Analysis of Sources of Funding of Regional Parties of India, FY 2021-22

May 17, 2023

The Association for Democratic Reforms recently released the report titled “Analysis of Sources of Funding of Regional Parties of India, FY 2021-22”. It sheds light on the income sources of regional political parties in the financial year 2021-22.

High Percentage of Income from Unknown Sources

According to the report, regional political parties received 76% of their income from unknown sources in 2021-22. This staggering figure, amounting to Rs 887.55 crore, demonstrates a concerning trend of undisclosed contributions and raises questions about the accountability of these parties.

Comparison with Previous Years

The report also highlights a significant rise in income from unknown sources compared to the previous year. In 2020-21, regional parties reported a total income of Rs 530.70 crore, with Rs 263.93 crore (49.73%) coming from unknown sources. This indicates a substantial increase, suggesting a lack of progress in ensuring transparency and accountability within political party finances.

Known and Unknown Sources

The report defines donations over Rs 20,000 as “known” sources since donor details are available through contribution reports submitted to the Election Commission of India (ECI). Conversely, “unknown” sources encompass income declared in annual audit reports without disclosing the specific source of income.

Examples of Unknown Sources

Unknown sources of income for political parties include donations through electoral bonds, sales of coupons, relief funds, miscellaneous income, voluntary contributions, and contributions from meetings or morchas. These sources lack transparency as details of the donors and the nature of contributions remain undisclosed.

Dominance of Electoral Bonds

The report highlights that 93.26% (Rs 827.76 crore) of the income from unknown sources can be attributed to electoral bonds. This raises concerns about the influence of undisclosed funds on the political landscape and the need for greater transparency in campaign financing.

Other Known Sources of Income

Apart from unknown sources, political parties also derive income from known sources. Known donors, whose contributions exceed Rs 20,000, accounted for 12.48% of the total income. Additionally, parties receive income from membership fees, bank interest, sale of publications, party levy, and other transparent revenue streams.

Limited Compliance and Analysis

While the analysis considered 54 regional parties initially, only 28 parties filed both their Annual Audit and Contribution reports. This highlights the need for improved compliance and reporting mechanisms to ensure a comprehensive understanding of political party finances.

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