ECI transparency guidelines to political parties for party funds and election expenditure effective from Oct 01, 2014

The transparency guidelines issued by the Election Commission of India to all political parties for party funds and election expenditure became effective from yesterday, October 01, 2014.

The Election Commission of India (ECI) on 29th August, 2014, issued guidelines to all the political parties listing ways to increase transparency and accountability in party funds and election expenditure not only during elections but also in other times. The ECI stated that Concerns have been expressed in various quarters that money power is disturbing the level playing field and vitiating the purity of elections”. Hence, in order to curb the abuse of money power, the ECI had, on 3rd October, 2013, sought suggestions and inputs from all recognised parties, most of which supported the need for transparency while a few had other suggestions and views.

Based on the suggestions received from the political parties, the ECI has stated that effective from 1st October, 2014, all political parties are required to keep and maintain books of accounts and documents so as to enable calculation of the parties’ income. The parties are required to maintain accounts based on the guidance note issued by Institute of Chartered Accountants of India (ICAI) and that the accounts need to be audited and certified by qualified practicing Chartered Accountants. These accounts are to be submitted annually to the ECI along with a copy of the Auditor’s report by 31st October.

Another important guideline issued states that “…no deduction shall be allowed on the contributions made in cash by any person or company to a political party”. It also states that the parties need to maintain details of donors donating specifically during public rallies, except petty sums. Similarly, if the expenditure incurred by the parties exceeds Rs 20,000, then the payment should be made by cheque/draft and not by cash unless there is a lack of banking facility or towards payment of party functionaries.

While providing lumpsum amounts to candidates for campaigning during elections, political parties shall not exceed the ceiling prescribed for expenditure by the candidate and that the payment should be made only through crossed cheque/ draft or bank transfer.

It was not mandatory for the unrecognised political parties to submit their election expenditure statement to the ECI but the circulated guidelines also state that the unrecognised parties shall file their expenditure statements with the Chief Electoral Officer (CEO) of the state where the party’s headquarters is situated.

The copies of these guidelines were not only circulated among all political parties but were also copied to the CEOs of all states, the Chairman of the Central Bureau of Direct Taxes (CBDT) and to the President of the ICAI. For a copy of the circulated guidelines, click here.

With Haryana and Maharashtra Assembly Elections scheduled to be held on 15th October, 2014, financial transparency during elections, especially poll funding is important. While analysing the election expenditure incurred by the national parties during the Assembly Elections in 2009, ADR had reported that a total of Rs 49.99 crores was collected by the national parties by cash during Maharashtra Assembly Elections while the parties collected a total of Rs 11.47 crores by cash during Haryana Assembly Elections held in 2009.

ADR has also filed a petition with the Delhi High Court requesting for a process of regular submission of election expenditure statements by political parties and that it should commence a year prior to the polling date announced by the ECI till the results are declared. ADR, in its petition, has recommended the implementation of the recommendations made in the 170thLaw Commission Report on Electoral Reforms, to introduce a ceiling on expenditure by parties and also that the parties submit their statements of income and expenditure a month before declaration of elections and once a week during elections.

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