Press Release: For the FY 2021-22, the income of Regional political parties from unknown sources is Rs 887.551 cr, which is 76.147% of the total income of these parties.

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May 16, 2023, 3:17:08 AM5/16/23

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Press Release

Date: 16-05-2023

Analysis of Sources of Funding of Regional 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 improving 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 audit reports 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. As a result, a substantial amount of 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, parties 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.

To access the reports in both English and Hindi on our website, please visit: https://adrindia.org/content/analysis-sources-funding-regional-parties-india-fy-2021-22

Income of Political Parties from Known, Other Known and Unknown Sources

For this report, known sources have been defined as donations above and below Rs 20,000, whose donor details are available through contribution reports as submitted by regional parties to the ECI.
The unknown sources are income declared in the Annual Audit reports 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.
Association for Democratic Reforms (ADR), in its previous report dated 26^th August, 2022, analysed 27 Regional parties which filed both their Annual Audit and Contribution reports. For FY 2020-21, total income of Regional parties amounted to Rs 530.703 cr, of which Rs 263.928 cr or 49.73% came from unknown sources.
For this analysis, 54 Regional (recognized) parties were initially considered, but out of them only 28 have filed both their Annual Audit and Contribution reports (refer Annexure – 1), remaining 14 had not submitted one out of the two reports to be submitted (refer Annexure – 2). None of the two reports of 12 Regional parties are available on the ECI website at the time of preparation of this report.
The Annual Audit and Contribution reports of AAP is available on the website, but party’s donation declarations show discrepancies between data in the both reports for FY 2021-22. Therefore, this party has not been analyzed in this report.
Total income of 27 Regional political parties in FY 2021-22 (which have submitted both reports): Rs 1165.576 cr (refer Annexure – 3).
Total income of political parties from known donors (details of donors as available from Contribution report submitted by parties to Election Commission): Rs 145.42 cr, which is 12.476% of the total income of the parties.
Total income of political parties from other known sources (e.g. Membership fees, bank interest, sale of publications, party levy etc.): Rs 132.605 cr, or 11.377% of total income.
Total income of political parties from unknown sources (income specified in the audit reports whose sources are unknown): Rs 887.551 cr, which is 76.147% of the total income of the parties.

Income from Unknown Sources

Rs 887.551 cr of the total income of Regional Parties came from unknown sources, 93.26% or Rs 827.76 cr of this came from Electoral Bonds.
Income from Sale of coupons formed 4.32% (Rs 38.354 cr) and Voluntary contributions (below Rs 20,000) formed 2.40% (Rs 21.293 cr) in income from unknown sources of 27 Regional parties. Refer to Annexure – 4.

Observations of ADR

In FY 2021-22, either of the two reports of the 14 Regional Parties (audit reports of 8 parties and contribution reports of 6 parties) are not available on the ECI website. In FY 2021-22, for 12 regional parties, both reports (audit and contribution) are unavailable on the ECI website.
The contribution report of AAP is available on the website, but the party’s donations data show discrepancies as declared in their Annual Audit report and Contribution report (donations above Rs 20,000) for FY 2021-22. Therefore, this party has not been analyzed in this report. (Party has declared Rs 25.12 cr donations through others (Electoral bond/Electoral Trust), but the party has not declared a separate amount for Electoral Bonds).
During FY 2021-22, total income of Regional Parties from Unknown Sources amounted to Rs 887.551 cr and constituted 76.147% of their total income as declared in their audit reports. 93.26% or Rs 827.76 cr of this came from Electoral Bonds, and Regional Parties collected Rs 38.354 cr from Sale of Coupons.
Some of the top Regional Parties to declare highest income from unknown sources include DMK (Rs 306.025 cr), BJD (Rs 291.096 cr), TRS (Rs 153.037 cr), YSR-Congress (Rs 60.0168 cr) and JDU (Rs 48.3617 cr).
Regional Parties such as the DMK, MNS and NPF provided details of donations below Rs 20,000 also.

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 India, during FY 2021-22, total income of National Parties from unknown sources totaled 66.04%.
Any organization that receives foreign funding should not be allowed to support or campaign for any candidate or political party.
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/ State 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.