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Like Pakistan, India also follows the British bicameral legislative system where the lower and upper houses of the parliament are involved in drafting legislation, and political parties featuring in both these law-making chambers rely on donations to carry out their operations.

However, loopholes and grey areas do exist in the regulation of the funds received by the Indian political parties. Research shows that despite all sorts of regulations in place, over 55% of the donations received by regional Indian parties in 2019-20 came from “unknown” sources, the Association for Democratic Reforms (ADR) had revealed in November 2021.

In its November 12, 2021 edition, reputed local media house “The Indian Express” had reported: “According to the ADR report, electoral bonds accounted for nearly 95% of the donations from “unknown” sources. While the total donations received by 25 regional parties in 2019-20 added up to Rs803.24 crore, Rs445.7 crore was attributed to “unknown” sources, the report said. Of the donations from “unknown” sources, Rs 426.233 crore (95.616%) came from electoral bonds, and Rs 4.976 crore from voluntary contributions. The report noted that donations received by national parties from “unknown” sources added up to 70.98% of their income.”

A few months earlier on June 10, 2021, this newspaper had divulged: “In 2019-20, the ruling BJP had received roughly Indian Rs7.85 billion in donations from companies and individuals, according to its contribution report submitted to the Election Commission (EC). This was over five times of the Rs1.39 billion that Congress had got. BJP MP Rajeev Chandrasekhar’s Jupiter Capital, the ITC Group, real estate companies Macrotech Developers (earlier known as Lodha Developers) and B G Shirke Construction Technology, the Prudent Electoral Trust, and Jankalyan Electoral Trust were among the BJP’s biggest donors.”

The “Indian Express” had asserted: “The BJP also received a sizable donation of Rs20 crore from Gulmarg Realtors, the real estate company associated with builder Sudhakar Shetty, in October 2019. The Enforcement Directorate had raided Shetty’s residence and office in January 2020. At least 14 educational institutions were also among the BJP’s donors. These include Mewar University, Delhi (Rs2 crore), Krishna Institute of Engineering (Rs10 lakh), G D Goenka International School, Surat (Rs2.5 lakh), Pathania Public School, Rohtak (Rs2.5 lakh), Little Hearts Convent School, Bhiwani (Rs21,000), and Allen Career, Kota (Rs25 lakh).

There are many BJP members, MPs and MLAs among the party’s donors. In India, Section 29B of the Representation of the People Act (RPA) entitles parties to accept voluntary contributions by any person or company, except a government company, whereas Section 29C mandates political parties to declare donations that exceed Indian Rs20,000.

Such a declaration is made by making a report and submitting the same to the Election Commission. Failure to do so on time disentitles a party from tax relief under the Income Tax Act, 1961.

It is imperative to note that on April 2, 2017, the Indian government had lowered the limit for cash donations to political parties from Rs20,000 to Rs2,000, according to the "Hindustan Times."

The Indian government had insisted that corporations should also refrain from cash giving, requiring them to donate via cheque or digital payment. The Finance Bill presented in Indian parliament had also introduced the concept of an "electoral bond," by which corporations could purchase time-limited bearer bonds from scheduled banks and transfer those bonds to registered bank accounts of political parties.

While these funds would flow through the banking system (rather than under the table), corporations could not be obliged to disclose their purchases nor are parties required to report their deposits.

In a bid to clamp down on cash in politics and to introduce transparency in electoral funding, the Indian government hence legally allowed the corporations to give unlimited sums to political parties, all without having to disclose a single rupee.

In 2014, the Delhi High Court had found both ruling Bharatiya Janata Party (BJP) and its key adversary, the Indian National Congress, guilty of receiving foreign funding. Not long ago, a research paper of Dr. Bhimrao Ramji Ambedkar College had shed enough light on how Indian political entities raise funds.

The research paper had viewed: “One of the biggest disadvantages of the corporate funding is the use of fake companies to route black money. There are various gaps in Indian rules, the benefit of which political parties take to avoid any kind of reporting. Hidden sources of funding lead to more spending of funds in election campaigns, thus impacting the economy of the country.”

It further read: “Excessive reliance on corporate funding can turn political and democratic processes into a plutocracy in the longer run.” On history of corporate funding of political parties in India, the research paper revealed: “It goes back to the freedom movement. The Birlas were one of the leading donors of the Indian National Congress. After Independence, the business class as a whole secured some leverage over the shaping of the Congress government's economic policy.”

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