71% of political donations from unknown sources, can't be traced

ADR demands political parties only accept donations through digital payments

The Association for Democratic Reforms (ADR) on Tuesdayappealed to Prime Minister Narendra Modi to fulfill his promise of making political funding more transparent, as a means to strike at the root of black money.

It said the government’s push towards a digital and “less-cash” economy after demonetisation should be implemented by political parties, which would make it possible to know the source of each paisa received as donations by political parties.

The ADR, a non-governmental organisation, appealed to political parties to only accept digital payments. Its founding member, Jagdeep Chhokar, said demonetisation has had very little impact on the finances of political parties.

The ADR has analysed income-tax returns and statements of six national and 51 regional recognised parties filed with the Election Commission between 2004-05 and 2014-15. It said the analysis reveals that in this 11-year period, 71 per cent of political donations to political parties were received from unknown sources and cannot be traced.

According to the current law, donations above Rs 20,000 are the only “known sources” of income. “Unknown sources” are income declared in the I-T returns by political parties without giving any source of income, for donations below Rs 20,000. These unknown sources include sale of coupons, relief fund, miscellaneous income, voluntary contributions and contribution for meetings. Other known sources of income include sale of moveable and immoveable assets, membership fee, bank interest and sale of publications.

ADR’s analysis suggested the share of donations from unknown sources to the Congress witnessed 83 per cent increase in the 11-year period. This increase was 65 per cent for the Bharatiya Janata Party (BJP), 94 per cent for Samajwadi Party and 86 per cent for Shiromani Akali Dal. The growth in income from unknown sources increased 313 per cent in 11 years. It was especially sharp in the case of regional parties at 652 per cent.

The ADR also found that income-tax returns of 42 out of 51 regional parties analysed were unavailable for at least one financial year. There were 12 regional parties that have never submitted details of their donations. Of all the parties, the Bahujan Samaj Party was the only one to consistently declare receiving “nil” donations above Rs 20,000. The ADR said that 100 per cent of BSP’s donations came from unknown sources.

The ADR demanded that political parties make available for public scrutiny full details of donors under the Right to Information (RTI) Act. This is the law in Bhutan, Nepal, Germany, France, Italy, Brazil, Bulgaria, the US and Japan. It also demanded that any organisation that receives foreign funding should not be allowed to support or campaign for any candidate or political party. The ADR said it supports the Election Commission’s recommendation that details of all donors who donate above Rs 2,000 be declared in public domain.

Chhokar said there was a need to constitute an independent body approved by the Comptroller and Auditor General to audit the accounts of political parties annually. The Income Tax Department was unable to perform such a task as the officials dare not go against the government of the day.