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Parties need access to money to reach out to the electorate, explain their goals/policies and receive inputs from people. But where do they collect their funds from?

In this brand new episode, which is the fourth in the podcast series launched by ADR in June 2020, we look at the analysis of the Income Tax Returns (ITRs) and donations statements filed by the 7 National political parties for FY 2018-19 with the Election Commission of India (ECI), to ascertain the sources of the funds received by the National parties. We look at the declared incomes of the National parties and their top sources. Subsequently, we analyse and discuss the sources of these incomes as Known sources, Unknown sources and Other Known sources, which are categories defined by ADR. Please send us your feedback, comments, and suggestions. You can reach us at [email protected].

PODCAST TRANSCRIPT


Opening remark 00:08

Political Parties play a key role in democracies as they contest elections, form governments, formulate policies and are responsible for providing governance, and improve the lives of the common man. Parties need access to money to reach out to the electorate, explain their goals/policies and receive inputs from people. But where do they collect their funds from?

[Pause]

Welcome back to another episode of ADR Speaks! My name is Shelly Mahajan and I am a Program Associate with the Political Party Watch team at ADR.

Introduction 00:40

In this brand new episode, which is the fourth in the podcast series launched by ADR last month, we look at the analysis of the Income Tax Returns (ITRs) and donations statements filed by the National political parties for FY 2018-19 with the Election Commission of India (ECI), to ascertain the sources of the funds received by the National parties.

The Income Tax Act and the guidelines issued by the ECI make it mandatory for the political parties to submit details of their audited reports to the ECI to be eligible for the 100% tax exemption provided to them. Each year, ADR analyses the total income and expenditure incurred all over India by National parties, as declared in their IT returns to the ECI, with the objective of revealing the true financial position of the parties to the citizens. The focus of this episode is the FY 2018-19, the year for which the latest data is available for the seven National parties, namely, Bharatiya Janata Party (BJP), Indian National Congress (INC), Bahujan Samaj Party (BSP), Nationalist Congress Party (NCP), Communist Party of India (CPI), Communist Party of India (Marxist) (CPM), and All India Trinamool Congress (AITC).

In this episode, we look at the declared incomes of the National parties and their top sources. Subsequently, we analyse and discuss the sources of these incomes as Known sources, Unknown sources and Other Known sources, which are categories defined by ADR. Known sources have been defined as donations above Rs 20,000 whose donor details are available through the donations statements of the parties. The Unknown sources are income declared in the IT returns but without giving source of income for donations below Rs 20,000. Such Unknown sources include ‘donations via Electoral Bonds’, ‘sale of coupons’, ‘relief fund’, ‘miscellaneous income’, ‘voluntary contributions’, ‘contribution from meetings/morchas’ etc. The details of donors of such voluntary contributions are not available in the public domain. Other known sources of income include sale of moveable & immoveable assets, old newspapers, membership fees, delegate fee, bank interest, sale of publications and levy whose details would be available in the books of accounts maintained by political parties.

 

 

Key findings 03:10

Now let’s look at some of the key findings of the analysis done by ADR on this subject:

  1. Each year, several political parties delay or default on the submission of their annual reports, failing to meet the prescribed due dates for filing of these reports. The same was also observed in the FY 2018-19, where 4 out of the 7 National parties’ audit reports were available in the public domain after the deadline of 31st Oct’19. These include NCP, BJP, INC & CPI, whose audited reports were filed after a delay of 5 days, 27 days, 42 days and 42 days, respectively.

 

  1. The total declared income of the 7 National parties for FY 2018-19 was Rs 3749.37 cr and the declared expenditure was Rs 1642.56 cr. Rs 2410.08 cr or 64.28% of the total declared income was received by the BJP followed by INC which declared a total income of Rs 918.03 cr (24.485%), which was less than half of BJP’s income. The declared income of AITC, NCP & CPM are Rs 192.65 cr, Rs 50.71 cr & Rs 100.96 cr, respectively. While CPI declared the least income of Rs 7.15 cr (a mere 0.19%).

