been filed against the seizure or where the seizure is not linked with any candidate or political party or any election campaign, as per SOP, it shall take immediate steps to order release of such cash".
Cash seizures during the last Lok Sabha elections were around ₹850 crore. Poll officials seized around ₹9,000 crore, of which ₹4,000 crore was from narcotics.