Press Release: The total assets declared by the 44 Regional Parties during FY 2020-21 amounted to Rs 2249.25 cr while 37 Regional Parties declared total assets of Rs 3000.62 cr in FY 2021-22

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Dec 2, 2023, 1:31:19 AM12/2/23

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Press Release

2nd December 2023

Analysis of Assets & Liabilities of Regional Parties – FY 2020-21 & 2021-22

To access the report in both English and Hindi on the website, please see: https://adrindia.org/content/analysis-assets-and-liabilities-regional-parties-fy-2020-21-and-2021-22

Introduction

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 the ICAI for recommendations 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 of items of income, expenditure, assets and liabilities in the financial statements of political parties.

Association for Democratic Reforms (ADR), previously analysed the Assets and Liabilities reports of the Political Parties for the following years:

Between FY 2011-12 to 2015-16, we analysed assets and liabilities declared by the 22 Regional Parties in our report dated 9^th March, 2018,
In our report on the Analysis of IT Returns: Assets and Liabilities of National Parties – FY 2016-17 & 2017-18 dated 31^st July, 2019, we analysed the total assets declared by the 7 National Parties during FY 2016-17 amounting to Rs 3260.81 cr, which increased by 6% to Rs 3456.65 cr during FY 2017-18.
We released a report on the analysis of the assets and liabilities declared by the 39 Regional Parties in FY 2016-17 and 41 Regional Parties in FY 2017-18.
ADR in its report dated 28th January 2022, analysed the assets and liabilities declared by the 7 National Parties and 44 Regional Parties in FY 2019-20.
ADR in its previous report dated 4^thSeptember 2023, analysed the assets and liabilities of 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 by 20.99% to Rs 8829.158 cr during FY 2021-22.

This report analyses the assets and liabilities declared by the 44 Regional Parties in FY 2020-21 and 37 Regional Parties in FY 2021-22.

Executive Summary

Declaration of assets by the Regional Parties – FY 2020-21 & 2021-22

The total assets declared by the 44 Regional Parties during FY 2020-21 amounted to Rs 2249.25 cr while 37 Regional Parties declared total assets of Rs 3000.62 cr in FY 2021-22 (refer Annexure – 1).

The total assets declared by the top 10 Regional Parties during FY 2020-21 amounted to Rs 1959.351 cr which increased to Rs 2909.186 cr (by 48.48%) during FY 2021-22.
During FY 2020-21, the highest assets declared by SP totalled Rs 561.46 cr and increased by 1.23% to Rs 568.369 cr during FY 2021-22, followed by BRS with total assets of Rs 319.55 cr in FY 2020-21 and Rs 512.24 cr in FY 2021-22.

During FY 2020-21 and 2021-22, the total assets of DMK (244.88%), BJD (143.92%) and JD(U) (95.78%) increased by more than 95%.
In the case of AAP, the total assets increased by 71.76% between FY 2020-21 and 2021-22, from Rs 21.82 cr to Rs 37.477 cr.
AIADMK and TDP are the only parties among the top 10 parties to show a decrease in their declared annual assets by 1.55% and 3.04 % respectively. AIADMK assets decreased from Rs 260.166 cr to Rs 256.13 cr and TDP assets decreased from Rs 133.423 cr to Rs 129.372 cr between FY 2020-21 and 2021-22.

Declaration of liabilities by the Regional Parties – FY 2020-21 & 2021-22

The total liabilities declared by the 44 Regional Parties during FY 2020-21 amounted to Rs 54.0635 cr while 37 Regional Parties declared total liabilities of Rs 74.1873 cr in FY 2021-22 (Refer Annexure – 2)

The liabilities declared by the top 10 Regional Parties during FY 2021-22 amounted to Rs 72.618 cr, an increase of 42.41% from FY 2020-21.
During FY 2021-22, the highest liabilities were declared by TDP worth Rs 42.584 cr, an increase of 57.18% from FY 2020-21, wherein TDP declared the highest liabilities worth Rs 27.092 cr.
Between FY 2020-21 and 2021-22, the total annual liabilities declared by BJD and AAP showed an increase of 1481.40% and 222.50%, respectively.
Between FY 2020-21 and 2021-22, the total annual liabilities declared by JD(S) and AJSU Party showed a decrease of 8.29% and 8.33% respectively.

Capital/ Reserve Funds declared by the Regional Parties – FY 2020-21 & 2021-22

The total Capital/ Reserve fund set aside by the Regional Parties during FY 2020-21 was Rs 2195.191 cr, and Rs 2926.434 cr for FY 2021-22, after adjusting for liabilities for the respective years, from the total assets of the parties.
For FY 2021-22, SP declared the highest capital of Rs 568.037 cr followed by Rs 502.551 cr of BRS and Rs 473.06 cr of BJD.
During FY 2020-21, MNS declared the lowest capital fund of Rs 15.824 cr followed by AAP (Rs 21.185 cr) among the top 10 regional parties.
The reserve funds of DMK increased by 263.19% from Rs 107.657 cr in FY 2020-21 to Rs 391.001 cr in FY 2021-22, while that of BJD increased by 143.33 %. In case of TDP, the reserve funds decreased by 18.38% between FY 2020-21 and 2021-22.

Observations of ADR

Regional 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 the due date such as a year, 1-5 years or payable after 5 years.
Details of fixed assets received as donations by the parties should be declared such as the 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 Regional 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, the nature and amount of such loans should be declared specifically by the parties - not declared by all Regional 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, political parties. Details of disclosure included:
a.       Classification and disclosure of details of donors (individuals, companies, institutions and others);
b.       Revenue from issuance of coupons of different denominations to be disclosed separately;
c.       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;
d.       Valuation of fixed assets, annually, to have a clear idea of appreciation/ depreciation.
For FY 2020-21, Audit reports of 9 regional parties namely IUML, JKNC, JKNPP, UPPL, LJSP, MNF, RLSP, RSP and UDP are unavailable and AIMIM party statement is incomplete on the website of the ECI. While 38 parties have delayed their submission by several days, ranging from 1 day to 590 days.
For FY 2021-22, audit reports of 17 regional parties namely AIMIM, BPF, HSPDP, IUML, IPFT, JKNC, JKNPP, LJSP, MNF, MPC, RLSP, RLTP, RSP, SHS, SKM, UDP and ZNP are unavailable on the website of the ECI, at the time of preparation of this report. 17 parties have delayed their submission by several days, ranging from 2 days to 346 days.