By: Anshul Vipat
The NDA government has consistently claimed that the scheme has ushered in an era of transparency since it was introduced in 2018. However, contrary to their claims, data shows that that the sources of funding of national political parties remain largely unknown.
The controversial electoral bond scheme has come into spotlight again after two recent developments. A fortnight ago, the Narendra Modi government amended the scheme to allow an additional period of 15 days for electoral bond sales in years which have State elections. Before this, on October 14, the Supreme Court agreed to schedule a hearing of a petition challenging the electoral scheme.
According to The Hindu, while considering the petitions, Justice BR Gavai asked the government whether the scheme is transparent, to which Solicitor General Tushar Mehta replied, “The methodology of receiving money is absolutely transparent… It is impossible to get any black or unaccounted money.”
The NDA government has consistently claimed that the scheme has ushered in an era of transparency since it was introduced in 2018. However, contrary to their claims, data shows that that the sources of funding of national political parties remain largely unknown. The share of “unknown sources of income” has increased following the introduction of electoral bonds, achieving the opposite of what it was intended to do.
How do political parties earn their income?
Political watchdog The Association of Democratic Reforms (ADR) classifies income sources of political parties into two - known and unknown. The known sources of income are further classified into two types — voluntary donations made above Rs 20,000 whose donor details are submitted to the ECI and “other sources of known income” such as sale of movable and immoveable assets, etc.
The unknown sources include donations below Rs 20,000 via electoral bonds, sale of coupons, etc., for which the details of donors are not available for the public. An amendment to the Representation of the People Act by the Finance Act, 2017, created a provision to exempt parties from declaring funds collected using electoral bonds.
Data shows spike in unknown sources of political income
As per data analysed from the ADR’s yearly reports, the share of unknown sources of income for national parties increased from 53 percent from 2015 to 2017 to 71 percent between 2019 and 2021. In the same period, the share of unknown sources of income increased from 55 percent to 68 percent for regional parties.
Before the introduction of electoral bonds i.e 2017-18, the total income of political parties from unknown sources (income specified in the IT Returns whose sources are unknown), was Rs 689 crores, or 53 percent of the total income.
Then, in 2018-19, i.e the first year post the introduction of electoral bonds, more than 67 percent of parties' total income came from unknown sources. Out of total income of Rs 2512.98 cr of six national parties from unknown sources, 78.02 percent or Rs 1960.68 cr came from electoral bonds. The figure jumped to 70 percent in 2019-20, with 88 percent of parties' unknown income coming from electoral bonds.
According to data, there was a rise in unknown share of income and electoral bonds were a major reason behind the spike. Among the political parties, BJP’s share of unknown income increased from 58 percent to 68 percent in the period, while the Congress’ remained at around 80 percent.
Although, as the above chart shows, the share of electoral bond and unknown sources of income dropped in 2020-21. However, this can be attributed to the overall fall in income sources of all political parties due to pandemic.
An India Tracker analysis done before had revealed that BJP's income had fallen nearly by 80 percent in the financial year 2021-22 as contributions through electoral bonds plunged sharply. Along with the ruling party, Congress also saw a sharp dip in its income during the pandemic year.
BJP got maximum donations through electoral bonds
BJP has cornered a lion’s share of the electoral bond income. The party received 67 percent of funds through electoral bonds by all parties between 2018 and 2021. In these four years, Rs 6,364 crores worth of electoral bonds were issued, out of which BJP got Rs 4,238 crores.
Many have criticised the system of electoral bonds saying it has made the system of political funding even more opaque and secretive than in the past. Last week, India Tracker did a story analysing the electoral bonds sale. An interesting observation from the data showed that the sale of electoral bonds jumps exponentially during the election period in the country. This is certainly a worrying sign for democracy and calls for increased transparency by the political parties and high level of scrutiny by the election commission and the judiciary.