If ‘reforms’ is the buzz word, then electoral reforms should be on top of the list, and the funding of political parties foremost among them. Currently there is a lack of transparency in how political parties and candidates solicit, collect and disburse funds. These issues were highlighted in a widely distributed report released by two NGOs, National Election Watch and Association for Democratic Reforms, published this September.

Legally, the activity of fund-raising, expensing, accounting and reporting of funds collected by political parties fall under the ambit of various acts including the Representation of the People Act, 1951; The Foreign Contribution (Regulation) Act, 2010; Companies Act, 1956; Trade Unions Act, 1926 besides the Election Commission of India’s "Model Code of Conduct for the Guidance of Political Parties and Candidates." But, more often than not, parties end up circumventing these rules.

In an analysis of funds received by the top three parties in Karnataka, the NGOs’ report reveals that in the last four years, the Congress (INC) got Rs 1,492.35 cr, the BJP Rs 769.81 cr, and the JD(S) which has filed returns only for two years (07-08 and 09-10) Rs 4.63 cr.

Interestingly, the Congress got Rs 1,171 cr. from "Sale of coupons", Rs 183.82 cr. as Donations/Contributions and Rs 82.15 cr as Interest. The BJP on the other hand got Rs 644.77 cr. from Donations/Contributions, Rs 53.41 cr as Interest collected and Rs 50.34 cr. from "Aajiwan Sahayog Nidhi". The JD(S) got Rs 4.58 cr. from Donations/Contributions, Rs 94,000 from Interest collected and Rental income of Rs 2 lakhs.

Meanwhile, of the funds received, the Congress spent Rs 716.03 cr on Elections, Rs 131.18 cr. on Aid and Rs 271 cr. on Publicity. The BJP spent Rs 271 cr. on Advertising and Publicity, Rs 141.15 cr. on Travelling and Rs 77.97 cr. on Meetings. The JD (S) did not file Income/Expenses statement.

With parties receiving huge sums of money as donations from corporates and individuals, it becomes important for voters to know who is giving what and if and whether there is any effect of this funding on policies pursued by the party or candidates. The current state of affairs is such that parties exploit the "loopholes" in the law to structure the inflow as well as outflow of funds from their coffers. One such loophole is the requirement to report the names of donors only for sums above Rs 20,000. Thus you have a situation where the parties club most of the money they receive under donations less than Rs 20,000.

For example, in Karnataka, the Congress has shown only 9.1 percent of their income received as donations above Rs 20,000. The corresponding figures for BJP and JD (S) is 21.71 percent and 23.75 per cent respectively.

Further analysis of the figures submitted by the parties reveal that overall, the number of donors giving more than Rs 20,000 has been increasing year on year. In 2010-11 the Congress had 399 such donors, the BJP 474 donors while the JD (S) has not filed their corresponding figures for this year though they reported one donor for the year 2009-10.

For the year 2009-10 when the general elections were held, the top three donors for the Congress Party was the Birla’s General Electoral Trust (Rs 13.95 cr.), Tata Group’s Electoral Trust (5.64 cr.) and Infrastructure Development and Consultant (I)(P) Ltd (Rs 5.5 cr.).

The BJP’s top donors were the General Electoral Trust (Rs 16.60 cr), Asianet V Holding Pvt. Ltd. (Rs 10 cr.) and Torrent Power Ltd. (Rs 5.50 cr.). The JD (S) had only one donor Lakshmi Narasimha Enterprises (Rs 1.10 cr.).

For the year 2010-11, the top three donors for Congress was Torrent Power Ltd. (Rs 2.3 cr.), Russell Credit Ltd. (Rs 1.5 cr.) and ITC Ltd. (Rs 50 Lakh). For the BJP it was Torrent Power Ltd. (Rs 3 cr.), Sai Regency Power Corporation Pvt Ltd. (Rs 1.2 cr.) and Lodha Construction (Dombivili) (Rs 1 cr.). The JD (S) has not filed its ITR for this year.

Who are the donors from Karnataka?

Similarly, the top donors from Karnataka to the three main parties include Lakshmi Narasimha Enterprises, Shobha Developers, R V Deshpande, M R Jaishanker of Brigade Group, Irfan Razak and Razwan Razak of the Prestige Group, and several individuals who have all donated anywhere from Rs 21,000 to Rs 1.1 cr.

Contributors to BJP
SHOBHA DEVELOPERS                Rs. 5,000,000
SHRI M R JAISHANKAR              Rs. 2,000,000
Irfan Rajak                      Rs. 1,250,000
Razwan Rajak                     Rs. 1,250,000
M.R.Jai Shankar                  Rs. 500,000

Contributors to JD(S)
Lakshmi Narasimha Enterprises    Rs. 11,000,000
Lakshmi Narasimha Enterprises    Rs. 1,000,000

Contributors to INC
R.V. Deshpande                   Rs.2,000,000
Krishnappa, MLA                  Rs.1,000,000
R.V. Deshpande                   Rs.500,000
S.T. Somashekar                  Rs.500,000
Dr. K. Sudhakar                  Rs.500,000
Nazeer Ahmed, MLC                Rs.300,000
Nazeer Ahmed, MLC                Rs.300,000
Shri Mohammed Yousuf             Rs.200,000
Shri T.V. Mohandas Pai           Rs.200,000
M. Narayanaswamy                 Rs.200,000
Vasu, Ex-Mayor                   Rs.200,000
S.E. Raghavendra                 Rs.200,000
B.A. Basavaraja                  Rs.200,000
Shri Ramdas Kamat                Rs.100,000
T. John,MLC                      Rs.100,000
Manjunath Kunnur, EX-MP          Rs.100,000
C.G. Chinnaswamy                 Rs.100,000

 

Of course, we do not know the source of most of the money that parties get because these are all less than Rs 20,000, which they don’t have to report. And it looks strange if not suspicious that the names of quite a few top industrial houses are missing from the list of donors, because it is highly unlikely they are not giving any money to the parties. It could well be that they believe in funding the candidates directly rather than give to the parties they represent.

The funds that parties report is not even 1 to 2 per cent of what they actually get, says RK Misra of Nav-Bharat, a political initiative seeking to reduce the role of money-power in fighting elections as well as transparency in how funds are received and spent. According to him, the laws are fine, but the problem is when funding is made anonymously for vested interest and not for furthering democracy or any such reason.

Any solutions?

Interestingly, the Associated Chambers of Commerce and Industry of India (ASSOCHAM), earlier this year, came out with its position on "Funding of Political Parties for Election Purposes". It favored a dual approach of part financing from a Public Fund and part from public and corporate donations. It also favored removal of all caps on income as well as expenditure of political parties.

In fact, the Companies Bill, 2011, which is pending in Parliament and which would replace the Companies Act, 1956, seeks to increase corporate funding to political parties from 5% to 7.5% of the average net profits earned by a company in the three immediately preceding financial years. This money can also be given to any person who the company believes represents a party or political cause. Whether this is desirable or not is highly debatable though not much serious debate has really taken place on corporate funding of political parties.⊕