Tag: political donations

Parties Got Rs 7,726 Cr in Non-Electoral Bond Funds Between 2013-23, Nearly 65% Went to the BJP

Of the Rs 7,726 crore, the BJP received nearly Rs 5,000 crore or 64.7%, followed by the Congress (10.7%), Bharat Rashtra Samithi (3.3%) and Aam Aadmi Party (3.1%).

New Delhi: Political parties received Rs 7,726 crore in non-electoral bond donations between 2013-2023 according to Election Commission of India (ECI) data, Businessline reported.

Of the Rs 7,726 crore, the BJP received nearly Rs 5,000 crore or 64.7%, followed by the Congress (10.7%), Bharat Rashtra Samithi (3.3%) and Aam Aadmi Party (3.1%).

According to the report, a large chunk of the total donation was made through transparent means of political funding.

Before the introduction of the electoral bonds scheme in 2018, donations to political parties that exceeded Rs 20,000 had to be declared under the political finance laws implemented in 2003 by the Bharaitya Janata Party-led government.

These donations, incentivised by 100% tax deductibility, saw a notable increase over the years, reaching Rs 1,247 crore in FY20 from Rs 309 crore in FY14. However, donations witnessed a slight decline to Rs 1,101 crore in FY23, the report said.

Corporate donations also play a significant role, with entities such as Prudent Electoral Trust (PET) emerging as leading contributors. In FY23, PET contributed Rs 256 crore to the BJP and Rs 90 crore to Bharat Rashtra Samithi (BRS). Additionally, M/S MKJ Enterprises Limited disbursed Rs 45 crore to the INC, while B.G. Shirke Construction Technology PVT Limited donated ₹35 crore to the BJP, the paper reported.

Anil Verma, head of the Association for Democratic Reforms, explained the transition from transparent to opaque political donations in India. “Party politics in India has become increasingly competitive over the years, leading to a rise in party expenditures for elections. To meet these growing expenses, parties often rely on resources generated from the corporate sector. This dynamic has resulted in the development of opaque funding mechanisms. Regardless of which political party is in power, they tend to utilize funding mechanisms to their advantage,” Verma said.

According to Eswaran Sridharan and Milan Vaishnav, authors of Costs of Democracy: Political Finance in India, nearly 75% of money received by the six national parties comes through anonymous donations that are below the Rs 20,000 limit, the report highlighted.

Electoral Bonds Scheme Amended To Allow Sale for Additional 15 Days in Assembly Election Years

The move has raised eyebrows as it comes days before assembly elections in Himachal Pradesh and Gujarat, while the Supreme Court is also set to hear pleas challenging the opaque political donation scheme next month.

New Delhi: The Narendra Modi government has raised eyebrows by amending the controversial Electoral Bond Scheme 2018 even as pleas challenging the process to allow anonymous political donations are due to be heard in the Supreme Court on December 6, 2022.

The Ministry of Finance on November 7 issued a notification for amending the scheme to provide “an additional period of 15 days” for their sale “in the year of general elections to the Legislative Assembly of States and Union Territories with Legislature”.

The bonds under this scheme are usually made available for purchase by any person for a period of ten days each in the months of January, April, July and October, when specified by the Union government. The original scheme had provided for an additional period of thirty days, as specified by the government, in the year when Lok Sabha elections are held, while the amendment adds another 15 days.

Since assembly elections to various states and union territories are held every year, the amendment effectively means that there will be 15 additional dates annually during which the opaque bonds can be sold.

The move comes days before the Himachal Pradesh assembly elections on November 12 and weeks before Gujarat goes to the polls early next month.

Sale of 23rd tranche from November 9

Immediately after issuing the notification, the Union government also announced the sale of electoral bonds under the 23rd tranche from the authorised branches of the State Bank of India. The notification said the sale of bonds would take place through the 29 authorised branches of the bank from November 9 to November 15, 2022.

Like in previous rounds of sale, the electoral bonds shall be valid for 15 calendar days from the date of issue and no payment shall be made to any payee political party if the bond is deposited after expiry of the validity period. The Electoral Bond deposited by an eligible political party in its account shall be credited on the same day.

Reacting to these developments, transparency activist Commodore (Retired) Lokesh K. Batra said the government’s decision is “shocking”, especially when the matter on stay of the scheme is due to be heard by the Supreme Court on December 6, 2022.

He charged that in 2018, the Union government had already allowed the “illegal sale” of electoral bonds beyond the laid down period, as specified in the notification. He said in view of the general elections to the Lok Sabha in 2019, an additional 30 days sale period was allowed ahead of the polls. Batra said it was also not clear whether the government has made the amendment to the 2018 notification in consultation with the Reserve Bank of India.

Also Read: Big Money Continues To Drive Sale of Electoral Bonds, Reveals Data From SBI, DEA

BJP getting most of the funds, scheme topped Rs 10,000 crore mark

The opposition parties have been opposing the scheme since a disproportionately large percentage of the funds through it have been going to the ruling BJP. Earlier in July this year, The Wire had reported that sales of electoral bond had already raised more than Rs 10,000 crore for various political parties.

Meanwhile, there are five petitions in the apex court challenging the Electoral Bond scheme. Among those who have filed the petitions are non-governmental organisations Association for Democratic Reforms (ADR) and Common Cause; and the political party and CPI (Marxist). These petitions have, among other things, sought clarity on whether introducing the Electoral Bond Scheme as a Finance Act and thereby bypassing the Rajya Sabha was justified. They have also questioned if the scheme facilitates unaccounted anonymous political donations.

SC was urged to club pleas

In the last hearing on the matter on October 14, when the matter came up before a Bench of Justices B.R. Gavai and B.V. Nagarathna, senior advocate Prashant Bhushan, appearing for ADR, urged a hearing by a larger bench into three connected issues – the electoral bonds issue, whether political parties can come under the Right to Information (RTI) Act and the legality of retrospective amendments to the Foreign Contribution Regulation Act (FCRA).

