Political Party Funding
Political parties need access to money in order to reach out to the electorate, explain their goals/policies and receive inputs from people. Political party funding (political finance) are the methods that a political party uses to raise money for campaign and routine activities. Funds for party activity (be it campaigning or routine operations) can be solicited via "grassroots fundraising" as party membership dues or other voluntary contributions from individuals (e.g. direct mail fundraising) or as "plutocratic funding" from wealthy people and/ or the business community as corporate donations. Despite such multitude of promising options, political fundraising via political corruption (e.g. influence peddling, graft, extortion, kickbacks, embezzlement) is still around.
At present, only the following parties are recognized by the Election Commission of India (ECI) as National Political Parties:
- Bhartiya Janata Party (BJP)
- Indian National Congres (INC)
- All India Trinamool Congress (AITC)
- Nationalist Congress Party (NCP)
- Communist Party of India - Marxist (CPM)
- Communist Party of India (CPI)
- Bahujan Samaj Party (BSP)
An analysis of these parties' 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. 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.
Political parties need access to money in order to reach out to the electorate, explain their goals/policies and receive inputs from people. Political party funding (political finance) are the methods that a political party uses to raise money for campaign and routine activities. Funds for party activity (be it campaigning or routine operations) can be solicited via "grassroots fundraising" as party membership dues or other voluntary contributions from individuals (e.g. direct mail fundraising) or as "plutocratic funding" from wealthy people and/ or the business community as corporate donations. Despite such multitude of promising options, political fundraising via political corruption (e.g. influence peddling, graft, extortion, kickbacks, embezzlement) is still around.
At present, only the following parties are recognized by the Election Commission of India (ECI) as National Political Parties:
- Bhartiya Janata Party (BJP)
- Indian National Congres (INC)
- All India Trinamool Congress (AITC)
- Nationalist Congress Party (NCP)
- Communist Party of India - Marxist (CPM)
- Communist Party of India (CPI)
- Bahujan Samaj Party (BSP)
An analysis of these parties' 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. 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.
SUBJECT Variables
SOURCES OF INCOME
Known sources are those donations above Rs 20,000, whose donor details are available through contributions report as submitted by National parties to the ECI.
Unknown sources are income declared in the IT returns 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 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.
- The total funding received by the 6 national political parties in 2022-23 was ₹3,077 crore, a 6.5% decrease over the collections received in 2021-22.
- ₹2,361 crore (77% of the total funds raised in 2022-23) was raised by BJP, a 23% increase over 2021-22 when BJP raised ₹1,917 crore. Of the total funds raised by BJP in 2022-23, 59% were from unknown sources.
- ₹452.4 crore (15% of the total funds raised in 2022-23) was raised by INC, a 16.4% decrease over the previous year when INC raised ₹541.3 crore. 70% of the funds raised by INC in 2022-23 were from unknown sources.
- The remainder of ₹263.7 crore (8% of the total funds raised in 2022-23) was raised by the other 4 national parties.
UNKNOWN SOURCES OF INCOME
These are categorised as income declared in the IT returns 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.
Electoral Bonds:
The central government had on January 29, 2018, notified the electoral bond scheme. It is like a promissory note that can be bought by any Indian citizen or company incorporated in India from select branches of State Bank of India. The citizen can then donate the same to any eligible political party of his/her choice. Issued in multiple values of Rs 1,000, Rs 10,000, Rs 1 lakh, Rs 10 lakh and Rs 1 crore, these bonds can only be encashed by political parties, which had secured at least 1 per cent of the votes polled in the most recent Lok Sabha or state election. Monies received from electoral bonds will be deposited in a bank account verified by the Election Commission. All the transactions for electoral bonds can be done only through that account.
Opponents to the scheme allege that since the identity of the donor of electoral bonds has been kept anonymous, it could lead to an influx of black money. Others allege that the scheme was designed to help big corporate houses donate money without their identity being revealed.
- ₹1,511 crore (49% of the total funds raised and 82% of the total unknown sourced funds raised in 2022-23) was collected via Electoral Bonds and cannot be traced back to the donor.
- ₹1,400 crore (76% of the unknown sources) was collected by BJP, closely followed by INC which collected ₹315 crore (17% of the unknown sources) in 2022-23.
- ₹177 crore was raised via the sale of coupons in 2022-23 of which INC raised ₹125.8 crore and CPM raised ₹11 crore
- ₹183 crore was received as voluntary donations of under ₹20,000 value in 2022-23, of which ₹106 crore was received by the BJP.
Also read: Electoral Bonds - The black hole of untraceable funds in Indian politics
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