The Election Commission is set to tell the law ministry to cap anonymous cash donations a political party can receive at 20% of its total collections even as Mayawati-led BSP has filed yet another contribution report declaring all donations as anonymous.

In a communication to the ministry, EC will also suggest a cap on election campaign expenditure of parties, a move that all parties have backed, people familiar with the development told ET. Both issues have been high on the commission’s agenda for checking money power in elections and were flagged up to the Centre in 2016 as well, sources said.

EC will send fresh communications on these issues this week, they said. The case of anonymous cash donations has been one long battle at the commission. While its recommendation to limit anonymous cash funding to amounts less than Rs 2,000 from Rs 20,000 was agreed to and announced by the Modi government in 2017, this has not fully solved the problem of opacity in funding of political parties.

BSP, which had consistently declined to declare its donors by claiming year after year that it has not received any funds greater than Rs 20,000, has in its 2017-18 contribution report claimed that it has not received any funds above the new limit of Rs 2,000 and hence avoided declaring its donors yet again, sources said.

BSP was the only party to declare receiving nil donations above Rs 20,000 between 2004-05 and 2014-15. Thus 100% of its donations came from unknown sources. The total income of the party during this period had increased by 2,057% from Rs 5.19 crore in 2004-05 to Rs 111.96 crore in 2014-15.

Taking note of BSP’s latest contribution report, EC has now decided to write to the law ministry, asking that the proportion of anonymous cash donations should be restricted to Rs 20 crore, or 20% of a party’s entire collection, whichever is lower, to ensure transparency.

The 2015 Law Commission report had also recommended that only “a maximum of up to Rs 20 crore or 20% of the party’s entire collection, whichever is lower, can be anonymous”. While BSP may lead the pack in anonymous cash donations, other parties do not measure up any better.

An 11-year study by ADR on the sources of funding of national and regional parties of India from 2004-05 to 2014-15 had revealed that more than two-thirds of the funds had come from ‘unknown’ sources.

According to the study, 83% of total income of Congress, 65% of BJP, 94% of SP, 100% of BSP and 86% of SAD came from anonymous donations.

EC had on August 27 held a meeting with all political parties where one of the issues on the agenda was to limit campaign expenditure for an election to ensure a level-playing field for all political parties and to check the staggering money power that is at work at every election. All political parties are learnt to have agreed to the suggestion.

Accordingly, the commission will take up the issue with the law ministry. EC had earlier proposed that the ceiling on campaign expenditure “should be either 50% of or not more than the ceiling limit provided for the candidate multiplied by the number of candidates of the party contesting the election”.

A close look at electoral finances clearly shows funds flowing generously to the BJP’s coffers while Congress is faced with a tough financial situation.

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