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Donations received by Political Parties (Relevant for GS Prelims and Mains Paper II)

Unknown Donators
If you want to know how political parties raise funds in the country, you will only get a part of the answer. The known donors and sources of contributions to national and regional parties account for less than a third of their total income.

Association for Democratic Reforms’ report
An analysis by the Association for Democratic Reforms shows that 69% of funds and contributions received by political parties from 2004-05 to 2014-15 came from unknown sources. Going by income tax returns and statements submitted to the Election Commission, six national and 51 recognised regional parties together had an income of Rs. 11,367.34 crore during this period, but only Rs. 1,835.63 crore came from named donors, while other declared sources such as sale of assets, bank interest, membership fee and sale of publications. This means a total income of Rs. 7,832.98 crore came from unknown sources.

Major political parties of the country
Details submitted by the Congress held that 83% of its income came from unknown sources and the BJP said it raised 65% of its funds as anonymous contributions. 

Faulty laws hindering transparency 
The reason for these startling numbers is that under the present income tax law, parties need not disclose the names of those donating up to Rs. 20,000. 
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.

Political parties under RTI ?
In 2013, the Central Information Commission ruled that political parties were covered under the Right to Information Act. 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. Bringing them under the ambit of the RTI Act is definitely a step in the right direction. It would mean the list of donors, regardless of size of contribution, is open to public scrutiny. 

Other alternatives
1.    State funding of elections is another solution to reduce the dependency on contributions, though the financial implications of this needs careful consideration.
2.    Another mechanism is to have a regulatory authority to receive authentic reports on political funding, scrutinise them and put them in the public domain.



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