 

  1. Between FY 2017-18 and 2018-19, National parties’ total declared income increased from Rs 1397.90 cr to Rs 3749.37 cr (an increase of 168%). In case of BJP, which received the highest income for both years, it witnessed a jump of 135% while it was 361% for INC. The highest increase in the income was declared by AITC of 3628% from Rs 5.167 cr during FY 2017-18 to Rs 192.65 cr during FY 2018-19. While the declared income of CPM decreased by 3.71%.

 

  1. The top source of income of National parties for FY 2018-19 is voluntary contributions/donations/grants; fee subscriptions & bank interest being the others. 7 National parties collected 83.47% (Rs 3129.75 cr) of their total income from Voluntary contributions for FY 2018-19. The income from donations/contributions include: BJP – Rs 2354.02 cr, INC – Rs 551.55 cr, AITC – Rs 141.54 cr, NCP – Rs 41.326 cr, CPM – Rs 37.228 cr and CPI – Rs 4.08 cr.

 

  1. As per the categories defined by ADR on the types of sources, total income of political parties from Known donors (details of donors as available from contribution reports submitted by parties to Election Commission and analysed by ADR) is Rs 951.66 cr, which is 25.38% of the total income of the parties.

 

  1. Total income of political parties from Other Known sources (e.g. sale of assets, membership fees, bank interest, sale of publications, party levy etc.) is Rs 284.73 cr, or 7.59% of the total income.

 

  1. Total income of political parties from Unknown sources (income specified in the IT Returns whose sources are unknown) is Rs 2512.98 cr, which is a humungous 67% of the total income of the parties. Out of Rs 2512.98 cr as income from Unknown sources, share of income from Electoral Bonds is Rs 1960.68 cr or 78%.

 

  1. Only BJP, INC, NCP and AITC declared receiving an income from Contribution through Electoral Bonds. BJP received donations through Electoral Bonds worth Rs 1450.89 cr (42.53%), INC received Rs 383.26 cr, AITC received Rs 97.28 cr and NCP received Rs 29.25 cr.

 

  1. For National parties, under Unknown sources, income from sale of coupons declared by INC, NCP & CPM formed 13.10% (Rs 329.10 cr) while Donations from Voluntary Contributions (below Rs 20,000) formed 8.65% (Rs 217.41 cr). It must be noted that the Coupons are one of the ways devised by the political parties for collecting donations and hence are printed by the party itself. There is no cap or limit as to how many coupons can be printed or the total quantum (that is the total amount/worth of coupons). The only source of information regarding the coupon system is the party itself and no one else. Coupon system does not come under the scope of Election Commission of India and they have no control over it.

 

  1. From the analysis, it is clear that given the anonymity provided to donors by the Electoral Bonds Scheme, it has emerged as the most popular mode of donations to National political parties for FY 2018-19. More than 52% of the total income of 7 National Parties came from Electoral Bonds (Rs 1960.68 cr), wherein identity of the donors is not disclosed to the public.

 

Key take-away 09:49

The above analysis and data shows that the sources of parties’ income remain largely unknown. At present, political parties are not required to reveal the name of individuals or organizations giving less than Rs. 20,000 nor those who donated via Electoral Bonds. As a result, more than 67% of the funds cannot be traced and are from ‘unknown’ sources. While the National political parties were brought under the RTI Act by the Central Information Commission (CIC) ruling in June 2013, they have still not complied with the decision and continue to deny information under the RTI Act.  Full transparency is, unfortunately, not possible under the current laws, and it is only the RTI that can keep citizens informed.

Conclusion 10:37

Political parties have multiple sources of funding and thus accountability & transparency should be an important aspect of their functioning. It is essential to have comprehensive and transparent accounting methods and systems which provide complete information on the sources of funding of political parties which are defined as ‘public authorities’ under the RTI Act by the CIC and are answerable to the citizens. As voters, we must raise questions on this matter and demand accountability from our politicians.

[Pause]          

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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