BJP & Congress are yet to submit Annual Audit reports to ECI for 2018-19
Sai Krishna Muthyanolla
November 21, 2019
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Political parties are supposed to
submit annual audit reports to the ECI by 31st October every year.
They are also supposed to file expenditure reports within 90 days of a Lok
Sabha general election. Both the BJP & Congress are yet to submit audit
reports for 2018-19 and have not yet submitted expenditure report for the Lok
Sabha elections.
Financial transparency of politicalparties is important for the effective working of democracy. Since most of thepolitical parties depend on funding from multiple sources, it becomesimperative that funding does not become a vehicle for exchanging favours. Henceit is all the more significant that there is transparency in political funding.Various democratic countries have enacted laws which lay down the proceduresfor political funding, spending and other aspects to bring in transparency inpolitical funding.
What about India?
In India, the Election Commission ofIndia (ECI) is entrusted with the responsibility of monitoring expenditure& disclosures related to political parties, as per the laws made related toelection process and political parties. As per Section 29C of the Representation of The PeopleAct, 1951, every party which is registered under Section 29 A is required to submit the followingto the ECI every year.
Along with these two reports whichare submitted annually, political parties are required to submit theirexpenditure report post the elections, and within 75 days after State general electionsand 90 days after Lok Sabha general elections.
As on date, only 3 recognized
National Parties submitted ‘Annual Audit Reports’ for 2018-19
Currently, there are 7 politicalparties recognized as National Parties in India. All the recognizedpolitical parties are required to submit their Audited Annual Reports.
Of these  seven, only 3 have submitted their audit reports so far for the year 2018-19. They are,  All India Trinamool Congress (AITC), Bahujan Samaj Party (BSP) and Communist Party of India – Marxist (CPI-M). Both the BJP & the Congress are yet to submit the audit report.
All the political parties arerequired to submit the annual audit reports by 31st  October every year. Only  the ‘All India Trinamool Congress’ has managedto submit the audit reports on time for the last two years.
A look at the previous year’s submission dates reveal that thefour parties which are yet to submit the annual audit reports have a history oflate submission.
However, all the 7 National Partieshave submitted Contribution Reports. Furthermore, only BSP, INC and NCPhave submitted the contribution report prior to the cut-off date of 30th September.
As for Expenditure Report which needs to be filed within 90days after Lok Sabha elections, the two largest National parties of BJP and INChave not yet submitted the same. Lok Sabha elections concluded on May 19, 2019.
The Status of submission ofExpenditure Report and Contribution Report by each of the recognized Nationalparties is given below
The income for 2018-19 has increased
for both Trinamool Congress and BSP in 2018-19
Income of Trinamool Congress hassignificantly increased for financial year 2018-19, compared to 2017-18. For2017-18, the income as per the annual audit report was around ₹ 5.2 crores which increased to ₹ 192.7 croresin 2018-19 i.e. an increase of 37 times. Even though the expenditure has notincreased to this extent, there has been a significant increase in it as well.Trinamool Congress reported expenditure of ₹1.8 crores in 2017-18 which increased to ₹ 11.5 crores in 2018-19.
BSP also reported an increase inboth its income & expenditure. In 2017-18, BSP showed an annual income of ₹ 51.7 crores which increased to ₹ 69.8 crores in 2018-19. However, the proportionate increase in theirexpenditure has affected the year end surplus. For 2017-18, the expenditure wasshown as ₹14.8 crores which increasedsignificantly in 2018-19 to ₹ 48.9 crores. Meanwhile, CPI(M)reported a slight fall in both the income received and the expenditure for2018-19. The major reason for the increase in income in 2018-19 could be theLok Sabha general elections, before which political parties could have raisedfunds.
Trinamool’s increased income is due
to increased Donations
For the year 2018-19, Trinamool Congress received contributions/donationsworth ₹141.5 crores, which is a steep increasecompared to 2017-18, when it received donations and contributions worth ₹ 0.3 crore.
Out of these  total donations, ₹  44.3 crores were received fromdonations/contributions worth more than ₹ 20,000 and hence the details of the donors are available. Furthermore,97% of these donations above ₹20,000 are received from a singlesource – ‘Progressive Electoral Trust’, which contributed ₹ 42.9 crores.
