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REVEALED: How parties gain heavily from donations

Last updated on: January 5, 2011 13:11 IST

How political parties gain heavily from donations

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When it comes to financial contributions/donations, political parties in the country seem to benefit a lot by them as a significant part of their income depends upon them.

A study conducted by the Association for Democratic Reforms and the National Election Watch -- which was based on Income Tax Returns and Financial Orders obtained as RTI replies -- reveals humongous 'favours'  that political parties obtain from corporate houses.

The ADR analysis, which contains financial contributions of above Rs 20,000 received by eight major political parties in the Financial Year 2007-08 and 2008-09 shows that the maximum contribution has been received by the Bharatiya Janata Party (Rs 297 crore) followed by the Bahujan Samaj Party (Rs 202 crore) and the Congress (Rs 72 crore) as part of their income.

It must be mentioned here that political parties, under Section 13A of the Income Tax Act, get tax exemption on all voluntary contributions above Rs 20,000.

Interestingly, the BSP declared that it did not receive a single voluntary contribution in excess of Rs 20,000 although the total contributions received by the party exceeded a whopping Rs 202 crore in both the FYs.

On the other hand, the Nationalist Congress Party reported that all the financial contributions it received were those exceeding Rs 20,000.

Read the full report here

Please click NEXT to read further..

Compiled by: Rajorshi Sanyal


Image: Supporters hold party flags during a Congress election campaign rally in Mumbai
Photographs: Punit Paranjpe/Reuters
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Congress' big-ticket donors make it the highest earning party

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In the financial year 2008-09, the Congress showed more than Rs 496 crore as its annual income (a total of Rs 717 crore if results of FY 2007-08 are included which makes it the highest earning political party in the country), out of which it obtained around Rs 48 crore in voluntary contributions.

The party received contributions exceeding Rs 20,000 from 143 contributors. This reveals that 58 per cent of the total contributions it received came from those exceeding Rs 20,000, and it went tax-free.

The Bharti Electoral Trust, a subsidiary of the Bharti Airtel group, donated Rs 11 crore to the Congress by cheque. This was followed by Torrent Power Limited, an Ahmedabad-based company, which contributed Rs 4.5 crore to the party.

Adani (Wilmar Enterprises Ltd), Mundra Port and SEZ Ltd contributed Rs 3 crore each.

However, in the financial year 2007-08, the party showed its income at Rs 220 crore, out of which it received total contributions of Rs 24 crore. 33 per cent of the contributions it received were the ones exceeding Rs 20,000 mark, hence were exempted from income tax.

Read the full report here


Image: Congress chief Sonia Gandhi releases a book celebrating 125 years of the party during the 83rd plenary session in New Delhi
Photographs: Reuters
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BJP received maximum contributions

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The Bharatiya Janata Party received the maximum amount of voluntary contributions in FY 2008-09 amounting to Rs 196 crore, a massive portion in its annual income of Rs 220 crore.

However, the party recorded that it received less contributions which were above Rs 20,000 (only 16 per cent) that amounted to Rs 30 crore.

That means the bulk of the contribution came from small, anonymous contributors who paid less than Rs 20,000.

The General Electoral Trust made contributions of approximately Rs 6 crore exclusively to the party, followed by the Bharti Electoral group and Popatbhai Ukabhai Venkariya.

Even in 2007-08, the party was at the top in receiving donations, amounting to Rs 101 crore out of a total income of Rs 123 crore. Here also only a slender 25 per cent came from big-ticket contributors.

Read the full report here


Image: BJP supporters wear masks of senior leader Lal Krishna Advani during an election campaign rally at Biaora in Madhya Pradesh
Photographs: Raj Patidar/Reuters
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BSP not far behind; NCP has a different story

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Compiling the records of both the studied years, Mayawati's Bahujan Samaj Party was the second largest receiver of voluntary funds (after BJP) amounting to Rs 202 crore, out of total income of Rs 251 crore.

Surprisingly the ruling party of Uttar Pradesh didn't receive a single big-ticket donation exceeding Rs 20,000.

But Sharad Pawar's NCP had an absolutely contrasting story to reveal.

It showed to the I-T department that it received Rs 6.6 crore as voluntary contributions, and 100 per cent of which were contributions exceeding Rs 20,000 mark.

NCP, one of the most vital allies of the United Progressive Alliance, which also shares power in Maharashtra with the Congress, recorded total earnings of Rs 57 crore in the two studied years.

Read the full report here


Image: Uttar Pradesh Chief Minister Mayawati receives a garland made-of currency notes by her party supporters during a party workers meeting in Lucknow
Photographs: Reuters
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Without much corporate help, Left still makes it large

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The Communist Party of India-Marxist recorded a total earning of around Rs 122 crore in the two studied years out of which 55 crore it received in voluntary contributions.

But the ruling party in West Bengal and Kerala stated that only 2 per cent of the total donations it received were exceeding the Rs 20,000 mark.

Similarly the Samajwadi Party received total contributions of Rs 46 crore out of which only 1 per cent was above Rs 20,000.

Lalu Prasad Yadav's Rashtriya Janata Dal showed its total income of Rs 6.2 crore, out of which Rs 5.5 crore consisted of voluntary contributions, the study showed.

Read the full report here


Image: A CPI-M supporter holds a placard during a protest against US President Barack Obama's visit to India, in New Delhi
Photographs: Reuters
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The ones who made most of the difference

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Bharti Electoral Trust, a subsidiary of Bharti Airtel Group, was the biggest contributor of funds to the political parties in the two years which were analysed in the study.

It contributed a total of Rs 17 crore, (Rs 11 crore to the Congress and Rs 6 crore to BJP). In all it made five contributions: three to the BJP and two to the Congress.

Torrent Power Ltd made total contributions of Rs 5.5 crore, which consisted of three contributions to the Congress (of Rs 4.5 crore) and one to the NCP.

General Electoral Trust made voluntary contributions of Rs 6.51 crore to the BJP only.

Read the full report here


Image: Men sit in front of a wall advertising Bharti Airtel at a roadside in Ahmedabad
Photographs: Amit Dave/Reuters
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Donations lack transparency

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After analyzing the available data, the study rightly concluded that there should be more transparency within the functioning of the political parties in the country and how they deal with such large amount of voluntary contributions, many of which are provided by powerful corporate houses.

The ADR suggested that the contribution reports submitted by the political parties along with their income tax returns must be duly checked by the Comptroller and Auditor General.

Also, PAN declarations of contributors or donors must be made compulsory, and the parties should accept only cheques or DDs. There should not be any room for cash transactions in such contributions.

Read the full report here


Image: The study concludes that cash transactions should not be permitted for donations
Photographs: Reuters
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