The Economic Times
Anubhuti Vishnoi

While the Election Commission's latest proposal on poll promises has sparked a political debate, its long-pending 'reform' on political party funding may soon get a governmental go-ahead.

The EC's proposal to lower the limit of anonymous donations from the existing '20,000 to '2,000 is learnt to be under active consideration of the Centre. ET gathers that meetings are being held between EC officials and the law ministry to work out ways to do so.

The Election Commission had written to the Law ministry last month reminding of its several pending reform proposals -- that political parties should declare foreign funding received, not accept more than 20% of total donations in cash and declare all political donations above '2,000 instead of the current limit of '20,000.

The latter has been a pain point for years as several political parties declare 'nil' to miniscule amounts in their contribution report while their annual accounts run in crores, implying that the bulk of it came in as anonymously donated cash amounts of less than '20,000.

This is, in fact, unfinished business from 2017. While the NDA government announced an amendment to Section 13A of the Income Tax Act in 2017 capping anonymous donation at '2,000, it could not be truly enforced as Section 29C of the Representation of People's Act, 1951 was not amended alongside, to reflect the same.

This has resulted in a situation where while a political party has to declare all donations it has received above '2,000 to the Income Tax Department to avail tax exemptions, it is not bound to declare the names of donors for the same to the EC in its contribution report.

Crores of political funding, therefore, remains anonymous -- an issue which was also raised in the 2015 Law Commission report.

The Association of Democratic Reforms (ADR) has assessed that in 2020-21, donations from Voluntary Contributions (below '20,000) formed 40.12% ( '171.1 cr) in income from unknown sources of the eight national parties.

The Bahujan Samaj Party (BSP), for one, has consistently declined to declare its donors by claiming year after year. It declared receiving nil donations above '20,000 between 2004-05 and 2014-15 even as the total income of the party increased by 2057% -- from '5.19 crore in 2004-05 to '111.96 crore in 2014-15.

Other parties do not measure up much better.

From declaring '28.2 crore received as 'contribution' in 2019-20, the Biju Janata Dal has recently submitted to the Election Commission that it has not received any amount of contribution over '20,000 in 2020-21.

AIADMK has also declared that it received no amount greater than '20,000 in 2020-21.

The anonymity of political donations, in fact, has a long history.

Between 2004-05 to 2014-15, two-thirds of the party funds came from 'unknown' sources which included 83% of total income of the Indian National Congress, 65% of BJP, 94% of Samajwadi Party, 100% of BSP and 86% of Akali Dal, ADR assessments show.

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