The murky world of political party finance, Pg10

Key Highlights:

• A BBC investigation revealed extraordinary donations received by six Registered Unrecognised Political Parties (RUPPs), highlighting opacity in political funding.
• The Association for Democratic Reforms (ADR) reported a 223% increase in the declared income of RUPPs for FY2022-23.
• The Election Commission of India (ECI) delisted 334 RUPPs out of 2,854 as part of a strategy to clean up the electoral system.
• Political parties collectively held ₹18,742.31 crore for the 2024 general election, with tax exemptions leading to an estimated ₹11,813 crore loss to the exchequer over a decade.
• The electoral bond scheme, introduced in 2018, was declared unconstitutional by the Supreme Court of India in 2024, but details of donations raised further questions.

Detailed Insights:

• Political parties, though central to democracy, are not explicitly defined in the Constitution, except in the Tenth Schedule, and operate as associations under Article 19.
• They enjoy significant income-tax exemptions, sometimes serving as "mysterious receptacles" for inexplicable funds, akin to shell companies.
• Only 739 out of 2,764 RUPPs submitted financial records to the ECI for FY2022-23, indicating widespread non-compliance and lack of transparency.
• T.N. Seshan, former Chief Election Commissioner, in 1994, criticized the "adhocism" and poor governance within almost all political parties.
• The ECI's power to 'delist' or 'take off' parties from its list does not amount to deregistration, as the commission generally lacks the power to deregister political parties.
• RUPPs, even if unrecognised or delisted, remain eligible to receive contributions under Section 29B of the Representation of the People Act, 1951, and tax benefits under Section 13A of the Income-tax Act.
• Order 16A of the Election Symbols (Reservation and Allotment) Order, 1968, empowers the ECI to suspend or withdraw recognition for Model Code of Conduct violations, but this power is rarely exercised.
• Individual donors and Hindu Undivided Families have surpassed corporates in political donations, claiming ₹2,275.85 crore in exemptions in FY2022-23.
• Only 41.76% of total donations over nine years were claimed as tax-exempt, raising concerns about the sources and incentives behind the remaining 58%.
• Political parties have consistently resisted being brought under the Right to Information Act, with neither the ECI nor the Supreme Court enforcing the Central Information Commission's 2013 order.
• The article suggests the Supreme Court should order a court-monitored probe into electoral bonds and the funding of "shell" RUPPs that do not actively participate in elections.
• It recommends the ECI, using its Article 324 powers, should mandate audits by the Comptroller and Auditor General of India (CAG) and impose limits on party election expenditure.

Key Concepts Involved:

• Registered Unrecognised Political Parties (RUPPs): Political parties registered with the ECI but not recognized as National or State parties, often lacking significant electoral participation.
• Electoral Bonds: Financial instruments for anonymous donations to political parties, declared unconstitutional by the Supreme Court in 2024 due to lack of transparency.
• Representation of the People Act, 1951 (RPA): The primary legislation governing the conduct of elections in India, including the registration and financial regulations for political parties.
• Article 324: A constitutional provision that grants the Election Commission of India comprehensive powers of superintendence, direction, and control over the preparation of electoral rolls and the conduct of elections.