Audit reports of 16 Regional Parties for FY 2016-17 not yet in public domain

This report analyses the total income and expenditure incurred, all over India, by the Regional Parties during FY 2016-17, as declared by the parties in their IT Returns submitted to the ECI

Political parties have multiple sources of funding and thus accountability and transparency should be an important aspect of their functioning. It is essential to have comprehensive and transparent accounting methods and systems, which should reveal the true financial position of the parties. The Election Commission of India (ECI), in its letter dated 19th November,’14 addressed to the Presidents/General Secretaries of all political parties, stated that it was mandatory for the parties to submit details of their audited reports to the Commission.

This report analyses the total income and expenditure incurred, all over India, by the Regional Parties during FY 2016-17, as declared by the parties in their IT Returns submitted to the ECI.

Status of submission of audited reports by the Regional Parties, FY 2016-17

· The due date for submission of annual audited accounts for the parties was 31st Oct, 2017.

· Out of 48 regional parties considered, 12 had submitted their audit reports on time, while 20 have delayed their submission by several days, ranging from 13 days to 5 months or 147 days.

· Audit reports of 16 regional parties for FY 2016-17 are unavailable on the website of the ECI, till the date of preparation of this report. This includes some major Regional Political Parties like AAP, JKNC, RJD, etc.

· Hence, this report analyses the income and expenditure of 32 Regional Political Parties, who have submitted their audit report to the ECI, for FY 2016-17.

Income declared by Regional Parties, FY 2016-17

· The total income of all 32 Regional Parties for the FY 2016-17, was Rs 321.03 cr.

· SP reported having the highest income of Rs 82.76 cr, which forms 25.78% of the total income of all 32 regional parties, closely followed by TDP with an income of Rs 72.92 cr or 22.71% and AIADMK whose income was Rs 48.88 cr or 15.23% of the total income of 32 regional parties.

· The total income of top 3 parties amounted to Rs 204.56 cr, which comprised 63.72% of the total income of 32 Regional Parties, collectively.

Comparison of Income of Regional Parties, FY 2015-16 and FY 2016-17

· Out of 32 regional parties, 43.75% or 14 parties have shown a decline in their income from 2015-16 to 2016-17, while 40.63% or 13 parties have shown an increase in their income. 15.63% or 5 regional parties have not submitted their Income Tax Return to the ECI in FY 2015-16.

· Regional parties who have not submitted their audit report for FY 2015-16 are INLD, MGP, JKPDP, AIUDF, and KC-M.

· Total Income of 27 Regional Parties increased from Rs 291.14 cr in FY 2015-16, to Rs 316.05 cr in FY 2016-17, an increase of 8.56% or Rs 24.91 cr.

Unspent Income of Regional Parties, FY 2016-17

· There are 17 regional parties who declared a part of their income as remaining unspent for the year 2016-17 while 15 parties spent more than the income collected during the year.

· AIMIM and JDS have more than 87% of their total income remaining unspent while TDP has 67% of its income remaining unspent for FY 2016-17.

· DMK has declared spending Rs 81.88 cr more than its income while SP and AIADMK declared spending Rs 64.34 cr and Rs 37.89 cr more than their total income, respectively.

Expenditure incurred by Regional Parties, FY 2016-17

· Top 3 regional parties that have incurred highest expenditure are SP which had spent Rs 147.1 cr, followed by AIADMK which spent Rs 86.77 cr and DMK with Rs 85.66 cr.

· The total expenditure by SP is 33.78% of the total expenditure as reported by 32 regional parties.

· Expenditure incurred by the top 3 political parties is 73.38% of the total expenditure as reported by 32 regional parties.

Observations of ADR

· Out of 48 regional parties considered, the audit reports of 2 regional parties (J&K NPP and UDP) are not available for 13 years (between FY 2004-05 and 2016-17) with the ECI. Complete reports are available only for 32 Regional Parties, for FY 2016-17.

· KJP, which gained recognition post Lok Sabha elections 2014, has not submitted its audit report since its inception.

· 4 regional parties (AJSU, HSPDP, JKNC and KCM) have defaulted 6 or more times in submitting their audit reports to the ECI, between FY 2004-05 and 2016-17.

· The income tax returns/audit reports of Regional parties were obtained from the Election Commission of India. The income tax returns of 20 out of the 48 regional parties (42%) analysed were unavailable at least once between FY 2015-16 and FY 2016-17.

· Audit reports of INLD, MGP, JKPDP, AIUDF, and KC-M are unavailable for FY 2015-16 for comparison.

· The income of 27 Regional Parties (whose details are available for both FY 2015-16 and 2016-17) for the FY 2015-16 was Rs 291.14 cr, this increased by 8.56% to Rs 316.05 cr in FY 2016-17.

· The expenses of these 27 Regional Parties for the FY 2015-16 was Rs 132.31 cr, this increased by 224% or Rs 296.64 cr to Rs 428.95 cr in FY 2016-17.

· The most common and popular source of income for regional parties across FY 2015-16 and 2016-17 are Grant/Donations/contributions/Gross Receipts and Interest Income (Bank, FD, TDR with Bank).

· The most common and popular item of expenditure for regional parties across FY 2015-16 and 2016-17 are election expenses and administrative and general expenses.

Recommendations of ADR

· The Supreme Court gave a judgment on September 13, 2013 declaring that no part of a candidate’s affidavit should be left blank. Along the same lines, we recommend that the Election Commission India impose rules that no part of the Form 24A submitted by political parties providing details of donations above Rs 20,000 should be left blank.

· Full details of all donors should be made available for public scrutiny under the RTI. Some countries where this is done include Bhutan, Nepal, Germany, France, Italy, Brazil, Bulgaria, the US and Japan. In none of these countries is it possible for 75% of the source of funds to be unknown.

· Any party which does not submit its IT returns or donation statement to the ECI on or before the due date, their income should not be tax-exempted and defaulting parties should be derecognized.

· Accounts of Regional parties not following the ICAI guidelines for auditing of reports should be scrutinized by the IT department.

· The Regional political parties must provide all information on their finances under the Right to Information Act. This will only strengthen political parties, elections and democracy.

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