Bhushan had also questioned if the changed norms had opened Indian elections to anonymous foreign funding. He said following the retrospective amendment to FCRA, anyone could not get foreign money. He also questioned if these changes could have been brought through a money Bill.

Senior advocate Kapil Sibal, who was appearing for another petitioner, had suggested that since this was an important issue, the court should consider referring it to a larger bench. Referring to Article 145, he said, constitutional important matters are to be heard by constitution benches.

Centre insisted scheme is transparent

Incidentally, during the hearing, solicitor general Tushar Mehta, while representing the Centre, had submitted that the methodology of receiving money was transparent and replied in the affirmative to a query from the bench on if the system provided information on where the money was coming from.

Mehta also claimed that this was not an election-related issue. To a query from the bench on whether the matter should be referred to a larger bench, the SG said there should be a threshold hearing before deciding on the reference.

Though the counsel for the petitioners sought an urgent hearing in view of the upcoming elections to Himachal Pradesh and Gujarat assemblies, the court posted the matter to December 6.

Taxpayers, Not Donors or Parties, Are Bearing the Cost of Printing Electoral Bonds: RTI

The government has incurred a cost of Rs 1.43 crore on printing low-denomination bonds, of which only 117 have been sold.

New Delhi: Despite the fact that the electoral bond scheme has been seriously questioned by different sections of society across the country and the petition challenging its legality in the Supreme Court is still pending, the Narendra Modi government is pressing ahead with it.

As per the response to an application filed under the Right to Information Act (RTI), electoral bonds worth Rs 19,000 crore have been printed so far. Of these, bonds worth more than Rs 6,200 crore have been sold in 13 phases altogether.

It is worth noting that the cost of printing the electoral bonds is not borne by the buyer but by the government. That means the printing cost is being borne by the people – taxpayer – indirectly.

The cost of printing one electoral bond comes to Rs 25, with an additional 6% GST charged both by the Centre and the state governments.

The State Bank of India (SBI) is the only bank authorised to sell electoral bonds. For the process by which individuals and entities can buy electoral bonds to make a donation to a political party and the party concerned can encash the bonds through a verified account with the bank, the SBI charges bank commission. These costs too are paid with taxpayers’ money.

Electoral Bond Sale and Pri… by The Wire on Scribd


Responding to an application filed by RTI activist Commodore Lokesh Batra (Retired), the SBI has disclosed that in 2018, a total of 6,04,250 electoral bonds worth Rs 7,131.50 crore were printed and the following year, 60,000 bonds totalling Rs 11,400 crore were printed.

Also Read: Electoral Bond Scheme Results in Visible Dip in Transparent Corporate Donations

The printing of electoral bonds is done at the Indian Security Press (ISP) located in Nashik. According to the documents received, the ISP’s print run thus far is as follows:

  • 2,56,000 electoral bonds of Rs 1,000;
  • 2,56,000 bonds of Rs 10,000;
  • 93,000 bonds of Rs 1 lakh;
  • 26,000 bonds of Rs 10 lakh; and
  • 14,650 bonds of Rs 1 crore.

In all, 6,64,250 election bonds have been printed at a cost of Rs 1.86 crore. And it is the Department of Economic Affairs in the Union Ministry of Finance, the taxpayer’s money, in other words, that pays for their printing. It is strange that the expense incurred in printing the electoral bonds is not recovered from the buyer or the political parties.

There have been 13 rounds of sale of electoral bonds so far in which 12,452 out of the 6,64,250 printed electoral bonds, worth Rs 6210.40 crore, have been purchased.

Interestingly, a staggering 91.81% of this amount has come through the sale of electoral bonds in the highest denomination of Rs 1 crore. The remaining 7.91%  is made up of bonds of Rs 10 lakh. The sales of bonds of Rs 10,000 and Rs 1000, have been so negligible as to be non-existent.

The documents provided by the SBI give a break-up of the number of electoral bonds sold denomination-wise:

  • 5,702 bonds of Rs 1 crore;
  • 4,911 bonds of Rs 10 lakh;
  • 1,722 bonds of Rs 1 lakh;
  • 70 bonds of Rs 10,000; and
  • 47 bonds of Rs 1000.

Printing of low-denomination bonds: an unnecessary burden on taxpayers

The above figures make it clear that the sale of the lowest-denomination bonds has been next to nothing. Since it is the Central government which pays for the printing of every electoral bond, its move to continue printing the Rs 1000 and Rs 10 bond is being seen as a waste of the taxpayer’s money.

The idea of going for low-denomination bonds was the brainchild of the Bharatiya Janata Party (BJP), which felt that it would enable people from every section of society to make contributions to political parties. This view had emerged at a time when the Modi government was thinking of launching an electoral bond scheme and had sought the opinion of all political parties.

On August 24, 2017, BJP general secretary, Bhupendra Yadav, in a letter to the then union finance minister, Arun Jaitley, had suggested that electoral bonds of Rs 10,000 and less should be considered in addition to high-denomination bonds.

Yadav wrote, “To encourage people of all strata to participate in the process, while protecting their identities from being disclosed, if that is the preference, the bonds should also be available in denomination of Rs 2,000/-, Rs 5,000/- and Rs 10,000/- in addition to the higher denomination.“ The Wire had provided this information in a report published in late November 2019.

Having accepted the suggestion, the Central government has ended up printing 2,56,000 electoral bonds of Rs 1,000 and the same amount in the denomination of Rs 10,000. The number of bonds sold in both denominations so far is only 47 and 70!

The cost incurred on the printing of bonds of these denominations is Rs 1.43 crore.

The taxpayer has to bear the cost of bank commission too

The documents procured under the RTI also reveal that the commission earned by the SBI in the sale and encashment of the electoral bond, too, is to be recovered from the Central government.

For 13 rounds of electoral bond sales held thus far, the SBI has sent the Centre a bill of Rs 3.48 crore. The SBI’s commission for the 13th round of electoral bond sale, from January 13, 2020, to January 22, 2020, is Rs 5.34 lakh.

