This is an excellent development: public discussion on political funding in India. I'm pleased that political party donations, being tax exempt, are now being subject to public scrutiny. This development was long overdue.
Ashish Tripathi, TNN | Sep 10, 2012LUCKNOW: The major source of the income of political parties in India is through donations and voluntary contributions. However, majority donations comes from undisclosed contributors.
According to the study conducted by the Association of Democratic Reforms (ADR), an umbrella body of non-governmental organizations working across the country for transparency in political and electoral system, the top five political parties with the highest total income between financial year (FY) 2004-05 and FY 2010-11 (last 7 years) are the Congress with Rs 2008 crore followed by Bhartiya Janta Party (BJP) with Rs 994 crore, Bahujan Samaj Party (BSP) – Rs 484 crore, Communist Party Marxist (CPM) – Rs 417 crore and Samajwadi Party (SP) – Rs 279 crore.
However, between 80-90% of the income of these political parties is through donations from unnamed sources. According to rules, it is mandatory for the political parties to provide names of the contributors who donate above Rs 20,000. But figures available show that ""named sources of income"" form a very small percentage of total income of the parties.
Sample this: Of the national parties for FY 2009-2010 and FY 2010-2011, BJP's donations from named donors amounted to 22.76% of the total income. The congress has shown a mere 11.89% of their income from named contributions, followed by Nationalist Congress Party (NCP) with 4.64% and CPM – 1.29%.
Significantly, the BSP has declared that it has not received any donations above Rs 20,000 in FY 2009-2010 and FY 2010-2011 even though its total income for the two years is Rs 172.67 crore. This means that all the donations were below Rs 20,000 and were from 'anonymous' sources. The CPI has shown 57.02% of total Income from donations above Rs 20,000.
The ADR conducted the study on the basis of facts and figures collected through queries filed with the Election Commission of India and the Income Tax authorities across the country under the Right to Information Act. The ADR analyzed the information and prepared the reports of six national parties and 36 regional parties.
According to the section 29-C of the Representation of People Act 1951 says that it is mandatory for political parties to submit details of contributions and donations received in excess Rs. 20,000 every year to the Election Commission of India. Any political party which fails to submit the donation reports every year is not entitled to any tax relief under the provisions of Income Tax Act and Companies' Act. The political parties are not eligible to accept any contributions from any foreign source.
The study also reveals that of the total regional parties analyzed for FY 2009-2010 and 2010-2011, Telangana Rashtra Samiti (TRS) has 99.98% of its income coming from donations followed by Janata Dal (United) with 95.96% and Lok Janshakti Party with 89.88%. Rashtriya Janata Dal – 56.13% and Telugu Desham Party – 37% derive maximum income from donations above Rs 20,000. The BJP had the maximum number of donors donating above Rs 20,000 for FY 2009-2010 (279) and FY 2010-2011 (502) while for Congress it was 226 in 2009-2010 and 417 in 2010-2011.
Several Electoral Trusts also make contributions to political parties. They include trusts like the General Electoral Trust, the Public and Political Awareness Trust, Bharti Electoral Trust, Electoral Trust, Harmony Electoral Trust, Satya Electoral Trust, Chowgule Charitable Trust and the Corporate Electoral Trust.
The trust which has made the maximum contributions to the political parties is the General Electoral Trust with contributions of Rs 36.46 crore to the Congress between FY 2003-04 and 2010-11 and Rs 26.07 crore to the BJP during the same time.
Similarly, Bharti Electoral Trust made a contribution of Rs 11 crore to the Congress during FY 2008-09 and Rs 6.10 crore to the BJP during the same period.
The Public and Political awareness Trust made an overall contribution of Rs 9.5 crores to BJP during the FYs 2003-04 and 2004-05.
The Electoral trust made contributions amounting to Rs 9.96 crore to the Congress in FY 2004-05 and FY 2009-10, Rs 6.82 crore to the BJP in FY 2004-05 and 2009-10, Rs 0.30 crore to the JD(U) in 2009-10, Rs 1.58 crore to the SP in FY 2004-05 and 2009-10.
