The Economic Times

The Election Commission of India has flagged the presence of political parties that have not contested any election for many years and sought powers to deregister them or act against them, if required.

At a meeting with the law ministry last week, EC proposed that it should be empowered to act in cases where a political party may not have contested elections for years but may be enjoying income-tax exemption on donations, ET has learnt.

The law ministry is yet to take a view on the matter.

The last time the EC made a move in this direction was in 1999, when it put 200 parties on notice as they had not contested any elections for a while. Several of these notices returned undelivered or were not responded to, and such parties were deleted from the list of registered parties. However, the EC later retreated from the stance and took a view that existing laws only allow it to register parties and have no provision to de-register them.

The EC’s concern over the mushrooming of political parties, however, is not unfounded.

There are over 2,700 political parties registered in India at the state and national levels, as per data from March 2021. Of these, there are seven national-level parties, over 50 state parties and the remaining are unrecognised. It is estimated that not more than 400-500 parties contest polls.

To be counted as a recognised, a political party should have got a minimum percentage of valid votes or certain number of seats in the state legislative assembly, or the Lok Sabha, during the last election.

It is, however, estimated that not more than 400-500 of the registered parties actually contest elections.

This brings to the fore the larger question of political funding.

It is suspected that several unrecognised parties may be engaged in money laundering, given the income tax exemptions they enjoy.

While Section 29A of the Representation of People’s Act, 1951 provides for registration of a political party by the EC. Section 29B and C allow the said party to receive voluntary contributions, provided they report every donation above Rs 20,000 in their contributions reports submitted to the EC. Section 13A of the I-T Act then comes into play, as it exempts parties’ income from ‘house property’, ‘other sources’, ‘capital gains’ and ‘voluntary contributions’ from tax.

The blind spot lies in Sections 29A and B of the RP Act, 1951 as they do not place any conditions, such as contesting of elections for collecting donations.

The Association of Democratic reforms, a watchdog NGO on electoral issues, has reported that the number of registered unrecognised political parties has increased twofold in the last 10 years.

From 1,112 parties in 2010, the number spiked to 2,301 in 2019, and now is over 2,700.

It also points out that the number of unrecognised parties increases disproportionately during the year of Parliamentary elections.

Between 2018 and 2019, it increased by over 9.8%, while between 2013 and 2014, it increased by 18%.

Although unrecognised, these parties netted Rs 65 crore in 2018-19 and Rs 24.6 crore in 2017-18. Among such parties reporting high donations are Apna Desh party of UP at Rs 65 crore for the two financial years, besides Public Political Party, Bhartiya Rajnitik Vikalp Party, Dharmrajya Paksha and Marulmalarchi Dravida Munnetra Kazhagam.

ADR assessments show maximum unregistered parties in UP and the highest donations going to such parties in Gujarat.

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