SBI Electoral Bond Commission by The Wire on Scribd


According to a letter written by SBI chief general manager, Vasudha Bhat Kumar, to the joint secretary (budget) in the Department of Economic Affairs (Ministry of Finance), the bank has asked for the bill to be settled in full.

Also Read: PMO Told Finance Ministry to Break Rules, Sell Electoral Bonds Before Assembly Polls: Report

The documents show that the Centre has made a payment of Rs 77.44 lakh to the SBI thus far, which covers seven rounds of the electoral bond sale (until January 2019).

The SBI has asked the Union finance ministry to deposit the remaining amount of Rs 2.70 crore along with a GST of 18%, as well as 18% GST that had not been paid in the earlier instalment.

What also comes to light through the SBI chief general manager’s letter is that the Central government is deducting 5% TDS on the electoral bonds and not 10%. The bank has written to the department of economic affairs for reimbursement of 5% TDS as the Central government had deducted 10% TDS on the Rs 77.43 lakh payment it had deposited as the bank’s commission for seven rounds of electoral bond sales.

Not only that, SBI has even asked the Centre to pay the Rs 270 that the instalment of Rs 77.43 lakh had fallen short of.

The 14th round of sale of electoral bonds was to commence in April, which could not be held due to the coronavirus pandemic, although the banks have been open during this time. As of now, it is not clear whether the Centre plans to hold the next round after some time.

Although there is no provision pertaining to electoral bonds that a round of sale that is missed can be held at a later date, in 2018 the Central government did just that – the proposed sale of electoral bonds in January 2018, the first round, was actually conducted two months later, in March 2018. The framework governing the process of sale and purchase of electoral bonds was not ready by January.

Political funding and electoral bonds. Credit: PTI

For 13 rounds of electoral bond sales held thus far, the SBI has sent the Centre a bill of Rs 3.48 crore. Photo: PTI

The controversy over electoral bonds

According to election laws, if any individual or organisation makes a political donation of Rs 2,000 or more to any political party, then the party in question is required to furnish information about the donor.

The electoral bond scheme has done away with this ‘hurdle’. Now, through the electoral bond scheme, anyone can make a political donation ranging from Rs 1,000 to Rs 1 crore to any political party without his or her identity having to be revealed. All that a political party is required to disclose is the total amount of contribution that has been raised for it through the medium of electoral bonds.

It is precisely for this reason that electoral bonds are being considered a big threat to the idea of transparency in the area of political funding.

Following the launch of this scheme, there has been a distinct drop in political contributions made through other means, such as cheques, to the major political parties, and correspondingly, there has been a big spike in the donations coming through electoral bonds.

The facts speak for themselves. In 2018-19, almost 60% of the contributions raised by the BJP, amounting to Rs 1,450 crore, came from electoral funds. Contrast it with 2017-18, when the BJP declared Rs 210 crore as the donations received through electoral bonds.

Also Read: RTI Reveals Electoral Bond Scheme Passed After Only ‘Informal Discussion’ Among Officials

To introduce electoral bonds the Modi government amended several laws in 2017 (after making changes in the Finance Act, 2017, and corresponding amendments in statutes such as the Representation of People Act,1951, the Reserve Bank of India Act, 1934, the Income Tax Act, 1961, Foreign Contributions Regulation Act, 2010, and Companies Act, 2013. The scheme was notified in January 2018).

It is these very amendments that have been challenged in the Supreme Court by the non-governmental organisation, Association for Democratic Reform (ADR), which works towards electoral and political reform with a view to strengthening democracy and governance. However, on the last few occasions, the Supreme Court hearings have been continually put off.

In its petition, ADR has stated that the amendments to the statutes in question have opened doors for unlimited political donations by foreign companies and legitimised large-scale electoral corruption. The complete opacity built into this mode of political donations is a huge problem, the organisation has pointed out.

Last year several disclosures were made regarding electoral bonds which revealed that the RBI, Election Commission, law ministry, RBI governor, chief election commissioner and many political parties had written to the Central government to register their objections to the proposed electoral bond scheme. However, the union finance ministry had brushed aside those objections and gone ahead with their plan.

The RBI had stated that amending the RBI Act, 1934, in order to legalise anonymous donations under the electoral bond scheme would create a bad precedent – apart from encouraging money laundering it would pose a threat to the fundamental principles of the Central bank’s regulatory framework.

The Election Commission too filed an affidavit in the Supreme Court that the donations received by political parties through electoral bonds would be a threat to the very idea of transparency.

Apart from this, documents received through RTI applications show that when a draft of the proposed scheme was prepared, it had a provision for discussions and consultations with political parties and members of the public. After a sitting with Prime Minister Modi that provision was removed.

The documents also reveal that the BJP knew about the scheme even before the draft was prepared. Four days before the proposal was to be placed before the prime minister, BJP general secretary Bhupendra Yadav, as mentioned earlier, had written a letter to the then-finance minister, Arun Jaitley, with suggestions from the party for the electoral bond scheme.

Translated from the Hindi original by Chitra Padmanabhan.

BJP Received 93% of Corporate Donations Since 2016, Rs 405 Crore From One Trust Alone

A report said donations by corporate houses increased significantly and that the national parties failed to provide PAN, address details of several donors.

New Delhi: While political parties are required to submit details of those donating over Rs 20,000 in a financial year to them, an analysis by Association of Democratic Reforms has revealed that in many cases, such donations are being received without PAN details and address of donors. Incidentally, the BJP has been the overwhelming recipient of political donations, having received over Rs 915 crore (92.5%) out of the total donation of Rs 985 crore received by the six national parties in two fiscals – 2016-17 and 2017-18.

Political parties are required to furnish the name, address and PAN of the donor along with information about mode of payment and amount contributed by each donor to the Election Commission.

In a report released in January 2014, ADR had noted that between 2004-05 and 2011-12, the national parties received a total of Rs 378.89 crore in political donations. This constituted 87% of the total contribution from known sources.

Also Read: In 2019, Is BJP Riding a Modi Wave or a Money Wave?

