In the country, a total of 31 political parties, including 7 national and 24 regional parties, received donations of Rs 20,000 or more between 2016-17 and 2021-22. It is worth noting that the majority of these donations, i.e. 60 per cent or more, were received only through Electoral Bonds.
During this period, an important development occurred in 2018 when the Electoral Bond Scheme was introduced. Not only that, but during this time, the provisions of the Companies Act of 2017, which allowed companies to contribute political donations up to 7.5 per cent of their average net profits over the previous three years, were also removed. This time frame is significant because in 2018, the Electoral Bonds came into existence. The special feature of the Electoral Bond scheme is that it allows donors’ names to be kept confidential. Therefore, companies interested in contributing to political parties through Electoral Bonds can do so without disclosing their names or details in their accounts.
Foreign companies registered in India can also contribute to political parties in terms of the government’s amendments to the Income Tax Act, the Companies Act, the Reserve Bank of India Act, and the Foreign Contribution (Regulation) Act 2010 (with subsequent amendments). During this period, general elections were held in 2019 for the Lok Sabha, as well as elections for 45 state legislative assemblies.
How do political parties receive donations?
Political parties receive donations through three ways: (1) Anonymous Electoral Bonds, (2) Direct donations from corporate houses (including election trusts), and (3) Other donations, including donations below Rs. 20,000, received from MPs/MLAs, rallies, campaigns, party units, lifelong support funds, members, membership fees, and party election funds.
According to a report by ADR, from 2016 to 2022, in 6 years, Rs 16,437.635 crore was donated to 31 recognised political parties. Out of this, 55.90 per cent or Rs. 9,188 crore were received through Electoral Bonds, while the remaining amount of Rs 4,614.53 crore (28.07 per cent) came from the corporate sector and Rs 2,634.74 crore (16.03 per cent) from other sources.
Analysis reveals some interesting details from ADR’s research. Let’s take a look at some of the key findings:
1. Between the financial years 2017-18 and 2021-22, donations to political parties through Electoral Bonds increased by 743 per cent. The method of donation through Electoral Bonds remains preferred due to the confidentiality of the donor’s name.
2. The BJP received the highest total donations among all national parties, surpassing other parties by a considerable margin.
3. Over a span of 6 years, the BJP received 52 per cent of its total donations (Rs 5,271.9751 crore) through Electoral Bonds, while other national parties earned Rs 1,783.9331 crore (28.07 per cent) through this method. The INC received the second-highest donation of Rs 952.2955 crore (61.54 per cent) through bonds, followed by AITC with Rs 767.8876 crore (93.27 per cent).
4. The BJD received more than 89.81 per cent of its total donations (Rs 622 crore) through Electoral Bonds, while DMK received Rs 431.50 crore (90.703 per cent), and TRS received Rs 383.6529 crore (80.45 per cent) through this channel.
5. Between the financial years 2016-17 and 2021-22, national parties received Rs 3,894.838 crore in direct corporate donations, whereas regional parties received Rs 719.692 crore.
6. The BJP received the highest amount of direct corporate donations among all national parties, with an increase of 152.029 per cent over the six-year period.
7. The BSP did not declare any corporate donations consistently, while CPI declared zero corporate donations from the financial year 2018-19 to 2021-22.
8. Over the six-year period, the highest direct corporate donations were made to Prudent Electoral Trust (Rs 1,604.43 crore), followed by Progressive Electoral Trust (Rs 549.9750 crore), and BG Shirke Construction Technology Private Limited (Rs 102.155 crore).
9. The highest amount of corporate donations declared by the 31 recognised political parties came from Delhi (Rs 1,843.697 crore), followed by Maharashtra (Rs 1,418.130 crore), and Gujarat (Rs 213.540 crore).
These findings shed light on the trends and patterns of political party donations during the analysed period.
What should be done to ensure that political parties do not take advantage of legal loopholes? There is no doubt that they should maintain complete transparency regarding the details of donations they receive. In order to prevent any discrepancies, the Election Commission of India (ECI) has introduced several measures such as…
1. On September 13, 2013, the Supreme Court issued a ruling stating that no part of the candidate’s affidavit should be left blank. Similarly, if political parties receive donations of Rs 20,000 or more, they should provide the details in the submitted Form 24A without leaving any section blank.
2. All donors who have made donations of Rs 20,000 or more on multiple occasions should disclose their PAN details.
3. It is necessary to also disclose donations below Rs 20,000. The date on which the donation was made should be recorded and submitted in Form 24A without any omissions.
4. Corporates should publish the details of their political contributions on their websites (in annual reports or dedicated pages) to increase transparency in political funding.
5. The annual audit of donations from national and regional political parties should be conducted by the dedicated department of CBDT (Central Board of Direct Taxes), and shell companies or non-compliant organisations should not be allowed to receive donations.
6. If political parties fail to provide complete details of the donations received as per the rules, the Election Commission of India (ECI) should take strict action. The ECI should have the authority to cancel the registration of political parties that repeatedly fail to provide the required information.
7. The Right to Information (RTI) Act should be used to obtain information from both national and regional political parties. Political parties should comply with the orders issued by the Central Information Commission (CIC).
8. Complete donor details should be made available under the RTI Act. This practice is followed in several countries such as Bhutan, Nepal, Germany, France, Italy, Brazil, Bulgaria, the USA, and Japan. However, it may not be feasible to disclose approximately 50 per cent of the funding sources in countries where anonymity prevails, but currently, it is happening in India.
9. The Electoral Bond Scheme, 2018, should be completely abolished. In order to continue the scheme, the provision of keeping the names of donors confidential, as included in the Electoral Bond Scheme, 2018, should not be accepted. The ECI should publicly disclose the details of donations received by political parties in the annual report, including the bond value and specific credit details for each bond.
10. According to the Law Commission’s report in 255, instead of penalising political parties for non-compliance with rules, an express penalty should be imposed for the loss of benefits on political parties, and the penalty should include a daily fine of Rs 25,000 for each day beyond the default period of 90 days, with the possibility of increasing it to a fine of up to Rs 50 lakh if the party makes false declarations.
11. Political parties that remain inactive for a long period of time, do not participate in any elections, and continue to receive donations through Electoral Bonds should be delisted by the Election Commission of India (ECI), thereby nullifying the advantage of electoral bonds for such parties.
12. The income, expenses, and contribution details of political parties should be audited by the Comptroller and Auditor General (CAG).
13. Just as Section 276CC of the IT Act imposes penalties on individuals for unsuccessful submission of their IT returns, similar legal provisions should be applied to political parties to ensure equal legal accountability.