As Political Parties Become Richer, Their Sources Of Donations Become Shadier
April 23rd, 2018
Money and power often go hand-in-hand and thus, disclosure is the base of public supervision of political funding. The donations and funds received by political parties are regulated to some extent by the Election Commission of India and also under Income Tax Act and RPA 1951, but the united aversion of parties across the spectrum prevents accurate disclosure of the sources of funding. This article is a summary of political funding received by the six national parties during the period 2004-2017 as filed by the political parties and based on the yearly and compiled reports of Association of Democratic Reforms (ADR), a New Delhi based independent think tank.
Parties have many sources of funds, some more legitimate than others. The Supreme Court in PUCL vs Union of India noted that some of this funding is unaccounted criminal money instead of protection or unaccounted money from business houses looking for kickbacks and preferential treatment. Parties only have to disclose details of those donors who donate more than Rs 20,000. So, all donations of Rs 19,999 or less fly under the radar as ‘unknown sources’. This was changed in budget 2017, and the maximum cash donations were capped at Rs 2,000, but the underlying problem of syphoning significant amount of money in small units (now Rs 1,999) remains.
Political parties show remarkable unity when it is in their self-interest. A Central Information Commission (CIC) ruling in 2013 said that political parties are also under the ambit of RTI. None of the parties complied, and CIC issued show-cause notices and scheduled hearings. All the parties were absent from the two CIC hearings in November 2014 and January 2015, and strangely, CIC abrogated its power in March 2015 and stated that it does not have the requisite authority to implement its ruling. A recent ADR report (ANALYSIS OF INCOME & EXPENDITURE OF BJP & INC: FY-2016-2017) states that four national parties, namely, BJP, INC, NCP and CPI have been consistently tardy in audit report submission over the last five years. INC and BJP submit their reports usually around six months after the due date of submission. These delays prevent scrutiny.
FY 2015-16 and FY 2016-2017
As per the most recent ADR report, BJP is the wealthiest party in India with an income of Rs 1,034.27 crore during FY 2016-17. INC comes a distant second with an income of Rs 225.36 crore in the same period. While BJP’s income showed a rise of 81.18%, revenue of INC fell by 14% as compared to FY 2015-2016. BJP submitted its reports 99 days after the due date while INC submitted it after 138 days.
Looking at the expenditure reports, BJP spent a massive Rs 606.64 crore on Election/General propaganda which is almost twice the total spending by INC.
Transition Years: FY 2013-14 and FY 2014-15
In the aftermath of a sweeping victory, BJP reported the highest income of Rs 970.43 crore during FY 2014-15, which was 51.92% of the total income of all National Parties together. As compared to FY 2013-14, BJP’s income rose by 44.02% while INC’s income decreased by Rs 4.74 crore. A large part of these incomes are filed under ‘unknown sources’, and the two major parties showed the most income in this regard.
Rather surprisingly, FY 2013-14 again saw BJP as the richest party with an income of Rs 673.81 crore (44.37% of all parties combined) even though it was INC which was still in power. This shows how corporate houses backed BJP to claim victory and the role of money in successful election campaigns. BJP submitted its audited report for FY 2013-14 in September 2015, almost ten months after the due date for submission. INC reported the highest income from ‘unknown’ sources in FY 2013-14, while BJP was a close second.
The Decade 2004-2014
As per an ADR report titled Impact of Black Money in Elections and Political Activities, 2,967 out of the total 3,452 candidates who contested more than one election (including state assemblies and parliament) in the decade 2004-2013, showed an average increase in wealth of 134%. The average declared wealth was Rs 1.74 crore per candidate in 2004 while in 2013, it was Rs 4.08 crore.
Rs 11,367.34 was the combined income of all National and Regional Parties from FY 2004-05 to FY 2014-15. Congress led the way with an income of Rs 3,982 crore. The incomes from both ‘known’ and ‘unknown’ sources saw a big rise in the time frame. Overall, there was an increase of 313% in income from ‘unknown sources’ and 69% of the total income of parties during this decade came from the same. Specifically, 65% of BJP’s income came from ‘unknown sources’ while INC reported 83% of its income under ‘unknown sources.’ Meanwhile, BSP did not report a single donation of above Rs 20,000 during these ten years, hence 100% of its income through donations came from ‘unknown sources.’
Corporate Donors in Indian Politics
The details of corporate donors who donate more than Rs 20,000 has to be disclosed by parties. The ADR report (Analysis of Donations from Corporates & Business Houses to National Parties-FY 2012-13 to 2015-16) shows that BJP is the leader in receiving donations from business houses. Out of the total Rs 956.77 crore that corporate houses donated to five national parties between 2012-13 and 2015-16, BJP’s share was Rs 705.81 crore from 2987 corporate donors. INC was a distant second, receiving only Rs 198.16 crore from 167 business houses. BJP’s donors were mostly trusts and business houses dealing in mining, manufacturing, real estate, oil and power, construction, imports/exports among others.
Corporate donations peak during the election years and 60% of the total corporate donations in the five year period were reported in FY 2014-15. Corporate houses use ‘electoral trusts’ to make donations not seem biased towards a particular party, hence, hedging their bets in case their favoured party suffers a defeat. Between FY 2012-13 and FY 2015-16, one such trust, Satya Electoral, was the top donor to not just one but three of the National Parties. This Trust donated 35 times in three years an amount totalling to Rs 260.87 crore distributed among BJP (Rs193.62 crore), INC (Rs 57.25 crore) and NCP(Rs 10 crore).