In another report in August 2017, ADR mentioned that between 2012-13 and 2015-16, business houses had donated Rs 956.77 crore to the national parties. These funds had amounted to 89% of their total funding from known sources.

The latest report has analysed the contributions in 2016-17 and 2017-18.

BSP did not receive any donation over Rs 20,000

It stated that while the BJP, Congress, Communist Party of India (Marxist), CPI, Nationalist Congress Party and All India Trinamool Congress were covered for the analysis, the BSP was left out. The party declared that it did not receive any voluntary contributions above Rs 20,000 during this period or earlier.

Business houses donated Rs 985.18 crore or nearly 93% of the total contributions received by these political parties from known sources. It said the donations from the corporate sector to national parties have increased significantly – by 160% – between the two periods for which data was evaluated (FY 2004-05 to 2011-12 and FY 2016-17 to 2017-18).

The Bahujan Samaj Party declared that it did not receive any voluntary contributions above Rs 20,000 during this period or earlier. Photo: REUTERS/Pawan Kumar

BJP got the bulk of corporate donations

Overall, the report said the six parties received Rs 1059.25 crore from voluntary contributions above Rs 20,000. The BJP received most of these donations, Rs 915.59 crore, from 1,731 corporate donors.

The Congress was a distant second, with Rs 55.36 crore received from 151 corporate donors. During the two-year period, the report said that the BJP and Congress’s voluntary contributions above Rs 20,000 from corporate or business houses were 94% and 81% respectively. On the other hand, the CPI received the lowest share of corporate donations, at just 2%.

Also Read: BJP Pulls In 12 Times More Political Donations Than Other Parties Combined: ADR

The analysis also noted that between 2012-13 and 2017-18, donations from the corporate sector to national parties registered a 414% rise. During this period, it said, the BJP received the most donations, Rs 1,621.40 crore, constituting 83.49% of the total corporate donations.

Little known trusts donated hundreds of crores

Surprisingly, little known corporate entities have emerged as major donors to the political parties.

ADR said “Prudent/Satya Electoral Trust was the top donor to two of the national parties, between FY 2016-17 and 2017-18.” The trust made 46 donations in the two years, with its contribution standing at Rs 429.42 crore.

The BJP declared that it received Rs 405.52 crore in 33 donations from the trust, while the Congress submitted that it received Rs 23.90 crore in 13 donations.

The second highest corporate donor to the Congress and the BJP was the Bhadram Janhit Shalika Trust. In 10 donations, it contributed Rs 41 crore to these parties.

Electoral bonds and political funding. Credit: PTI

Surprisingly, little known corporate entities have emerged as major donors to the political parties. Photo: PTI

Nature of work of some large donors not known

ADR said out of the Rs 985.18 crore donated by the corporate sector to the national parties in the two years, Rs 22.59 crore came from the unsegregated category. These are companies whose details are not available online or whose nature of work is unclear.

The group also said the analysis revealed that electoral trusts were the biggest donors to the national parties, contributing Rs 488.42 crore in the two year period.

The real estate sector was the second highest overall contributor in FY 2016-17, contributing Rs 49.94 crore. In FY 2017-18, the manufacturing sector was the second highest overall contributor, donating Rs 74.74 crore to the national parties.

PAN, address, internet info of many donors not available

A crucial aspect flagged by ADR is that while submitting details about the donations to the Election Commission, the political parties did not fulfil the mandatory condition of disclosing the PAN details and address of the donors.

It said there were a total of 916 donations, through which national parties received Rs 120.14 crore, where the address details were not provided in the contribution form. Likewise, the national parties received Rs 2.59 crore through 76 donations for which the PAN details were not provided.

Also Read: India’s Shadow Lobbies: How Business Captured the Government

Interestingly, 98% of donations without PAN and address details went to the BJP.

The association said that the national parties also received Rs 22.59 crore in 347 donations from corporate entities which have no internet presence or whose nature of work is not known.

‘Make parties return funds for which disclosure is incomplete’

In view of these discrepancies, ADR has made a number of recommendations. It said the Supreme Court judgment of September 13, 2013 laid out that no part of a candidate’s affidavit should be left blank. “Similarly, no part of the Form 24A submitted by political parties providing details of donations above Rs 20,000, should be blank.”

ADR has demanded that all those donating Rs 20,000 or more should provide their PAN details, record date of donation and submitted in Form 24A. Parties who do not submit the donation statement to the ECI should be heavily penalised and their income should not remain tax exempt.

The organisation has also stated that if parties did not obtain the PAN or address details of corporate donors, the ECI should make the parties return the amount “to deter them from providing incomplete information”.

It also suggested that corporate donors should make details of their political contributions available in the public domain through their websites. The group also suggested that the Central Board of Direct Taxes should scrutinise annually the donations received by all national, regional and unrecognised parties to discourage donations from shell companies or illegal entities.

BJP Pulls In 12 Times More Political Donations Than Other Parties Combined: ADR

Of Rs 469.89 crore in donations above Rs 20,000 in 2017-18, BJP got Rs 437.04 crore. The remaining six national parties managed a meagre Rs 32.83 crore.

New Delhi: The ruling BJP has declared high value donations totalling more than Rs 437 crore for the last fiscal, which is 12 times of the sum total of donations declared by all other national parties including the Congress, in the last financial year, an electoral think-tank said Wednesday.

The maximum amount of donations to both the BJP and the Congress came from Prudent Electoral Trust, which is backed by some big corporate houses, including major players in the realty and telecom sectors, according to ADR or Association for Democratic Reforms.

Prudent Electoral Trust donated a total of Rs 164.30 crore to the BJP and the Congress combined. Of this the BJP got Rs 154.30 crore, which is 35 per cent of the total funds received by the party, and the Congress got Rs 10 crore, which is 38 per cent of its total funds.

Also read: Centre Overlooked EC’s Concerns on Changes to Laws on Political Funding

High value donations or any donation above Rs 20,000 declared by the national parties were Rs 469.89 crore for the year 2017-18. Out of this, BJP received chunk of the funds at Rs 437.04 crore, while Congress got Rs 26.65 crore.