On the other hand, nearly 69% of thecontributions received are less than ₹ 20,000 each &through electoral bonds, hence the donor details of these donations are notknown. In its annual audit report, Trinamool Congress reported to have receivedmore than ₹ 97 crores worth electoral bonds in2018-19.
Apart from contributions, the partyalso saw an increase in the amount received via ‘fees & subscriptions’, wherein it received ₹ 49.4 crores n 2018-19 compared to ₹ 3.9 crores in the previous year.
Trinamool Congress collected ₹ 1.02 crores via issuance of coupons in 2018-19 while this sourcegenerated only around ₹ 9 lakhs in 2017-18. The remainingwas from the other sources of income.
A major portion of the expenditure incurred in 2018-19 is under election expenditure for the Trinamool Congress. The party spent ₹ 9.6 crores in 2018-19 compared to ₹ 18 lakh the previous year. This increase in election expenditure can be attributed to the Lok Sabha general elections held in 2019, like in the case of increased income.
‘Fee & Subscriptions’ are the major source
of income for the BSP
The income of BSP for the year2018-19 is categorized under two broad sources – ‘Fee & Subscriptions’ and ‘OtherIncome’.
Conspicuously, no income is reportedfrom ‘Grants/Donations/Contributions’ which happen to be one of the key sourcesof income in 2017-18.
The total revenue generated from fees& subscriptions in 2017-18 was ₹ 8.7 croreswhich increased to ₹ 30.9 crores in 2018-19
The annual audit report shows an income of ₹ 38.8 crores under ‘other income’ for 2018-19, which was ₹ 32.2 crores the previous year. This income is from bank interest andinterest on income tax refund.
However, the income generatedthrough ‘Grant/Donations/Contributions’ is NIL for 2018-19 where it was ₹ 10.7 crores in 2017-18. Hence, the Contribution Report , which is a mandatory reportdetailing the contribution made to the party ( for amounts above ₹20,000) does not reflect any details for 2018-19.
As is the case with TrinamoolCongress, a major reason for the increase in expenditure for 2018-19 is electionexpenditure with ₹ 33.1 crores spent compared to ₹ 1.5 crores  spent in the previousyear.
Income of CPI(M) hasn’t increased in
2018-19
Unlike the incomes of the other tworecognized National parties, the income of CPI (M) has decreased in 2018-19compared to 2017-18.
There is no increase in the contributionsor other sources of income because of the election year, like in the case of  Trinamool Congress and BSP. Furthermore, theproportion of revenue received from various sources is evenly distributed. Eventhe expenditure incurred does not reflect the impact of a general electionyear, with the expenditure incurred on elections in 2018-19 being ₹ 9.3 crores, slightly more than ₹ 9.1 crores incurred the previous year. The major share of expenditurein both the years is towards employee cost, admin & general expenses.
The contributions report submitted by CPI(M) does not showany abnormal contribution like in the case of Trinamool Congress.
However, it has to be noted that theincome of CPI(M) albeit not very different but is higher than the other twonational parties ( with exception of Trinamool Congress during 2018-19).
Submission of the prescribed
financial reports only an initial step towards transparency in political
funding
The ECI needs to first ensure thatthe recognized political parties (national & state) comply with the cut-offdates for submission of the various reports. Till date, only 3 out of the 7recognized national parties have submitted the annual audit report within the cut-offdate in 2018-19. Not just in 2018-19, the remaining 4 parties also delayedsubmission of reports in 2017-18.
Even among the recognized stateparties, only 20 among 53 plus parties have so far submitted their annual audit reports.
Political parties are eligible fortax exemptions upon the submission of the audit reports. Making themin-eligible for tax exemptions and levying fines for delay in submission ofthese reports can help improve the situation.
Even in cases where these reportsare submitted on time,  there is verylittle transparency on who the donors are. For example, in the case ofTrinamool Congress, close to 70% is from unknown sources and in the case ofBSP, there is not a single contribution above ₹ 20,000 and hence the donor details are not known.
The Law Commission of India in its ‘Report on Electoral Reforms-2015’ has made recommendations in respectto various aspects like Electoral trusts, disclosure of contributions of lessthan ₹ 20,000 etc. among others. Factlyhas earlier written an article on some of the proposed reforms.
In further stories, we would lookinto the annual audit reports submitted by the recognized state parties andalso explore the nature of contributions received by pollical parties includingthrough electoral bonds.