Press Release: The audit reports of 18 regional parties are not available on the ECI website at the time of preparation of this report even after 261 days since the due date for submission.

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Jul 19, 2024, 2:27:58 AM (8 days ago) Jul 19

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Press Release

Date: 19th July, 2024

Analysis of Income & Expenditure of Regional Political Parties for FY 2022-23

For the complete reports in English and Hindi with details of top three sources of income, top items of expenditure of the Regional Parties and the status of submission of their audit reports for FY 2022-23, kindly access the reports on the website: https://adrindia.org/content/analysis-income-expenditure-regional-political-parties-fy-2022-23

Executive Summary

Political parties have multiple sources of funding and thus accountability and transparency should be an important aspect of their functioning. It is essential to have comprehensive and transparent accounting methods and systems which should reveal the true financial position of the parties.

The Election Commission of India (ECI), in its letter dated 19^th November,’14 addressed to the Presidents/General Secretaries of all political parties, stated that it was mandatory for the parties to submit details of their audited reports to the Commission.

This report analyses the total income and expenditure incurred, all over India, by 39 out of 57 Regional Parties during FY 2022-23, as declared by the parties in their Audit reports submitted to the ECI. The Regional Parties include AGP, AIADMK, AIMIM, AINRC, AITC, AIUDF, AJSU Party, Apna Dal (Soneylal), BJD, BRS, CPI, CPI(ML)(L), DMDK, DMK, GFP, INLD, J&KPDP, JD(S), JD(U), JJP, JMM, KC(M), LJSP(Ram Vilas), MGP, MNS, NDPP, NPF, PPA, RJD, RLTP, RSP, SAD, SDF, SKM, SP, TDP, UPPL, Voice of the People Party and YSR-Congress.

Status of submission of audited reports by the Regional Parties, FY 2022-23

The due date for submission of annual audited accounts for the parties was 31st October,'23.
16 parties had submitted their audit reports on time, while 23 parties delayed their submission by several days, ranging from 3 day to 150 days.
Audit reports of the remaining 18 regional parties for FY 2022-23 are unavailable on the website of the ECI at the time of preparation of this report. These include some major political parties like SHS, BPF, JKNC, NCP and Shiv Sena (UBT) etc.
Hence, this report analyses the income and expenditure of 39 Regional Political Parties, whose audit reports are available on the ECI website for FY 2022-23.

Total income declared by Regional Political Parties, FY 2022-23

The total income of the 39 Regional Parties for the FY 2022-23 was Rs 1740.486 cr.
BRS reported having the highest income of Rs 737.677 cr, which forms 42.38% of the total income of all the parties analysed, followed by AITC with an income of Rs 333.457 cr or 19.16% and DMK whose income was Rs 214.353 cr or 12.32% of the total income of the 39 Regional parties analysed in this report.
The total income of top 5 parties amounted to Rs 1541.328 cr, which comprised 88.56% of the total income of the political parties analysed collectively.

Comparison of Income of Regional Parties, FY 2021-22 and FY 2022-23

For 37 parties out of 39 political parties whose data is available for both the years, 20 parties have shown an increase in their income from FY 2021-22 to FY 2022-23 while 17 parties have shown a decline in their income during this period.
Total income of the 37 parties increased from Rs 1721.189 cr in FY 2021-22 to Rs 1731.935 cr in FY 2022-23, a total increase of 0.62% or Rs 10.746 cr.
BRS reported the highest increase in its income of Rs 519.565 cr, followed by TDP and CPI which declared a total increase of Rs 57.966 cr and Rs 12.454 cr respectively, between FY 2021-22 and FY 2022-23.

Unspent Income of Regional Parties, FY 2022-23

There are 19 Regional parties who declared a part of their income as remaining unspent for the FY 2022-23 while 20 political parties spent more than the income collected during the year.
BRS has more than Rs 680.201 cr of its total income remaining unspent while BJD and DMK have Rs 171.066 cr and Rs 161.729 cr respectively, of their income remaining unspent for FY 2022-23.
YSR-Congress, NDPP, CPI(ML)(L), JD(S), SAD, INLD, LJSP (Ram Vilas), Apna Dal (Soneylal), KC(M), SDF, AJP, AJSU Party, J&KPDP, AIUDF, AINRC, RSP, NPF, Voice of the People Party, MGP and GFP are the 20 regional parties that declared spending more than their income. JD(S) has declared spending the highest amount of Rs 7.224 cr or 490.43% more than its income.
It is to be noted that GFP is the only party which has not declared any income for FY 2022-23, but the party has declared expenses during this year of Rs 6.68 lakhs.