“The donations declared by BJP is 12 times more than the aggregate declared by Congress, NCP, CPI, CPM and Trinamool Congress for the same period,” ADR said in a statement.

Nearly 90 per cent of the total donations to the national parties were made by corporate houses, while 10 per cent were by individuals.

Corporate houses and businesses donated Rs 400.23 crore to the BJP and only Rs 19.29 crore to the Congress in 2017-18.

Meanwhile, the BSP declared that it did not receive any donations above Rs 20,000 during 2017-18, as it has been declaring for the past 12 years, the Delhi-based think-tank said.

Also read: BJP Received 82% of Donations to National Parties in Gujarat: ADR Report

Almost half of the declared donations, Rs 208.56 crore, came from Delhi, followed by Rs 71.93 crore from Maharashtra and Rs 44.02 crore from Gujarat.

Rs 42.60 crore or 9.07 per cent of the total donations could not be attributed to any state or union territory due to incomplete information, ADR said.

In a Win for Activists, SC Issues Notice to Centre on Plea Challenging Foreign Political Funding

The petition before the apex court had claimed that retrospective amendments to the FCRA were meant to bail out the BJP and Congress, held guilty by the Delhi high court of accepting foreign funding.

New Delhi: The Supreme Court’s notice to the Centre on July 2 seeking a response to a plea alleging that the recent amendments to the Foreign Contribution (Regulation) Act (FCRA), 2010 have opened the doors to unlimited political donations from foreign firms has come as a shot in the arm for activists battling to ensure transparency in political funding.

The activists had also alleged that the FCRA amendment was primarily aimed at protecting the two major national parties – the Bharatiya Janata Party and the Congress, which were held guilty by the Delhi high court in 2014 of taking foreign funding in violation of the FCRA Act.

‘Amendments to FCRA made to overturn the HC judgment against BJP, Congress’

The petition before the apex court was filed by founder-trustee of the Association for Democratic Reforms (ADR) Jagdeep S. Chhokar and former bureaucrat E.A.S. Sarma. They challenged the amendments to the FCRA through the Finance Act, 2016 and the Finance Act, 2018 on the grounds that they had been “made in an attempt to overturn the judgment passed by the Delhi high court (in a PIL filed by petitioners herein) holding the two major political parties (the BJP and the Congress) guilty of taking foreign funding, against which the special leave petitions were dismissed by this court.”

Appearing for the petitioners, senior advocates Prashant Bhushan, Kamini Jaiswal and Pranav Sachdeva contended that “the said amendments have opened doors to unlimited political donations from foreign companies, thereby legitimising financial contributions received from foreign sources.”

SC notice to MHA on plea

Upon hearing the plea, the bench comprising Chief Justice Dipak Misra and Justices A.M. Khanwilkar and D.Y. Chandrachud issued a notice to the home ministry and tagged the matter with other similar pending petitions.

The petition had noted that the writ was being filed under Article 32 of the constitution in public interest to challenge the amendments made in the FCRA Act 2010 through Finance Act, 2016 and Finance Act, 2018, which had been passed as a Money Bill with retrospective effect from 1976.

It claimed that the “amendments have been made in an attempt to overturn the judgment passed by the Delhi high court (in a PIL filed by petitioners herein) holding the two major political parties (the BJP and the Congress) guilty of taking foreign funding, against which the SLPs were dismissed by this hon’ble court.”

Amendments in FCRA ‘opened doors to unlimited political donations from foreign companies’

Insisting that the “amendments have opened doors to unlimited political donations from foreign companies and thereby legitimising financial contributions received from foreign sources”, the petition had alleged that this also went “against settled principle of separation of powers since it has overruled the Delhi high court judgment (against which SLPs were dismissed).”

Elaborating on the issue, it said: “It is a settled law the legislature cannot over-turn any court judgment; it can only remove the basis of the judgment. The Delhi high court had held the two major national political parties (BJP and Congress) guilty of taking foreign funding in violation of FCRA 1976.”

Centre brought second amendment in 2018 despite matter being sub judice before SC

Noting that the amendment made in FCRA 2010 through the Finance Act 2016 was already under challenge before the Supreme Court, and that it had issued a notice in the matter on October 3, 2017, the petition said “despite the same being sub-judice, the parliament has now made the amendment with retrospective effect from 1976 vide Finance Act, 2018 which has come into force from 1st April 2018.”

The Wire had earlier reported how the Finance Bill had again amended FCRA 2010 to condone illegal donations to the BJP and Congress from foreign companies.

The petition had recalled that “in 1976, the Foreign Contribution (Regulation) Act, 1976 was enacted by the parliament to serve as a shield in legislative armoury, in conjunction with other laws like the Foreign Exchange Regulation Act, 1973, and insulate the sensitive areas of national life – like journalism, judiciary and politics from extraneous influences stemming from beyond our borders. It imposed prohibition on candidates for election from accepting foreign contribution from foreign sources.”

FCRA 1976 sought to prevent interference in ‘internal affairs of country’

The main reason behind enacting the said law, the petition said, was to prevent monetary aid/donations from gaining dominance and perhaps interfering with the internal affairs of the country, so as to safeguard the rule of law and ensure protection of fundamental rights guaranteed under Article 14 and 21.

Stating that FCRA 2010 was later enacted by the parliament, the petition said, through Section 54 (1) this Act repealed the earlier FCRA, 1976. However, the definition of ‘foreign source” remained unchanged.

Delhi HC had in 2014 held Congress, BJP guilty of violating FCRA 1976

On March 28, 2014, the petition said, the Delhi high court had in a writ petition held the Congress and BJP guilty of violating FCRA 1976. “The petition highlighted donations made to the political parties i.e. BJP and Congress by M/s Sterlite Industries Ltd. And M/s Sesa Goa Ltd., companies registered in India under the Companies Act, 1956 and more than 50% of their issued share capital was held by Vedanta Resources PLC, a company incorporated under the Companies Act, 1985 and registered in England and Wales with registration No.04740415.”

