In this article we will discuss, the total income and expenditure of national parties like BJP, Congress and 5 more for the financial year 2017-18, we also discuss at the electoral funding reforms within 2 or 3 years with recommendations to make political funding more transparent and how national parties in Indian and around the world generate political funds.
The association of Democratic reforms(ADR) analyse the total income and expenditure of 6 of India’s 7 national parties during 2017-18. as declared by the parties in their IT return submitted to the election commission of India. as per the report, the BJP has declared the total income of 1027. 34 crore rupees during 2017-18 and spends 74% of it. The ruling party income came down by nearly 7 crore Rupees as compared to 1034. 27 crore rupees total income it has declared in 2016-17.
The Communist Party of India Marxist follows in the second phase with an income of 104.8 5 crore rupees and an expenditure of 83.48 crore rupees. Mayawati’s Bahujan Samaj party declared the total income of 51.7 crore rupees during the year 2017-18 or which the party spend only 29% i.e 14.78 crore rupees. The Sharad Pawar’s NCP was the only party to have spent more than its total income of 8.15 crore rupees, the party spend 8.84 for rupees. All India Trinamool Congress declared the total income of 5.17 crore rupees and spent 1.76 crore rupees while the Communist Party of India’s total income was 1.55 rupees during 2017-18. it spends 1.10 crore rupees.
|S.n||Party Name||2017-18 Income||Expenditure|
|1||BJP||Rs 1,027.34 crore||Rs 758.47 crore|
|2||CPI(M)||Rs 104.85 crore||Rs 83.48 crore|
|3||BSP||Rs 51.7 crore||Rs 14.78 crore|
|4||NCP||Rs 8.15 crore||Rs 8.84 crore|
|5||AITC||Rs 5.17 crore||Rs 1.76 crore|
|6||CPI||Rs 1.55 crore||Rs 1.10 crore|
The income and expenditure of the Congress party is not known. as the party is yet to submit its audited report to the election commission. in 2016-17 the main opposition party had earn 225. 36 crore rupees. The 6 parties which include the BJP, BSP, NCP, CPI, CPM and the TMC collected 1041. 80 crore rupees of their total income from voluntary contributions during the financial year 2017-18.
Of this six national party is mentioned in the area report. only BJP declared receiving an income of 210 crore rupees from contribution to electoral bonds. the electoral bonds can be encashed by eligible political party only through a bank account. only the political parties registered under section 29 of the Representation of the People Act 1951 and with secure not less than 1% of the voting pole in the last general election to the house of people all the Legislative Assembly of the state are eligible to receive electoral bonds.
- BJP received Rs 167.80 crore of total donations received by all parties from Electoral Trusts in 2017-18.
- Four parties – INC, BJD, NCP, JKNC received Rs 25.98 crore collectively from electoral trusts.
- Currently, 22 registered Electoral Trusts formed by industrial houses, companies.
- According to the election commission guidelines All electoral trusts formed after January 2013 to declare details of money received/disbursed.
- Central govt rules mandate firms to donate 95% of total income to registered political parties in a financial year.
The government has taken several steps to make political funding transparent. electoral bonds is one of them to clean the political system. recently the Election Commission also made some recommendations to the Law Ministry regarding political funding.
Announced in the 2017 budget electoral bonds account for donations made to all major political parties. an electoral bond is a barrel instrument like a promissory note. It can be purchased by any Indian citizen or a body incorporated in India with the KYC compliant account. these bonds are available at specified branches of the State Bank of India. Donors can donate to the political party of choice that can then be cash through the party is verified an account within 15 days. the electoral bonds don’t bear the name of the donor. the sale of the first batch of electoral bonds took place between March 1st and March 10th 2018.
Electoral bonds worth 222 crore rupees were issued in the first tranche itself. as per the association of Democratic reforms, the BJP received 210 crore rupees from contributions through electoral Bond in 2017-18. the government also remove the cap on corporate contributions to political parties with the 2017 finance act.
Political Funding By Corporate Contributions
- Cap of 7.5% of net profit of a company’s past three financial years lifted.
