Press Release: Out of Rs 2172.231 cr as income from unknown sources, share of income from Electoral Bonds was Rs 1811.9425 cr or 83.414 %; Total income of National political parties from unknown sources: Rs 2172.231 cr, which is 66.04 % of the total income of the parties

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Mar 11, 2023, 1:26:26 AMMar 11

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Press Release

Date: 11-03-2023

Analysis of Sources of Funding of National Political Parties of India, FY 2021-22

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) shows that the sources 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 65% 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.

The reports in both English and Hindi are attached herewith. To access them on our website, please visit: https://adrindia.org/content/analysis-sources-funding-national-parties-india-fy-2021-22

Observations of ADR

Between FY 2004-05 and 2021-22, the National Parties collected Rs 17,249.45 cr from unknown sources (click here for access).
During FY 2021-22, BJP declared Rs 1161.0484 cr as income from unknown sources which is 53.45% of the total income of National Parties from unknown sources (Rs 2172.231 cr). This income of BJP is Rs 149.8658 cr more than the aggregate of income from unknown sources declared by the other 6 National Parties (Rs 1011.1826 cr).
AITC declared Rs 528.093 cr as income from unknown sources which is 24.3111 % of the total income of National Parties from unknown sources.
Out of Rs 2172.231 cr as income from unknown sources, share of income from Electoral Bonds was Rs 1811.9425 cr or 83.414 %.
Combined income of INC and NCP from sale of coupons between FY 2004-05 and 2021-22 stands at Rs 4398.51 cr.
It is to be noted that AITC’s total donations as per the audit report are worth Rs 38 lakhs (excluding donations via Electoral bonds) but the party has declared donations worth Rs 43 lakhs in the donations statement (details of donations above Rs 20,000). Hence, there is a discrepancy in the party’s statement for FY 2021-22.
CPI has declared donations through Levy, Membership fee, Party funds and Election funds.

Income of Political Parties from Known, Other known and unknown sources

For this report, known sources have been defined as donations above Rs 20,000, whose donor details are available through contributions reports as submitted by National parties to the ECI.
The unknown sources are income declared in the annual audit report 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.
For this analysis, 8 National parties were considered – BJP, INC, AITC, CPI(M), NCP, BSP, CPI and NPEP. 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 8 National political parties in FY 2021-22: Rs 3289.34 cr.
Total income of political parties from known donors (details of donors as available from contribution report submitted by parties to Election Commission and analysed by ADR here): Rs 780.774 cr, which is 23.74% 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 336.335 cr, or 10.22% of the total income.
Total income of political parties from unknown sources (income specified in the annual audit report whose sources are unknown): Rs 2172.231 cr, which is 66.04 % of the total income of the parties.
Out of Rs 2172.231 cr as income from unknown sources, share of income from Electoral Bonds: Rs 1811.9425 cr or 83.414%.

*Other known income includes: sale of moveable & immoveable assets, old newspapers, membership fees, delegate fee, bank interest, sale of publications and levy

**Details of income from unknown sources is given in Annexure – 1; Party-wise sources of income are given in Annexure – 2

Income from unknown sources

Out of total income of Rs 2172.231 cr of 7 National Parties from unknown sources, 83.414 % or Rs 1811.9425 cr came from Electoral Bonds.
Income from sale of coupons declared by INC, CPI(M) & NCP) formed 6.785% (Rs 147.3886 cr) of income from unknown sources while Donations from Voluntary Contributions (below Rs 20,000) formed 9.184% (Rs 199.4951 cr) in income from unknown sources of the 7 National Parties.

Recommendations of ADR

Since a very large percentage of the income of political parties cannot be traced to the original donor, full details of all donors should be made available for public scrutiny under the RTI. Some countries where this is done include Bhutan, Nepal, Germany, France, Italy, Brazil, Bulgaria, the US and Japan. In none of these countries it is possible for more than 65% of the source of funds to be unknown, but at present it is so in India.
Mode of payment of all donations (above and below Rs 20,000), income from sale of coupons, membership fees, etc. should be declared by the parties in the ‘Schedules’ of their audit reports, submitted annually to the Income Tax department and the ECI.
The ECI has recommended that tax exemption be awarded only to those political parties which contest and win seats in Lok Sabha/ Assembly elections. The Commission has also recommended that details of all donors who donate above Rs 2,000 be declared in public domain. ADR supports ECI for its strong stand to enforce reforms in funding of political parties and hopes that these reforms are proactively taken up by the Government for implementation.
Scrutiny of financial documents submitted by the political parties should be conducted annually by a body approved by CAG and ECI so as to enhance transparency and accountability of political parties with respect to their funding.
The National and Regional political parties must provide all information under the Right to Information Act. This will only strengthen political parties, elections and democracy. However, RTI or not, political parties should voluntarily account for every rupee that they get or spend.