Political Parties Got 69% Of Total Income From Unknown Sources: ADR Report [Read Report]

A recent report by a Delhi-based think tank has revealed that over the past 11 years, political parties have received Rs.7,832.98 crore from unknown sources, which is a startling 69% of their total income. The revelations raise pertinent question on the transparency and accountability of political parties with respect to funding.

The Association for Democratic Reforms undertook detailed analysis of earnings from respective sources of six national parties (INC, BJP, BSP, NCP, CPI and CPM) and 51 regional recognised parties, including AITC, which was declared a national party only in September, 2016.

As per the report, total income of both national and regional parties between FY 2004-05 and 2014-15 stood at Rs.11,367.34 crore, of which only 16% i.e., Rs.1,835.63 crore was received from known donors.

Another 15% of the total income, i.e. Rs.1,698.73 crore, was received from other known sources such as sale of assets, membership fees, bank interest, sale of publications, party levy etc. The remaining, a whopping 69% of their income, is from unknown sources.

A party-wise analysis has revealed that among the national parties, the INC received 83% of total income, i.e. Rs.3,323.39 crore, and the BJP received Rs.2,125.91 crore, which estimates at 65% of their total income, from unknown sources.

Among the regional parties, the Samajwadi Party received an enormous 94% of total income, amounting to Rs.766.27 crore, from unknown sources. The Shiromani Akali Dal stood at 86% i.e., Rs. 88.06 crore of their total income.

The ADR report pointed out that the income of national parties from unknown sources increased by a humongous 313%, amounting to Rs. 274.13 crore during FY 2004-05 to Rs 1130.92 crore during FY 2014-15.

An even more glaring revelation was witnessed in case of regional parties, which recorded a raise by 652%  i.e., from Rs.37.393 crore during FY 2004-05 to Rs.281.01 crore during FY 2014-15.

The report also pointed out that the BSP is the only party that has consistently declared that it has received ‘nil’ donations above Rs. 20,000 between FY 2004-05 and 2014-15, resultantly, 100% of the party’s donations come from unknown sources.

A startling 2,057% increase has been recorded in the party’s earnings over the last 11 years. Its income in the FY 2004-05 amounted to Rs.5.19 crore, which increased to Rs.111.96 crore during FY 2014-15.

The ADR, in its analysis found out that of the 51 regional political parties considered for this report, 45 parties had not submitted their donations statements to the ECI for at least one financial year.

It also revealed that 12 regional parties - J&K PDP, AJSU, NPP, RSP, MPC, KC-M, SKM, AINRC, PDA, MSCP, HSPDP and PPA had never filed their contributions report since FY 2004-05.

The analysis conducted by obtaining income tax returns/ audit reports of national and regional parties after filing RTI applications with the Income Tax departments, revealed that I-T returns of 42 out of the 51 regional parties  were unavailable for at least one financial year for several reasons, including denial of information, unavailability, inability to trace audit reports, incomplete information etc. Audit reports were also procured from the ECI.

The analysis revealed that party funding largely comes from unknown sources. The political parties are not required to reveal the name of individuals or organisations giving less than Rs. 20,000. A veritable escape route, parties heavily depend on it. The ADR stated that over two-thirds of the funds cannot be traced and are from ‘unknown’ sources.

The dismal state is aggravated with the fact that national political parties still haven’t complied with the CIC ruling in June 2003, which brought them under the RTI scanner, making full transparency a distant vision.

In the light of the stark revelations, the ADR recommended that since a very large per cent 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.

Example of countries like Bhutan, Nepal, Germany, France, Italy, Brazil, Bulgaria, the US and Japan, revealed that in these countries it is impossible for almost 75% of the source of funds to be unknown, but at present it is so in India.

They further suggested organisations with foreign funding should not be allowed to support campaign of any political party or candidate. An annual scrutiny of financial documents of political parties should be conducted by a body authorised by the CAG and the ECI. In the interest of greater tansperacy and accountability, the ADR recommended complete disclosures under the RTI Act for both national and regional political parties.

The ADR lauded and backed ECI for its strong moves with respect to the commission’s recommendations to reveal donor details above Rs. 2,000 and tax exemption only for those political parties that contest and win seats in Lok Sabha/ Assembly elections.

Read the report here.

This article has been made possible because of financial support from Independent and Public-Spirited Media Foundation.