The high court held the two major national political parties guilty of taking foreign funding and directed the Ministry of Home Affairs and Election Commission of India to take action against them within six months.

Finance Bill 2016 changed definition of “foreign company” under FCRA

To counter the high court order, the petition stated, “in 2016, for the first time the Finance Bill was used to bring amendments to the FCRA, 2010 to change the definition of what constitutes a foreign company in such a way that key beneficiaries of UK-based Vedanta group, the BJP and Congress, would not face legal scrutiny for donations received from 2010 onward. Vide the said Act, amendment was brought to the definition of ‘foreign source’ in the FCRA, 2010.”

The petition said a proviso was added to the definition of “foreign source” which stated: “Provided that where the nominal value of share capital is within the limits specified for foreign investment under the Foreign Exchange Management Act, 1999, or the rules or regulations made thereunder, then, notwithstanding the nominal value of share capital of a company being more than one-half of such value at the time of making the contribution, such company shall not be a foreign source.”

On November 29, 2016, the petition noted that “the SLPs filed against the Delhi high court judgment by the two political parties were dismissed as withdrawn” by the apex court.

HC had issued contempt notice to Centre in March 2017 for noting acting against BJP, Congress

On March 21, 2017, the Delhi high court issued contempt notice to Union of India on a petition filed by the petitioners who argued that the amendment in FCRA 2010 with effect from September 26, 2010 would not come to the aid of the two political parties. The high court specifically recorded the contention of the petitioners that amendment made by Finance Act, 2016 would not help the two political parties.

Subsequently, on October 3, 2017, the Supreme Court issued notice on a PIL filed by ADR challenging the provisions of Finance Act, 2016 and Finance Act, 2017 including the amendment to FCRA 2010.

On October 9, 2017, the Delhi high court on an application filed by the Central government for extension of time, gave it six months from the date of the order to take action against the two political parties for violations of FCRA.

On March 14, 2018, Lok Sabha passed the Finance Bill, 2018 whereby a retrospective amendment was made to the Finance Act of 2016. The amendment added the applicability of the proviso added by the Finance Act, 2016 retrospectively from 1976, instead of 2010.

On March 30, the Ministry of Finance notified the Finance Act, 2018 amending FCRA 2010 with effect from 1976.

Petition said Congress leader admitted retrospective amendment was to overcome FCRA violation

In the petition before the Supreme Court, ADR also submitted that on April 11, “Congress leader Dr Abhishek Manu Singhvi admitted on NDTV show that the retrospective amendment is to get over the violation of FCRA committed by Congress and BJP.”

In fact, while writing for The Wire earlier this year, Chhokar had made a detailed reference to this programme. Citing the programme, he stated that “these repeated attempts at amending the FCRA had, and have, only one objective: To save the BJP and Congress from being prosecuted for the violations of FCRA, as determined by the Delhi high court in its judgment of March 28, 2014.”

Chhokar further noted how the anchor had asked: “I am obviously talking about the amendments that we have actually seen to the FCRA which is something, it’s a story that’s almost amusing, were it not for the fact that it is so serious that after you and the BJP were pulled up by the Delhi high court for violations of receiving foreign funds. First, the Act is amended, going back to September 2010 and then when the Supreme Court says that the court was referring to the 1976 Act, then the Finance Bill goes all the way back to 1976 to amend the Act. Now isn’t this a case of all political parties, including you, being complicit in basically using Parliament going back to 1976, amending the law to protect yourself from being caught out for an illegality.”

To this, he had quoted Singhvi as responding: “I would be less than candid if I did not partly agree with you, though not with your strong words. But you must realise one thing, and this is a bit of legalese here which you must appreciate. Yes, it is true, that more than the two mainstream parties were involved and therefore an amendment was used. But, you know, it is not as bad as you make it sound. It was done for a case-specific aberration. I don’t think the intention was to violate the Act but since technically the view was the Act stood violated, both the parties agreed that, they should amend the law. And let me tell you what happened. It is a case-specific case of Vedanta or Sterlite group. They made an open donation, but there was a particular clause which read in a particular way by interpretation, was assumed to be compliant but was found by the courts to be non-compliant. There was nothing hidden about it. It is just that they had a set of foreign shareholders and foreign elements, which would have not made it a compliant thing. Now the only way to get about it was either to have prosecutions for both the parties. Remember it is not hidden, it is not surreptitious, not intended to violate in that sense. So to get around that prosecution, I think this was made, I wish it could have been avoided. Therefore, the going back to 1976 is not in the blanket sense you mean it, that there were millions of donations from millions of different donors. Remember the funny part of this whole thing is, it is for one donor, one donor, therefore, though you are right in theory, it is not as bad as it sounds. And I think it should be avoided in the future. It is a bona fide donation, accepted by the donee bona fide, made by the donor bona fide, but found to be in violation of the Act, which is rectified and therefore retrospective.”

This narrative, Chhokar had stated, “should not leave any doubt whatsoever in anyone’s mind that all political parties believe that the law of the land does not apply to them. They seem to be convinced that they are above the law.”

Petition cites many grounds for declaring FCRA amendments ‘void, illegal and unconstitutional’

The petition before the Supreme Court filed by Chhokar had demanded that the amendments introduced in FCRA 2010 by Section 236 of Finance Act, 2016 and by Section 217 of the Finance Act, 2018 be declared “void, illegal and unconstitutional” as they have “opened the floodgates to unlimited corporate donations to political parties and anonymous financing by Indian as well as foreign companies which can have serious repercussions on the Indian democracy.”

The petition further elaborated that “the Finance Act, 2016 has amended the Foreign Contribution Regulation Act (FCRA), 2010, to allow foreign companies with subsidiaries in India to fund political parties in India, effectively, exposing the Indian politics and democracy to international lobbyists who may want to further their agenda.”

