Political parties are sitting on a pile of cash they don’t want to talk about

Funding patterns of political parties, both national and regional, show large chunks of donations whose source is not disclosed and in cash


A file photo of Prime Minister Narendra Modi at an election rally. Photo: Reuters
A file photo of Prime Minister Narendra Modi at an election rally. Photo: Reuters

Political parties demand financial probity and accountability from everyone else, but not so much from themselves. Funding patterns of political parties, both national and regional, show large chunks of donations whose source is not disclosed and in cash.

In spite of receiving tax waivers and subsidized land from the state, political parties don’t come under the Right to Information (RTI) Act. However, some information on their finances can be gleaned from their income-tax returns and disclosures to the Election Commission (EC).

The six national parties, led by the Bharatiya Janata Party (BJP), have registered an eight-fold increase in income in nine years, with almost all of it coming by way of donations by several names, shows data from the Association for Democratic Reforms.

In 2014-15, 61% of their combined income of Rs1,869 crore came from unknown sources, with every party showing a high presence of such donations.

Political parties have to disclose the identity of only those donors who contribute above Rs20,000. But parties are showing nearly half their donations as being below Rs20,000, thus avoiding this disclosure.

Of the six national parties, the Bahujan Samaj Party (BSP), a prime contender in next year’s Uttar Pradesh polls, relies the most on such unaccounted for cash contributions.

Cash occupies a prime place in state elections as well. Parties have to disclose to EC the money raised and spent, and in what form (cash, cheque, draft or in kind), between the announcement of an election and its completion. For 71 state elections held in the last 12 years, partial disclosures made by political parties, both national and regional, show that 60% of the combined Rs3,368 crore collected was in cash.

The share of cash in total collections, though falling, was still a high 42% in 2014. Meanwhile, spending in cash has all but disappeared.

In another portent for the upcoming UP elections, the Samajwadi Party, another frontrunner, led all regional parties in cash collections for assembly elections in the last 12 years: Rs187 crore, of which 48% was in cash. That’s the currency whose rules have changed in one stroke. But will the rules of political funding ever change to allow tracing every rupee that political parties receive?

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