Large part of national parties’ income from ‘unknown sources’

Electoral bonds take form biggest portion of it: ADR Analysis

GN Bureau | March 7, 2024


#BSP   #Congress   #BJP   #ECI   #Elections   #ADR  
(For representation purpose only. Illustration by Ashish Asthana)
(For representation purpose only. Illustration by Ashish Asthana)

Between FY 2004-05 and 2022-23, the national political parties collected Rs 19,083.08 crore from unknown sources, according to an analysis made by the Association for Democratic Reforms.

During FY 2022-23, BJP declared Rs 1,400.23 crore as income from unknown sources which is 76.39% of the total income of the national parties from unknown sources (Rs 1,832.87 crore). This income of BJP is Rs 967.60 crore more than the aggregate of income from unknown sources declared by the other five national parties (Rs 432.63 crore), the ADR said in a statement.

INC declared Rs 315.11 crore as income from unknown sources which is 17.19% of the total income of National Parties from unknown sources.

Out of Rs 1,832.8788 crore as income from unknown sources, the share of income from Electoral Bonds was Rs 1510.6199 crore or 82.42%.

INC and CPI(M) have declared Rs 136.7986 crore combined income from the Sale of Coupons for FY 2022-23.

For more, see: https://adrindia.org/content/analysis-sources-funding-national-parties-fy-2022-23
Also see: https://adrindia.org/content/income-and-expenditure-report

For this analysis, ‘known sources’ have been defined as donations above Rs 20,000, whose donor details are available through contributions reports as submitted by the national parties to the ECI.

The ‘unknown sources’ refer to income declared in the annual audit report but without giving source of income for donations below Rs. 20,000. Such unknown sources include ‘donations via Electoral Bonds (which are now prohibited)’, ‘sale of coupons’, ‘relief fund’, ‘miscellaneous income’, ‘voluntary contributions’, ‘contribution from meetings/morchas’ etc. The details of donors of such voluntary contributions are not available in the public domain.

Other known sources of income include the sale of moveable & immoveable assets, old newspapers, membership fees, delegate fee, bank interest, sale of publications and levy whose details would be available in the books of accounts maintained by political parties.

For this analysis, six national parties were considered – BJP, INC, CPI(M), BSP, AAP and NPEP. However, BSP declared that it did not receive any funds from voluntary contributions (above or below Rs 20,000)/Sale of Coupons/Electoral Bonds or Unknown Sources of income. BSP received Rs 29.27 crore from other known sources of income which include bank interest (Rs 15.0487 crore), membership fees (Rs 13.73 crore), gain on sale of immovable property (Rs 28.49 lakh) and interest on income tax refund for AY 2021-22 (Rs 20.65 lakh).

Total income of political parties from known donors is Rs 850.43 crore, which is 27.64% of the total income of the parties.

Total income of political parties from other known sources (e.g. sale of assets, membership fees, bank interest, sale of publications, party levy etc.) is Rs 393.56 crore, or 12.79% of the total income.

Total income of political parties from unknown sources (income specified in the annual audit report whose sources are unknown): Rs 1832.8788 cr, which is 59.57% of the total income of the parties.

Out of Rs 1,832.87 crore as income from unknown sources, the share of income from Electoral Bonds stands at Rs 1,510.61 crore or 82.42%.

Income from the sale of coupons declared by INC and CPI(M) formed 7.46% (Rs 136.79 crore) of income from unknown sources while Donations from Voluntary Contributions (below Rs 20,000) formed 10.00% (Rs 183.28 crore) in income from unknown sources of the six national parties.

Recommendations of ADR

* Since a very large percentage of the income of political parties cannot be traced to the original donor, full details of all donors should be made available for public scrutiny under the RTI. Some countries where this is done include Bhutan, Nepal, Germany, France, Italy, Brazil, Bulgaria, the US and Japan. In none of these countries, it is possible for more than 59% of the source of funds to be unknown, but at present it is so in India.

* Mode of payment of all donations (above and below Rs 20,000), income from sale of coupons, membership fees, etc., should be declared by the parties in the ‘Schedules’ of their audit reports, submitted annually to the Income Tax department and the ECI.
* The ECI has recommended that tax exemption be awarded only to those political parties which contest and win seats in Lok Sabha/ assembly elections. The Commission has also recommended that details of all donors who donate above Rs 2,000 be declared in the public domain. ADR supports ECI for its strong stand to enforce reforms in the funding of political parties and hopes that these reforms are proactively taken up by the Government for implementation.

* Scrutiny of financial documents submitted by the political parties should be conducted annually by a body approved by CAG and ECI so as to enhance transparency and accountability of political parties with respect to their funding.

* The National and Regional political parties must provide all information under the Right to Information Act. This will only strengthen political parties, elections and democracy. However, RTI or not, political parties should voluntarily account for every rupee that they get or spend.

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