Harmony Electoral Trust made a contribution of Rs 2.00 Cr to INC and Rs 1.50 Cr to BJP during the FY 2009-10 while Satya Electoral Trust had made donations amounting to Rs 2.00 Cr to INC and Rs 1.00 Cr to NCP during the FY 2009-10.
Several companies and corporates have also donated money to the political parties between the FYs 2003-04 and 2010-11. Some of the companies are Torrent Power Limited, Asianet TV Holding private limited, Sterlite Industries, ITC Limited, Videocon Industries Limited, Larsen & Tubro Limited, Infrastructure Development and Consultant (I) (P) Limited and Russel Credit Limited.
The top ten companies which made the maximum contributions are the Torrent Power Limited donating Rs 14.15 crore to the Congress during the FYs 2003-04, 2007-08, 2009-10 and 2010-11 and Rs 13.00 crore to the BJP during the FYs 2007-08 to 2010-11.
Asianet V Holding Private Limited donated Rs 10 crore to the BJP during the FY 2009-10 and Rs 2.50 crore to the Congress during the FY 2009-10.
Sterlite Industries, a subsidiary of the Vedanta Group, donated Rs six crore to the Congress during FY 2004-05 and FY 2009-10, while The Madras Aluminium Company Limited, also a subsidiary of the Vedanta Group had contributed Rs 3.50 crore to the BJP.
Southern Engineering Works (SEW) Constructions, SEW Infrastructure and Videocon Industries are other major donors who contributed to the Congress BJP, CPI and NCP. The ITC is also a major donor making contributions to SP (Rs 78 lakhs), AIADMK (Rs 55 lakhs) and to RJD (Rs 33 lakhs) between FY 2003-04 and FY 2010-11.
As per ECI records, only 5 regional/state parties have regularly filed their contribution reports from FY 2004-2005 till FY 2010-2011. These are Samajwadi Party, AIADMK, Janata Dal (United), Shiv Sena and Telugu Desham Party.
Around 18 regional/state parties have never filed their contribution reports to the Election Commission from FY 2004-2005 till FY 2010-2011. Many of these defaulting political parties who have not filed their contribution reports for the mentioned time period are ruling parties/major opposition parties in their respective states. Some of these parties are National Conference, All India Trinamool Congress and Indian National Lok Dal among others.
Several major regional/state parties who have not filed their contribution reports regularly with the ECI. These include Shiromani Akali Dal, DMK, Rashtriya Janata Dal, Lok Janshakti Party, Janata Dal Secular, Biju Janata Dal, Telangana Rashtra Samiti and Sikkim Democratic Front.
Laws relating to donations to the political parties
According to ADR, the section 29C of the Representation of People Act, 1951 states that the political parties are required to submit contribution details received in excess of Rs 20,000 from any individual or a company. This section has been interpreted by the political parties as to include every single donation made only above Rs 20,000 by any person at one time. However, as per the provisions of this section, it must also include in it, multiple donations made by the same person, entity or company aggregating to Rs 20,000 or above during the said financial year.
In addition to this, the coupon system adopted by Political Parties makes it difficult to establish the identity of the donor since coupons are issued in lieu of receipts and transactions are made in cash. This implies that a lot of cash donations received remain unaccounted for in the books of accounts since only those amounts for which a receipt has been issued would be accounted for. These donation coupons are ostensibly below Rs 20,000 though these may aggregate to be more than Rs 20,000.
ADR demands the following steps to be taken to ensure accountability of the political parties and reduce corruption in running political parties and electoral politics.
* As several large donations have also been made in cash, ECI should issue directive to political parties to accept donations above Rs 20,000 only through cheques
* Provisions of the RPA relating to filing of contribution reports by parties should be strictly followed.
* Parties who fail to abide by the provisions of the Act must not be allowed to avail tax relief under the Income Tax Act.
* Section 29C of RPA must include all donations made by any individual or company amounting to over Rs 20,000 during the said financial year and not only single donations made over Rs 20,000.
* There should be a strict mechanism for donations received in cash through sale of coupons.
* Investigate the role of corporate and foreign entities in setting up of electoral trusts for making donations to political parties.
* More transparency s needed in the functioning of Electoral Trusts.
* Political Parties must be declared as public authorities