The current trend in India—where a lion share of funds for parties come from anonymous sources—signals danger as it will inevitably strengthen the infamous political-corporate nexus, black money generation and corruption in the economy.

A political party in power at the centre certainly will get more money from donors than those in the Opposition. Hence, an 81 percent jump in the income of the ruling Bharatiya Janata Party (BJP) in 2016-17 shouldn’t come as a surprise to anyone, and also a 14 percent decline in the Congress party’s income during the period.

Take a closer look at the income figures of the two major national parties---BJP and the Congress--for a point of comparison. According to the latest report from election watchdog Association of democratic reforms (ADR), the ruling party has seen its income rising from Rs 570.86 crore during FY 2015-16 to Rs 1,034.27 crore during FY 2016-17, while the income of Congress party decreased by 14 percent (Rs 36.20 crore) from Rs 261.56 crore during FY 2015-16 to Rs 225.36 crore during FY 2016-17. Since it came to power in 2014, BJP’s moneybag has expanded by about 53 percent—from Rs 673.81 crore in 2013-2014 to Rs 1034.27 crore in 2016-2017. The Congress party, during the period, has actually seen its income declining by 62 percent—from Rs 598.06 crore to Rs 225.36 crore.

Income in Rs crore Year BJP % growth Congress % growth FY14 673.8 598.1 FY15 970.4 44.0 593.3 -0.8 FY16 570.9 -41.2 261.6 -55.9 FY17 1034.3 81.2 225.4 -13.8 Source: ADR

Now look at the Bahujan Samaj Party (BSP). The party’s income increased by 266.32 percent (Rs 126.195 crore) from Rs 47.385 crore during FY 2015-16 to Rs 173.58 crore during FY 2016-17, while the income of NCP (Nationalist Congress Party) increased by 88.63 percent (Rs 8.098 crore) from Rs 9.137 crore during FY2015-16 to Rs 17.235 crore during FY 2016-17, said the report.

If we look at the whole picture, the seven national parties have collected close to 75 percent (Rs 1,169.07 crore) income from voluntary contributions for FY- 2016-17. In contrast, the parties have received 60 percent (Rs 616.05 crore) of their income from voluntary contributions during FY- 2015-16. But most of the funds are from anonymous sources.

As mentioned in the beginning, there is nothing surprising about the sharp rise in the income of the ruling BJP and fall in the Congress’ income for obvious reasons. But, the point of worry here is the chunk of funds political parties have received from anonymous sources. The ADR has not released the figures on funding from unknown sources so far, but according to Prof Jagdeep Chhokar, founder Member of ADR, “on an average 75-80 percent of the total political funding continues to remain from anonymous sources”. In other words, the promise to bring transparency remains a promise. This certainly doesn’t augur well for India and for BJP in particular, since transparency in political funding was one of the key promises from the party initially.

In fact, various policies from the Narendra Modi government has only made political funding even more opaque. The last such move came in the Finance Bill 2018 when the Lok Sabha quietly amended a law to protect political parties from any kind of scrutiny with respect to the foreign funds they may have received from 1976. This was only one among the 218 amendments Lok Sabha cleared without even a debate.

What does it do? The law, the Foreign Contribution (Regulation) Act, 2010, that prohibited foreign funding for Indian political parties, has now been amended to exempt parties from any scrutiny. In effect, no questions will be asked and no answers given on such funding, including possible illegal transactions. The point is, if no questions can be asked on foreign political funding, it may even lead to external influence in India's election process. That's a possibility one cannot rule out.

The importance of this clause can be understood only if one looks at the past record of political parties. As this NDTV report points out, in 2014, both Congress and BJP were found guilty by the Delhi High Court of accepting foreign funds following a petition by the Association of Democratic Reforms. The report cites that between 2004 and 2012, Vedanta Resources Plc, then a London-based group, had allegedly donated Rs 879 lakh to Congress and Rs 790 lakh to the BJP through its Indian subsidiaries. The latest amendment effectively frees both parties from this verdict.

In fact, the Finance Bill, 2017 too came with some good news for covert funding of political parties. It did so with two key changes in the law: First, it has scrapped a ceiling that earlier restricted a corporate entity from donating more than 7.5 percent of its average net profit in the three immediate preceding fiscal years to a political party. And second, the government proposed to cancel an existing rule that required corporate entities to disclose, in the profit and loss account, the name of the political party to which the funding is made. Both made it easier for political parties to make their election funding more opaque.

Even the recently announced electoral bonds do not make things any better. A donor can purchase these bonds from specified branches of State Bank of India (SBI) in multiples of Rs 1,000, Rs 1 lakh, Rs 10 lakh or Rs 1 crore and donate it to any registered political party. In the first phase, Rs 222 crore worth bonds were sold. The second tranche was issued this month. The party can encash these bonds in its account like a bearer cheque. This instrument is such that it seeks to promote cashless political donations since these bonds can be purchased either through cash or cheque. But, the big negative of this instrument is the anonymity it promises to political parties and donors. No one knows which hands are exchanging the money at the end of the day. This anonymity factor in political donations is a big problem as political observers and analysts have been pointing out for long.

Political parties need money to function in any democracy. But, the current trend in India—where a lion share of such funds come from anonymous sources—signals danger as it will inevitably strengthen the infamous political-corporate nexus, black money generation and corruption in the economy.