- Companies not to report political contributions in their profit and loss account.
- as per the 2017 report of the ADR, the BJP received the maximum donations of 705.8 crore rupees from 2987 corporate donors. the Congress receive the total contribution of 198.16 crore rupees.
Political Funding Reforms
- In the financial bill 2017, the government also amended provisions of the income tax act to cap individual cash donation act 2000 rupees from the earlier 20,000.
- The election commission has been pushing 2000 rupees cap for a long time. in March this year, the government passed an amendment to the foreign contribution Regulation Act 2010, allowing foreign companies to fund political parties in India.
- Meanwhile, the election commission is working to limit the spending of political parties on election campaigns. in a draft to Reform that was sent to the Law Ministry ahead of the five state elections the poll panel recommended.
Election Commission Recommendation On Political Funding
- Party’s expenditure limit should be 50% of the combined maximum spend for all its candidates.
- Individual spending to be capped based on the type of election.
- Anonymous donations to be limited to 20% of a party’s total collections.
Political parties competitive election campaigns required significant resources. these resources should be raised and spends transparently. India has numerous regulations in the cleaning of political funding. we look at some of the methods that an Indian political party is used to raise political funds.
Raising funds is aimed at financing advertisement cause and other miscellaneous expenses incurred for the party to promote itself. among the various methods of getting a political party founded the most commonly seen or by an individual person, public funding and corporate funding. a political party may acquire funds through donations from people or companies.
What Is State Funding?
- Direct Funding – Provides direct funds to parties.
- Allows parties to gather funds without approaching companies or people.
- State funding saves on poll campaigns, provides fair opportunities to those with limited funding sources.
Types Of State Funding
- Direct Funding – Provides direct funds to parties.
- Indirect Funding – Methods like free access to media, free access to public places for rallies, free or subsidised transport facilities.
- Direct funding by state is prohibited in India.
- Indirect funding is allowed in a regulated manner.
What is Corporate Funding Section 182 of Companies Act, 2013?
- Donor Company needs to be at least three years old.
- Companies can donate up to 7.5% of average net profits in three immediately preceding years.
- A contribution must be disclosed in profits and loss accounts.
- No contribution without a board of directors approval.
- If a company violates provisions, it may be held liable to a pay fine.
Provisions For Political Funds/Donations
- Section 29B of the RPA entitles parties to accept voluntary contributions by any person or company.
- Section 29C of RPA mandates parties to declare donations that exceed Rs. 20,000.
- Declaration made by making a report in each financial year and submitting it to the election commission.
- Failing to submit a report on time disentitles party from tax relief under Income Tax Act, 1961.
What makes political donations legitimate depends on the laws of that country, different countries have different restrictions on political funding for example in the United States and the United Kingdom Corporation donations are not permissible. while in countries like Australia and Malaysia they are accepted.
However, the source of funds for political parties varies around the world based on culture, President and legal standard. in many countries, political parties are at least partially funded from the national budget in the form of various types of allowances.
Campaign Finance In U.s
- At a federal level, finance law is enacted by Congress & enforced by FEC.
- Most campaign spending is privately financed.
- Public financing only available for qualifying candidates for a Presidential post.
- Donations from foreign interests not allowed.
- Corporate donations considered illegal.
Political Funding Rules In United Kingdom
- Political funding is done via membership fees, party donations or through state funding.
- State funding is reserved for administrative costs.
- Declarations must be made for donations above £5,000 for national parties.
- £1,000 or more for local associations.
- Any amount more than £50 is prohibited.
Political Funding In Australia
- Public funding for campaigning is received as per Commonwealth Electoral Act 1918.
- Australian Electoral Commission publishes the donations figures annually.
Political Funding Rules And Law In Malaysia
- Political donations are legal in Malaysia.
- Election Offences Act (1954) regulate maximum expenses allowed for candidates vying for parliamentary seats.
- Parties not obliged to disclose the source of funding.
- Malaysian Govt to introduce a new law on political funding.
Political Funding In Singapore
- Political Donations Act serves to prohibit donations to political parties from foreigners.
- Anonymous donors are also tightly restricted.