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In this episode, which is twelfth in the podcast series launched by ADR, we look at the donations from corporates (above Rs 20,000) to National parties for the FY 2018-19. Political parties considered in this analysis are BJP, INC, NCP, CPM & AITC. Though a National party, BSP has not been considered for analysis as the party has declared that it received no voluntary contributions above Rs 20,000 from any donor during this period as well as during the time period since 2004. CPI did not declare any income from corporates for FY 2018-19 and hence has not been taken up for analysis for this period. Donations from corporates to National parties increased by 133% from the period between 2004-12 to 2018-19.

Opening remarks (0:08)

During the FY 2018-19, a total of Rs 881.26 cr was donated by all the corporate/business houses to the 5 National parties namely BJP, INC, NCP, CPM & AITC, constituting 93% of the total contribution to political parties from known sources. Donations from corporates to National parties increased by 133% from the period between 2004-12 to 2018-19.


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Welcome back to another episode of ADR Speaks! My name is Shelly Mahajan and I am a Program Associate at ADR.


Introduction (0:51)

In this brand new episode, which is twelfth in the podcast series launched by ADR, we look at the donations from corporates (above Rs 20,000) to National parties for the FY 2018-19. Political parties considered in this analysis are BJP, INC, NCP, CPM & AITC. Though a National party, BSP has not been considered for analysis as the party has declared that it received no voluntary contributions above Rs 20,000 from any donor during this period as well as during the time period since 2004. CPI did not declare any income from corporates for FY 2018-19 and hence has not been taken up for analysis for this period.

Background (01:37)

Donations or contributions are amounts contributed above Rs 20,000 to the political parties by individuals, companies, electoral trusts and unions/ associations. The details of donors such as Name, address, PAN number, Mode of payment and date of donation have to be shown by the political party in the ‘Donations report’ filed by the party to the Election Commission of India. According to the rules laid down by the Election Commission, Contribution Report containing details of the donors who donated above Rs 20,000 have to be made available with the ECI on an annual basis as prescribed under Section 29-C of the Representation of People’s Act in Form 24A.

If the parties do not submit an annual report stating donations received above Rs 20,000, then such party shall not be eligible for tax relief under Section 29-C of the RPA. Contribution reports throw light on the huge amounts donated by companies and industries to political parties.

By rule, political parties are not permitted to accept contributions from foreign companies. No Government company shall contribute any amount or amounts, directly or indirectly to any political party or for any political purpose to any person. However, electoral bonds and FCRA amendments with it have paved way for unaccounted political funding. The amended Companies Act now allows any foreign company registered in India to make contributions through bonds to political parties, overruling legitimate doubts about what its source of funding is.

Key findings (03:20)

ADR analysed the donations from corporates to National parties for the FY 2018-19 which resulted in the following findings:

  1. 5 National parties received a total of Rs 951.66 cr via voluntary contributions above Rs 20,000 out of which 93% or Rs 881.26 cr was from corporates/ business houses

 

  1. Various sectors of business houses, in 7 years between FY 2012-13 & 2018-19, donated a total of Rs 2823.21 cr or 91.62% of the total contribution from known sources of political parties amounting to Rs 3081.58 cr.

 

  1. BJP received the maximum corporate donations of Rs 698.14 cr, which forms 94% of the total donations to the party above Rs 20,000 in FY 2018-19 followed by INC which declared a donation of Rs 127.602 cr from various corporate and business houses.

 

  1. National parties have received the maximum corporate donations during FY 2018-19 (Rs 881.26 cr), followed by FY 2014-15 (Rs 573.18 cr) & FY 2016-17 (Rs 563.19 cr). Donations from corporates to National parties was lowest in FY 2015-16, where it reduced to Rs 76.94 cr.

 

  1. Between FY 2012-13 and 2018-19, BJP received the maximum corporate donations of Rs 2319.54 cr, constituting 16% of the total corporate donations in the seven years.

 

  1. Progressive Electoral Trust was the top donor to three of the National parties namely BJP, INC & AITC, in FY 2018-19. The Trust donated a total of three times in one year, amounting to Rs 455.15 cr.

 

  1. Prudent Electoral Trust was the second highest corporate donor to BJP and INC, donating 25 times, a total amount of Rs 106.25 cr.

 

  1. The contributions from corporate/ business houses have been classified into 15 sectors/categories by ADR and does not form a part of the submission made by parties to ECI. These sectors include Electoral Trusts, Real Estate, Manufacturing, Trusts & Group of companies, Power & Oil, Mining, Construction, Exports/Imports among others.

 

  1. In FY 2018-19, Electoral Trust donated the maximum amount of Rs 617.65 cr followed by Manufacturing sector, contributing a total of Rs 96.88 cr and Mining, Construction, Exports/Imports sector, contributing a total of Rs 64.61 cr to the 5 National parties.

 

  1. BJP, INC and AITC received the maximum contributions from Electoral Trusts. BJP received the highest, Rs 471.785 cr, followed by INC with Rs 98.88 cr and AITC with Rs 42.986 cr.
  2. While NCP received the maximum contributions from Mining, Construction, Exports/Imports, Rs 5.65 cr.

 

  1. Rs 20.57 cr was received from the unsegregated category, which includes companies with no details available online or those with no clarity regarding their nature of work.
  2. Mode of payment is either incomplete or undeclared in case for 204 donations through which National parties received a huge sum of Rs 556.497 cr, which forms 15% of the total amount of donations received by corporate/business houses. 100% of corporate donations to AITC either have incomplete or undeclared mode of payment. This was also the case for the FY 2016-17 and 2017-18.

 

  1. In a total of 631 donations declared by National parties, there is no information related to PAN or address or details of both PAN and address details. Such contributions amount to Rs 58.395 cr.


Key take-away (08:10)

As we highlight these whopping amount of figures donated by corporates to political parties, it is important for our listeners to bear in mind that there is no restriction on the amount that corporate entities may contribute to political parties nor any requirement to share the details of their political contributions in their profit and loss accounts. The earlier limit of 7.5% was removed after amendment introduced to Section 182 of Companies Act 2013 in 2017.

More importantly, information pertaining to sources of funds from individuals, corporations or other details like the address of the donor, along with his/her PAN details, mode of payment etc. are not always furnished correctly by parties, parties also default in submission of their contribution reports before due date. As of now, there is no categorical schedule of penalties for incomplete/nondisclosure of such information in their reports or if parties fail to file returns in time.


Conclusion (09:11)

In conclusion, I request our listeners to understand that no regulatory framework guarantees effective enforcement of political finance regulations given that in a democracy, laws controlling political finance are passed by politicians themselves. The willingness and capacity of parties and other stakeholders to moderate use of money and follow the law both in letter and spirit; as well as an informed citizenry to hold parties accountable is most essential. The manner in which a political party manages its access to and use of funds defines the foundation for the political finance regime of a democratic country.

 

 

 

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Well, that’s all for today’s episode. I hope you all found this useful and interesting. If you like our work, make sure you subscribe to the podcast on our website: adrindia.org and don’t forget to write to us at [email protected] with your feedback. We will be back in two weeks with another amazing episode. Please stay tuned and thank you for listening.

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