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

An analysis of their Income Tax Returns and donations statements filed with the Election Commission of India (ECI), conducted by Association for Democratic Reforms (ADR) shows that the sources remain largely unknown. At present, political parties are not required to reveal the names 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 CIC ruling in June 2013, they have still not complied with the decision. Full transparency is, unfortunately, not possible under the current laws, and it is only the RTI that can keep citizens informed.

Observations of ADR

· Between 2004-05 and 2018-19, the National Parties have collected Rs 11,234.12 cr from unknown sources (links to reports given in ‘Reference’). The ‘Schedules’ or ‘Annexures’ were unavailable for CPM for 2017-18. Schedules contain specific details of income from various sources, without which ADR was unable to analyze sources of funding of CPM for the said year.

· During 2018-19, BJP declared Rs 1612.04 cr as income from unknown sources which is 64% of the total income of National Parties from unknown sources (Rs 2512.98 cr). This income of BJP forms more than 1.5 times more the aggregate of income from unknown sources declared by the other 5 National Parties (Rs 900.94 cr).

· INC declared Rs 728.88 cr as income from unknown sources which is 29% of the total income of National Parties from unknown sources.

· Out of Rs 2512.98 cr as income from unknown sources, the share of income from Electoral Bonds was Rs 1960.68 cr or 78%.

· Combined income of INC and NCP from sale of coupons between FY 2004-05 and 2018-19 stands at Rs 3902.63 cr.

· According to the donations reports (containing details of donations above Rs 20,000) of 2018-19, Rs 71.44 lakhs was given to the National Parties by cash.

· For this report, known sources have been defined as donations above Rs 20,000, whose donor details are available through contributions report as submitted by National parties to the ECI.

· The unknown sources are income declared in the IT returns but without giving a 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.

· For this analysis, 7 National parties were considered – BJP, INC, AITC, CPM, NCP, BSP and CPI. However, BSP declared that it did not receive any funds from voluntary contributions (above or below Rs 20,000)/Sale of Coupons/Electoral Bonds or Unknown Sources of income.

· Total income of 7 National political parties in FY 2018-19: Rs 3749.37 cr.

· Total income of political parties from known donors Rs 951.66 cr, which is 25.38% of the total income of the parties.

· Total income of political parties from other known sources (e.g. sale of assets, membership fees, bank interest, sale of publications, party levy etc.): Rs 284.73 cr, or 7.59% of the total income.

· Total income of political parties from unknown sources (income specified in the IT Returns whose sources are unknown): Rs 2512.98 cr, which is 67% of the total income of the parties.

· Out of Rs 2512.98 cr as income from unknown sources, the share of income from Electoral Bonds: Rs 1960.68 cr or 78%.

Out of total income of Rs 2512.98 cr of 6 National Parties from unknown sources, 78.02% or Rs 1960.68 cr came from Electoral Bonds.
Income from the sale of coupons declared by INC, NCP & CPM formed 13.10% (Rs 329.10 cr) of income from unknown sources while Donations from Voluntary Contributions (below Rs 20,000) formed 8.65% (Rs 217.41 cr) in income from unknown sources of the six National Parties.

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