Context
In the light of a recent report by Association of Democratic Reforms (ADR) regarding funding of political parties, article tries to build a case for more transparency in that respect to ensure clean and better democratic governance
Issue: Transparency in political funding
Note: The ADR report deals with the funding received by political parties from 2004-05 to 2014-05
Funding from unknown sources
Author cites the analysis done by ADR and states that,
- Major portion from unknown sources: 69% of funds and contributions received by political parties from 2004-05 to 2014-05 came from unknown sources. There cannot be a better case than this statistic for demanding greater transparency in political funding
- Worrying stats: Going by income tax returns and statements submitted to the Election Commission,
- Total income: 6 national and 51 recognised regional parties together had an income of ₹11,367.34 crore during this period
- Income from named donors: ₹1,835.63 crore
- Income from other declared sources such as sale of assets, bank interest, membership fee and sale of publications accounted for ₹1,698.73 crore
- Income from unknown sources: ₹7,832.98 crore
Backed by law
Author states that the reason behind such a high number of donations from unknown sources is the present income tax law under which parties need not disclose the names of those donating up to ₹20,000
- Exploiting the loophole: To enjoy income tax exemption, they need to maintain records only of those who donate sums above this. This provision effectively gives parties the required cover to pass off sizeable donations as small contributions from anonymous donors
Bringing political parties under RTI
Bringing parties under RTI is a step in the right direction as it would imply that the list of donors be made public in spite of the size of donation. In 2013, the Central Information Commission ruled that political parties were covered under the Right to Information Act
- Rationale: It was pointed out that they got tax exemptions, land allotments and free airtime on state-owned media, in effect benefiting significantly from the exchequer. The order, however, is yet to be accepted by parties
Author suggests
Author suggests that,
- State funding of elections is another remedy which can be looked into to reduce the dependency on contributions, though the financial implications of this needs careful consideration
- Regulatory authority: A more practical mechanism is to have a regulatory authority to receive authentic reports on political funding, scrutinise them and put them in the public domain
Read More: State funding of elections has also been covered by the live mint editorial in the 9pm brief dated 13th Jan 2017, A TOI article on the issue of state funding