It also charged that Finance Act, 2018 has amended FCRA 2010 with effect from 1976 “in an attempt to over-turn the judgement” passed by the Delhi high court.

‘Amendments pose a serious danger to the autonomy of the country’

Asserting that these “amendments pose a serious danger to the autonomy of the country and are bound to adversely affect electoral transparency, encourage corrupt practices in politics and have made the unholy nexus between politics and corporate houses more opaque and treacherous and is bound to be misused by special interest groups and corporate lobbyists,” the petition had also claimed that they were “in violation of Articles 14 and 21 of the Constitution of India.”

The petition further cautioned that “if the recent amendments are not set aside, foreign countries and corporate houses and extremely wealthy lobby groups can have a stranglehold on the electoral process and governance. Such activities, if allowed, can result in a situation that legislation, regulations etc. can be ultimately be passed and laws brought in to favour of these corporates and lobby groups at the expense of the common citizens of the country.”

‘Amendments will lead to creation of shell companies, rise in benami transactions’

It also highlighted the possibility that “this will lead to the creation of shell companies and rise of benami transactions to channelise the undocumented money into the political and electoral process in India.”

It also went into the details of what constituted a Money Bill to state that “the Finance Bill, 2018 may be a Money Bill if it deals only with the matters specified above, and not with any other extraneous matter as otherwise it would be analysed as a Financial Bill. However, an amendment to FCRA cannot be categorised as a Money Bill.”

Finally, the petition argued that “it is a settled principle of law that the legislature can pass an amendment to an existing law to cure the defect in that law.”

Therefore, it said, “when the Court held BJP and INC guilty of accepting donations from ‘Financial Source’ as prohibited in FCRA, 1976, then in no circumstance whatsoever can any political party in power use the powers vested in the legislature to cure the guilt on its part by bringing any law or amendment to an existing law.”

It also questioned how the scope of amendment to an already repealed act can be altered. “The legislature by extending the scope of amendment to the already repealed FCRA, 1976 has tried to get away with the guilt on the part of BJP and INC as recognised by the hon’ble high court and this is nothing but breach of the principle of Separation of Powers,” the petition said.

In light of all these alleged fallacies in law, the petition had sought that the amendments introduced in FCRA 2010 by Section 236 of Finance Act, 2016 and by Section 217 of the Finance Act, 2018 be declared “void, illegal and unconstitutional”.

SC Notice to Centre, EC on Political Funding Rekindles Debate on Transparency Claims

Electoral bonds, as proposed in Union Budget and passed by parliament, would only add to opaqueness in funding, claims a Delhi-based NGO.

Electoral bonds, as proposed in the Union Budget and passed by parliament, would only add to opaqueness in funding, claims a Delhi-based NGO.

Finance minister Arun Jaitley in his Budget 2017 proposal reduced the limit of donations to political parties from a single source to Rs 2,000 from Rs 20,000. Credit: Reuters

The Supreme Court on Tuesday issued a notice to the Centre and the Election Commission of India on a public interest litigation (PIL) filed by Delhi-based NGO Association for Democratic Rights (ADR). The PIL challenged the recent amendments related to political funding under which corporates have now been allowed to donate over 7.5% of their average net profit to a political party.

The notice is being seen as a major boost to the civil rights group’s fighting for transparency as the recent amendments to the law related to political funding have not made the process any more transparent – when it comes to private donations or corporate funding.

Appearing for ADR before a bench, senior advocate Prashant Bhushan had also questioned why political parties have now been allowed through the amendment to accept political donations by way of electoral bonds without disclosing their source.

The new amendments had been passed by the parliament in March this year. They were part of the proposals by finance minister Arun Jaitley in his Union Budget speech on February 1 this year.

Donation limit lowered from Rs 20,000 to Rs 2,000

Jaitley had insisted that the curbs on political funding proposed by him would improve transparency, a claim which was countered by several civil rights groups.

Among the announcements Jaitley made, one pertained to lowering the limit of donations to political parties from a single source to Rs 2,000 from Rs 20,000. Also, he had announced that parties would be entitled to receive donations by cheque or through a digital mode from their donors.

But activists had countered the minister’s claim that this would “evolve a transparent method of funding political parties which is vital to the system of free and fair elections”.

The NGO later brought out a report stating that lowering the limit to Rs 2,000 would not help as the parties would be inclined to show a larger number of small value donations. It released a report in July this year stating that while the total income of national and regional political parties in the 10 years till 2014-15 stood at Rs 11,367 crore, with Congress getting the biggest share of Rs 3,982 crore, nearly 69% of the income of these parties was from “unknown sources”.

In fact, the ADR pointed out that the income from unknown sources rose by 313% during the period for all parties and by 652% for regional parties. It also pointed out that Bahujan Samaj party had shown all 100% of its donations as small ones and thus from “unknown sources” even as its total donations rose 2057% from Rs 5.19 crore in 2004-05 to Rs 111.96 crore in 2014-15.

In the recent years though, the ADR report said that BJP emerged as the largest beneficiary of political donations. When it came to donations from corporate or business houses, it said between 2012-13 and 2015-16, the party received 92% of its donations from this group whereas in the case of the Congress, the figure stood at 85%. On the other hand, the Communist Party of India received the lowest share of corporate donations at 4% while the Communist Party of India (Marxist) got 17%.

Electoral bonds also do not improve transparency

Jaitley had also noted that “as an additional step, an amendment is being proposed to the Reserve Bank of India Act to enable the issuance of electoral bonds in accordance with a scheme” under which “a donor could purchase bonds from authorised banks against cheque and digital payments only.” He had added that these bonds “shall be redeemable only in the designated account of a registered political party.”

The minister had stated that “the existing exemption to the political parties from payment of income tax would be available only subject to the fulfilment of these conditions. This reform will bring about greater transparency and accountability in political funding while preventing future generation of black money.”

However, as several RTI activists like Venkatesh Nayak had pointed out the amendments would make thepolitical party funding “largely opaque in the future.”

