unknown-sources-funding-parties

Context: According to a report released by the Association for Democratic Reforms, as much as 67% of donations to national parties in 2018-19 came from “unknown sources”.

Key finding of the report:

  • The ADR analysed the income tax returns and donation statements submitted to the Election Commission by the BJP, the Congress, the Trinamool, the Communist Party of India, the Communist Party of India (Marxist), the Nationalist Congress Party and the Bahujan Samaj Party.
  • Contribution from known sources: The total income of the parties was ₹3,749.37 crore of which ₹951.66 crore was from known donors.
  • The BSP declared zero voluntary contributions.
  • Electoral bonds accounted for 78% of the ₹2,512.98 crore, or 67%, income from unknown sources.
    • Parties are required to give details of all donations above ₹20,000, donations under ₹20,000 and those via electoral bonds remain anonymous.
    • Out of the total income from unknown sources, 64% went to the BJP and 29% to the Congress.
  • 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 [Right to Information Act].

 

Reforms related to electoral funding

Legal Provisions: 

  • Section 29B of the Representation of the People Act (RPA) entitles parties to accept voluntary contributions by any person or company, except a Government Company.
  • Section 29C of the RPA mandates political parties to declare donations that exceed 20,000 rupees. Such a declaration is made by making a report and submitting the same to the EC. Failure to do so on time disentitles a party from tax relief under the Income Tax Act, 1961.
  • The Representation of People’s Act  lays down the rules for elections, bars political parties from accepting foreign funds.
  • In March, 2018, the government passed a key amendment to the Foreign Contribution Regulation Act, 2010 allowing foreign companies to fund political parties in India.

Electoral bonds

  • How electoral bonds work?
 

About Electoral bonds: The Electoral bond scheme was announced in Union Budget 2017-18 in an attempt to cleanse the system of political funding in the country.

Salient features:

  • Although called a bond, the banking instrument resembling promissory notes will not carry any interest.
  • The electoral bond, which will be a bearer instrument, will not carry the name of the payee and can be bought for any value, in multiples of Rs 1,000, Rs 10,000, Rs 1 lakh, Rs 10 lakh or Rs 1 crore.

Eligibility:

  • Purchased by citizens of India: As per provisions of the Scheme, electoral bonds may be purchased by a citizen of India, or entities incorporated or established in India. An individual can buy: A person being an individual can buy electoral bonds, either singly or jointly with other individuals.
  • Only the registered Political Parties: Which have secured not less than one percent of the votes polled in the last Lok Sabha elections or the State Legislative Assembly are eligible to receive the Electoral Bonds.

Source: https://www.thehindu.com/news/national/67-of-donations-to-national-parties-by-unknown-sources/article31026074.ece

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