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Analysis of Donations declared by Regional Political Parties – FY 2017-18

This report, prepared by Association for Democratic Reforms (ADR) focuses on donations declared by Regional Political Parties, during the Financial Year 2017-18, as submitted by the parties to the Election Commission of India (ECI).

For details of parties defaulting in their submission of contributions statements, donations declared by the parties without declaring PAN of donors, top donors and donations from foreign countries, refer to the detailed report, attached herewith.

Executive Summary

The executive summary below lists the key observations drawn from the report:

Out of 48 regional parties analyzed, only 15 had submitted their donations report to the ECI in the stipulated time period. 16 other regional parties have delayed their submission by a maximum of 31 days to 1 day. There are 17 Regional Political parties who have defaulted in the submission of their donations report to the ECI during FY 2017-18, till date, 21^st May, 2019.

I. Donations to Regional Parties as declared to the ECI (FY 2017-18)

Under Section 29C(1) of the Representation of People’s Act, 1951, political parties are required to prepare a report providing details of contributions in excess of twenty thousand rupees from any person in a particular financial year to avail 100% tax exemption.
However, in FY 2017-18, we see that 10 Regional Parties (AAP, SAD, DMK, SDF, NPF, MGP, MNS, PMK, AINRC and DMDK) have also provided details of donations received below Rs 20,000 in their contributions report.
The total amount of donations declared by Regional Parties, including both above and below Rs 20,000, was Rs 54.81 cr, from 2824 donations.
With regard to the total amount of donations, BJD leads with Rs 13.04 cr from 6 donations followed by JDU, which has declared receiving Rs 11.19 cr from 27 donations. YSR-C declared receiving Rs 8.35 cr that is the third highest amongst all regional parties.
59.44% or Rs 32.58 cr of the total donations received by Regional Parties have been received solely by top three Regional Parties.

Chart: Top 10 Regional Parties to declare maximum donations for FY 2017-18

II. Comparison of donations received by Regional Parties between FY 2016-17 and FY 2017-18

YSR-C, TRS, JDU and DMDK saw the maximum percentage increase in their income from donations between FY 2016-17 and 2017-18.
Donations to YSR-C increased by 95%, followed by DMDK for which it was 93%, TRS for which it was 90%, and JDU that saw an increase of 87%.

Chart: Comparison of donations received by top 5 Regional Parties between FY 2016-17 & 2017-18

III. Cash donations declared by the Regional Parties – FY 2017-18

Out of the total donations of Rs 54.81 cr declared by the Regional Parties, Rs 77.49 lakhs from 434 donations was received in cash during FY 2017-18. This formed 1.4% of the total donations to the parties.
Maximum donations in cash was declared by NPF, which collected a total of Rs 65.26 lakhs, followed by AINRC with Rs 4.20 lakhs and PMK with Rs 3.81 lakhs.
Among all the states, donors from Tamil Nadu made the highest donations of Rs 4.32 lakhs in cash followed by donors from Puducherry who donated a total of Rs 4.20 lakhs in cash.
Donations worth Rs 65.67 lakhs in cash did not have address details. 2 Regional Parties (NPF and DMK) have received such donations in FY 2017-18. (Refer: Annexure 1)

Chart: Donations received in cash by Regional Parties for FY 2017-18

IV. State-wise donations to Regional Parties

Segregation of donations according to location was made by ADR based on the addresses provided by the parties in their donations report to the ECI.
Donations declared by the Regional Parties contained details of donations received from 26 States/Union Territories/common capitals and 17 countries according to the declared address of donors. Only AAP declared donations from abroad.
Regional parties have declared receiving the highest amount of money or Rs 17.946 cr from Delhi, followed by Rs 9.03 cr from Maharashtra and Rs 5.194 cr from Karnataka.

Chart: Top 5 states from where Regional Parties have received the highest donations for FY 2017-18

5% or Rs 0.416 cr of the total donations above Rs 20,000 to AAP was received from abroad. (Annexure- 2)
A total of Rs 3.196 cr, (5.83% of total donations received by the Regional parties, FY 2017-18), could not be attributed to any State/Union Territory due toincomplete or lack of information provided by the parties.

Chart: Donations classified based on address as declared by Regional Parties for FY 2017-18

v. Donors from Corporates/ business sectors Vs. Individual donors

148 donations from corporate/business sectors amounting to Rs 27.51 cr were made to the Regional Parties while 2647 individual donors donated Rs 26.15 cr to the parties during FY 2017-18.
While in case of National Parties, 1361 donations were made by corporate/business sectors amounting to Rs 422.04 cr (89.82% of total donations) while 2772individual donors donated Rs 47.12 cr (10.03% of total donations) during FY 2017-18.
With the maximum number of donations during FY 2017-18, BJD has declared 5 donations from corporate/business sectors amounting to Rs 13 cr while one individual donor donated Rs 4 lakhs to the party.

VI. Disclosure of PAN details in donations

Out of 24 Regional Parties who had declared receiving donations, 19 parties, have declared donations of donors without their PAN details.
Rs 12.40 cr or 22.62% of the total amount of donations received by Regional Parties do not have PAN details.
It is to be noted that parties like NPF, MGP, AINRC, JVM-P, ZNP, DMDK and RJD who have declared 100 percent donations statements, have not provided PAN details of even a single donor in their donations statement.

Chart: Status of declaration of PAN by Regional Parties for FY 2017-18

Observations

ECI notification dated 29^th August,’14 stated that “…no tax deduction shall be allowed on the contributions made in cash by any person or company to a political party. Accordingly, the political party shall maintain name and address of all such individuals, companies or entities making donation to it, excepting petty sums, donated by the public only during its public rallies”. This notification was applicable for donations made from FY 2014-15 onwards. 2 regional parties NPF (Rs 65.26 lakhs) and DMK (Rs 0.41 lakhs) have received cash donations worth a total of Rs 65.67 lakhs that do not have address details.
For FY 2017-18, address details for 389 donations worth Rs 3.196 cr (5.83% of total donations received by the Regional parties) were not declared by parties. The amount of such donations is as high as Rs 50 lakhs.
Out of 24 Regional Parties who had declared receiving donations, 19 parties, have declared receiving 822 donations worth Rs 12.40 cr without PAN details.
For large number of donations, Regional parties have mentioned ‘Online/RTGS/Cheque no.’ as mode of contribution without providing any further information such as bank details. This makes it difficult to verify whether the information given is accurate or not.
Out of a total of 2824 donations, mode of contribution for 356 donations worth Rs 18.88 cr is incomplete/undeclared. Of these, mode of payment for 336 donationsworth Rs 5.007 cr received by AAP is incomplete/undeclared.

Recommendations

The Supreme Court gave a judgment on September 13, 2013 declaring that no part of a candidate’s affidavit should be left blank. Similarly, no part of the Form 24A submitted by political parties providing details of donations above Rs 20,000 should be blank.
The National and Regional Parties should, ideally, lead by example by filing complete and correct statements of donations to the ECI well in time for public scrutiny so as to encourage financial transparency.
It is suggested that the ECI publicizes on its website details of the action taken (if any) against political parties that fail to provide required details (such as name and address) of individuals, companies or entities making donations in cash.
Parties not adhering to the deadline fixed by the Election Commission of India should be penalized by making them liable to pay tax on 100% of their incomefrom various sources.
The National and Regional political parties must provide all information on their finances under the Right to Information Act. This will go a long way in strengthening political parties, elections and democracy.