With respect to electoral bonds, he had stated that the Finance Bill had proposed amendments to the Reserve Bank of India Act, 1934 to allow for the issuance of electoral bonds that individuals and companies can buy through commercial banks and to the Income Tax Act, 1961 to exclude donations received by these political parties through electoral bonds.

Stating that the aim of the amendment was to exempt the parties from each year reporting to the IT department in order to continue to avail income tax exemptions, Nayak had stated that the NDA government under Atal Bihari Vajpayee too had introduced Section 29C in the Representation of People’s (RP) Act to make all recognised national and state level political parties to make annual declarations of contributions received from individuals and companies in excess of Rs 20,000 but as the ADR data had shown, the exercise had ineffective in ensuring transparency. He had said the new amendments proposed to the RP Act would only ensure that the political parties will not be required to disclose the identity of individuals and companies who make donations through electoral bonds bought from the commercial banks.

He had noted that clauses 135 and 136 of the Bill that seek to amend section 29C of the RP Act would get the parties exemption from this process by “excluding electoral bond” from the purview of reporting. Therefore, Nayak had charged that “electoral bonds have the potential to make political party funding largely opaque.”

Budget 2017: Lowering Cash Limit for Political Donations Farcical, Say RTI Activists

Many feel the move is pointless as lowering the disclosure limit requires an amendment to the Representation of Peoples Act, which remains unchanged.

Many feel the move is pointless as lowering the disclosure limit requires an amendment to the Representation of Peoples Act, which remains unchanged.

A garland made of cash. Credit: Reuters

A garland made of cash. Credit: Reuters

 

Several RTI activists have dismissed finance minister Arun Jaitley’s announcement that cash donations to political parties will now be capped at Rs 2000, down from the earlier limit of Rs 20,000. They have questioned the intent behind the decision – it is meant to increase transparency and accountability in political donations – saying the decision actually leaves open a wide window for manipulations and non-disclosures.

Why not make Aadhaar mandatory for donations?

The most simple of questions was raised by RTI activist and former information commissioner Shailesh Gandhi, who demanded to know what stopped Jaitley from making Aadhaar mandatory for all donations. “This is just a façade that they have done something. The simple solution would have been to say that all donors should give Aadhaar card numbers and there is hardly anybody without it now. And any computer software would have been able to figure out if a number was used repeatedly.”

Noting that he has suggested this solution several times, Gandhi said “there attempts to be an attempt to show that we are doing something, everyone will say what great announcement – but instead of showing 10 donors now the parties would show 100 donors of small amounts in order to avoid fair disclosure”.

Parties’ intentions suspect as they have not counted themselves under the RTI

Gandhi said the Central Information Commission had held that all the national political parties were public authorities and had directed them to subject themselves to the RTI Act but the parties have neither appealed against the order in court nor have they complied with the directions. “They have just acted arbitrarily and cocked a snook at the CIC. We will not obey, what will you do, appears to be their stand.”

He added that now is a good time for political parties to take the lead and make Aadhaar mandatory for all donations themselves. “It just might set an example and make others also act.” Gandhi said it would also be useful if the civil society organisations that had batted for Aadhaar could now come forward to demand its use for political donations.

Decision absolves political parties of responsibility to make disclosures

RTI activist Venkatesh Nayak of the Commonwealth Human Rights Initiative said that the decision may come off as a welcome move on principle, but it actually “completely absolves political parties from taking any action voluntarily to account for any donations that they receive.”

“Here the responsibility of transparency is being placed on the donors and on the banks or Reserve Bank of India. Political parties themselves ought to have accounted for every penny that they receive but their plea is that they do not have the staff or the resources and they could not maintain the records in such a meticulous fashion,” he said.

So, Nayak argued that what seems to be a move aimed at bringing greater transparency to political donations has actually created a scenario in which the responsibility for ensuring transparency does not lie with the recipient “and that is the most worrisome feature”.

Stating that ideally the political parties should have been maintaining all these records, he said despite parties only being required to declare amounts equal to and higher than Rs 20,000, some political parties in the North East and also the MDMK in Tamil Nadu, have been reporting donations of less than Rs 20,000 as well. “It shows that it is possible to do that.”

Extraneous issues brought up via the Budget

Nayak also questioned the government’s use of the Budget to bringing up extraneous issues. “A budget is essentially a monetary bill and this is the second time under the NDA government that extraneous issues, which strictly speaking do not fall in the definition of monetary bill, are being brought in in complete violation of the constitutional principles,” he said.

Elaborating on the issue, Nayak said: “Last year it was about exempting the political parties from the purview of the Foreign Contribution Regulation Act for the purpose of receiving donations from the Indian subsidiaries of multi-national companies up to a certain cap, which was connected with FEMA, etc. So that was not exactly an issue to be brought through a money bill. And this time the issue of political donations has been raised in the Budget”.

On how and why the move was wrong, Nayak said: “This tendency is extremely disturbing because there is a constitutional provision that a money bill can contain only such matters that are laid down in the constitution about the regulation of tax, fees, et cetera. But the moment you say money bill, the Rajya Sabha has no role; they can only recommend. This is an issue that is extremely political and every political party should have a say on it in both houses. Now it can only remain at the discussion level and no further action can be taken. Again the attempt appears to be stall any action from the opposition parties in Rajya Sabha on this issue.”

Amendment to Representation of Peoples Act needed

The RTI activist said the issue of donations to political parties should ideally have been brought up through an amendment to the Representation of Peoples Act. “Even though they say there is a cap on receiving cash over Rs 2000, the reporting limit under the Representation of Peoples Act remains the same at Rs 20,000. So anything less than that amount does not have to be reported. So in effect, it does not make any impact,” he cautioned.

Noting that the proposal does not reflect any attempt on the political parties’ part to clean up their acts, he said: “The onus of transparency has not been placed on political parties at all and this shows the same tendency that has continued over several decades in political parties towards electoral reforms or cleaning up the electoral system. Everything is either mediated through the Supreme Court or in some way through public pressure, which in most cases too has to find a voice through an apex judgment or directive.”