Press Release: The total assets declared by the 8 National Parties during FY 2020-21 amounted to Rs 7297.618 cr which increased by 20.99% (Rs 1531.54 cr) to Rs 8829.158 cr during FY 2021-22.
ADR India
Analysis of Assets & Liabilities of National Parties – FY 2020-21 & 2021-22
There are a set of accounting standards set for commercial, industrial and business enterprises and these accounting standards are issued by the Institute of Chartered Accountants of India (ICAI). Political parties fall under the non-commercial, non-industrial or non-business entity. Thus, the standard accounting formats of the other entities are not applicable to political parties.
The Election Commission of India (ECI) requested for recommendations from the ICAI to bring uniformity in the accounting and auditing practices of political parties. Thus, the “Guidance note on Accounting & Auditing of political parties” or the “Accounting guidelines” were formulated in February, 2012 by the ICAI on the request of the ECI, in order to improve accounting and auditing standards of political parties and improve transparency in their finances. These guidelines lay down principles of recognition, measurement and disclosure items of income, expenditure, assets and liabilities in the financial statements of political parties.
Association for Democratic Reforms (ADR), in its report dated 16th October, 2017, analysed the assets and liabilities declared by the seven National Parties (BJP, INC, NCP, BSP, CPI, CPI(M) and AITC) between FY 2004-05 to 2015-16. In the report dated 9th March, 2018, ADR analysed the assets and liabilities declared by the 22 Regional Parties between FY 2011-12 to 2015-16. ADR also released a report on the Analysis of IT Returns: Assets and Liabilities of National Parties – FY 2016-17 & 2017-18 dated 31st July, 2019. The total assets declared by the 7 National Parties during FY 2016-17 amounted to Rs 3260.81 cr which increased by 6% to Rs 3456.65 cr during FY 2017-18. In case of Regional Parties, ADR’s analysis showed that the assets and liabilities declared by the 39 Regional Parties in FY 2016-17 amounted to Rs 1267.81 cr while 41 Regional Parties in FY 2017-18 declared Rs 1320.06 cr. ADR in its report dated 18th March, 2021, analysed the assets and liabilities declared by the 7 National Parties and 41 Regional Parties in FY 2018-19 and ADR in its previous report dated 28th January 2022, analysed the assets and liabilities declared by the 7 National Parties and 44 Regional Parties in FY 2019-20.
This report analyses the assets and liabilities declared by the 8 National Parties (BJP, INC, NCP, BSP, CPI, CPI(M), AITC and NPEP) for FY 2020-21 and 2021-22.
Executive Summary
Declaration of assets by the National Parties – FY 2020-21 & 2021-22
- The total
assets declared by the 8 National Parties during FY 2020-21 amounted to Rs
7297.618 cr which increased to Rs 8829.158
cr during FY 2021-22.
- During FY
2020-21, the declared assets of BJP totalled
Rs 4990.195 cr and increased by 21.17% to Rs 6046.81 cr during FY 2021-22.
- For FY 2020-21,
the declared assets of INC totalled Rs 691.11 cr and increased by 16.58% to Rs 805.68 cr during FY 2021-22.
- BSP is the only National Party to show a
decrease in its annual declared assets. The total assets of BSP between FY 2020-21 & 2021-22 decreased by 5.74% (from Rs 732.79 cr
to Rs 690.71 cr).
- The total assets of AITC increased from Rs 182.001 cr during FY 2020-21 to Rs 458.10 cr, an increase of 151.70%.
Declaration of liabilities by National Parties – FY 2020-21 & 2021-22
- The total liabilities for FY 2020-21 declared by the National Parties were Rs 103.555 cr. INC declared the highest liabilities of Rs 71.58 cr followed by CPI(M)
with Rs 16.109 cr.
- For FY 2021-22,
the highest liabilities of Rs 41.95
cr are declared by INC followed
by Rs 12.21 cr in the case of CPI(M) and Rs 5.17 cr in the case of BJP.
- Between FY 2020-21 and 2021-22, five parties
declared a decrease in liabilities, INC
(decrease of Rs 29.63 cr), BJP (decrease of Rs 6.035 cr), CPI(M) (decrease of Rs 3.899 cr), AITC
(decrease of Rs 1.306 cr) and Rs 1 lakh liabilities decrease of NCP.
- CPI declared Rs 6.28 lakhs in both years and BSP and NPEP have declared zero amounts for FY 2020-21 and FY 2021-22.
Capital declared by National Parties – FY 2020-21 & 2021-22
- The total Capital/
Reserve fund set aside by the National Parties during FY 2020-21 was Rs 7194.064
cr, and Rs 8766.494 cr for FY 2021-22, after adjusting for
liabilities for the respective years, from the total assets of the parties.
- For FY 2021-22,
BJP has the highest capital at
present after declaring Rs 6041.64
cr followed by Rs 763.73 cr of INC and Rs 723.56 cr of CPI(M).
- During FY 2021-22, NPEP has the least declared capital fund of Rs 1.825 cr followed by CPI with Rs 15.6752 cr.
Observations of ADR
- National
Parties failed to adhere to the ICAI guidelines that direct parties to declare details of the financial
institutions, banks or agencies from
whom loans were taken. The guidelines specify that the parties should state
the “terms of repayment of term loans” on
the basis of due date such as a year, 1-5 years or payable after 5 years.
- Details of fixed assets received as donation by the parties should be
declared such as original cost of the asset, any additions or deductions,
depreciation written off, cost of construction, etc. The same should also be
declared of fixed assets purchased by the political parties - not all National Parties
declared this information.
- Details
of loans given by the parties in cash/ kind should be specified and if it
constitutes more than 10% of the total loans, nature and amount of such
loans should be declared specifically by the parties - not declared by all National
Parties.
- ICAI guidelines, on auditing of political parties which were also endorsed by the ECI in order to improve transparency in the finances of political parties, remain guidelines only and have not been actively taken up by the political parties as a mandatory procedure to disclose details of their income. These guidelines were meant to standardize the format of financial statements of parties apart from improving disclosure of income, expenditure, assets and liabilities of the unique association, and political parties. Details of disclosure included:
- Classification and disclosure of details of donors (individuals, companies, institutions and others);
- Revenue from issuance of coupons of different denominations to be disclosed separately;
- Computation of income/ expenditure by Accrual method of accounting and not cash-flow method of accounting, where the former method provides more scope for transparency;
- Valuation of fixed assets, annually, to have a clear idea of appreciation/ depreciation.
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Maj. Gen Anil Verma (Retd.) Head National Election Watch, Association for Democratic Reforms |
Prof Jagdeep Chhokar IIM Ahmedabad (Retd.) Founder Member National Election Watch, Association for Democratic Reforms |
Prof Trilochan Sastry IIM Bangalore Founder Member, National Election Watch, Association for Democratic Reforms |
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