Political parties must be made to account for the bulk of their funding

Three actions of the government in the last couple of months seem to give a lie to its intentions on political and electoral funding. Let's start with the latest action. On March 26, it was reported that the government had blocked the Election Commission's move to make party funding more transparent.

Article 324 of the Constitution gives plenary powers to the EC for the superintendence and direction control of the conduct of all elections to Parliament and the state legislatures. The overall scheme is laid down in the Representation of the People (RP) Act, 1951. The practicalities of how elections are to be conducted are laid down in the Conduct of Election (CoE) Rules, 1961.

The RP Act was amended on September 11, 2003. Section 29B, which was inserted, permitted a political party to receive "contributions voluntarily offered to it by any person or company other than a government company". Section 29C, also added then, required every political party to submit to the EC a statement of all donations above Rs 20,000 "in such form as may be prescribed". The law ministry prescribed Form 24A for such reports. The income tax law was amended on April 1, 1979, by adding section 13A, whichgranted political parties 100 per cent exemption from income tax on the donations received by them.

Recently, the total income of political parties as revealed by their income tax returns was compared with the donations received, as reported in Form 24A, both accessed under the RTI Act by the Association for Democratic Reforms (ADR). It revealed that the statement of donations reported in Form 24A accounted for only about 20 per cent of the total income of political parties. The source of 80 per cent of their income was unknown. Several parties claim that this share comes through donations of less than Rs 20,000, often in cash or through what is called "sale of coupons", of which no record is kept.

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