Total expenditure incurred by Regional Parties, FY 2022-23

The total declared expenditure of the 39 Regional parties for the FY 2022-23 was Rs 481.039 cr.
Total expenditure incurred by the top 5 parties is Rs 402.024 cr or 83.57% of the total expenditure as reported by the 39 political parties.
Top 5 parties that have incurred highest expenditure are AITC which spent Rs 181.184 cr or 37.665%, followed by YSR-Congress which spent Rs 79.329 cr or 16.491%, BRS which spent Rs 57.476 cr or 11.948%, DMK which spent Rs 52.624 cr or 10.94% and SP spent Rs 31.411 cr or 6.53% of the total expenditure.

All sources of Income declared by Regional Political parties, FY 2022-23

39 Regional Parties collected Rs 1522.4649 cr or 87.4736% of their total income from voluntary contributions (includes Donations & Contributions and Electoral Bonds) for FY 2022-23.
Under voluntary contributions, political parties collected 73.8775% or Rs 1285.8269 cr of their income from Donations through Electoral Bonds while other Donations & Contributions amounted to Rs 236.638 cr or 13.5961% for FY 2022-23. The share of other sources of income declared by regional parties is Rs 218.0211 cr which is 12.5264% of the total declared income.
Only 8 of the 39 Regional Parties that were analysed declared donations through Electoral Bonds amounting to Rs 1285.8269 cr.
8.93% or Rs 155.3975 cr of the total income was generated through Interest Income by the 39 Regional Parties during FY 2022-23.

Observations of ADR

Audit reports of 23 parties were available on the ECI website after a delay of 3 day to 150 days from the last date of submission.
The income tax returns/audit reports of 18 regional parties are not available on the ECI website at the time of preparation of this report even after 261 days since the due date for submission.
More than 73% of the total income (Rs 1285.8269 cr) of the 39 regional political parties analysed for FY 2022-23 came from Donations through Electoral Bonds.
The most common and popular items of expenditure for regional parties for FY 2022-23 are Administrative & General Expenses and Election Expenditure.
As per the data shared by SBI in response to ADR’s RTI application, Electoral Bonds worth Rs 2797.3569 cr were redeemed by parties in FY 2022-23. 54% (Rs 1510.6199 cr) of this has been redeemed by National Parties and 45.97% (Rs 1285.8269 cr) is redeemed by Regional Parties.
For FY 2022-23, only 3 National Parties (BJP, INC and AAP) have received donations through Electoral Bonds (Rs 1510.6199 cr). Of the Regional parties that have submitted their audit reports, 8 Regional Parties (BRS, AITC, DMK, BJD, YSR-Congress, TDP, JMM and SKM) have declared receiving donations through Electoral Bonds worth Rs 1285.8269 cr.

Recommendations of ADR

The Supreme Court gave a judgment on September 13, 2013 declaring that no part of a candidate’s affidavit should be left blank. Along the same lines, we recommend that the Election Commission of India impose rules that no part of the Form 24A submitted by political parties providing details of donations above Rs 20,000 should be left blank.
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 70% of the source of funds to be unknown.
According to the Finance Act, 2017, Section 13A of the IT Act was amended to state that tax exemption will be given to registered political parties “Provided also that such political party furnishes a return of income for the previous year in accordance with the provisions of sub-section (4B) of section 139 on or before the due date under that section.” Thus, any party which does not submit its IT returns on or before the due date, their income should not be tax-exempt and defaulting parties should be derecognized.
Those parties not following the ICAI guidelines for auditing of reports should be scrutinized by the IT department.
All political parties must provide all information on their finances under the Right to Information Act. This will only strengthen political parties, elections and democracy.
Penal or stringent action (instead of only sending reminder letters) to be taken against recognised political parties for delaying or defaulting on the submission of their audit and contribution reports each year. Specific laws that command culpability like Section 13A of the Income Tax Act, 1961 and Section 29 (C) of the Representation of People Act, 1951 which lay down a proviso stating cancellation of tax exemption to political parties if they fail to submit their financial statements has not been stringently enforced by the Election Commission. Every year, between FY 2017-18 to 2022-23, at least 16 parties defaulted on the submission of their annual reports.