Politics is the most talked about topic in India. In recent time, people are more curious to know about the financial status of the parties. In the Indian economy, political parties play a key role. At present, in India near about 3000 political parties are operating. Out of which 8 are considered as National Party, 52 consider as State Parties and the rest are local unregistered parties. And as we are talking about it, somewhere in India, people are planning to create their own parties.  Now the biggest question arises that why people are creating political parties? Is it only for helping the people are sometimes else! And how much monetary support they have behind their back? Most importantly, is it fruitful to be a part of a political party in terms of financial stability? From where they collect the funds?

Source of Income

From the analysis of their tax statement submitted to the election commission of India, it is shown that 50 percent of their income comes from unknown sources. 7 national political parties received Rs 3,749 crore in 2018-’19 financial year. In the present situation, if someone donates the sum of less than Rs 20,000  to a political party, needs not to reveal his name. Even donations can be paid via electoral bond without revealing any data of donors. Now let talk about the showed source of income.

Fees and Subscription

The parties are getting a large number of money from their membership and renewal of membership. The parties have a fixed amount as their membership cost. So each time the people join the party has to pay the sum. As the parties have huge members register under them, they are getting a lot of amount from them. Moreover, the parties have their own News Paper and magazine. They get money by selling the magazines also. As we know, Bharatiya Janata Party is the largest Indian political party, they raised Rs. 189 lacs in the financial year 2018-’19 from subscription and membership fees. At the same time, the Indian National Congress raised Rs 2757.36 lacs from subscription as said by the Association of Democratic Reforms. Figure 1 showed the list of the National parties and their income from the source stated as a subscription for the financial year 2018-’19.

Corporate Donation:

Corporate funding in elections is started way back. Even before the freedom of Indians, Birla is one of the key donors of the Indian National Congress (INA). So after the freedom when the Congress Government started, they get some leverage in Indian economy policy. Way back then, the leading parties get the support or the donation from the large conglomerates such as Tata Sons, Birla.  And this process continues till 1969 when the Congress Government lead by Mrs. Indira Gandhi bans all corporate donations. At that time parties tried to use various methods to earn revenue, out of which some are legal some are not. Later in 1985, Rajiv Gandhi lifted the ban after a heavy protest.

In 2013, the amendment in Company law allows the corporate to donate 7.5 percent of their net average income in the last 3 years. Which is previously 5 percent. That increases the limits of the corporate donation amount. Later on the year 2018, the government also allows Foreign Contribution to political parties.

Donation Trends:

How the corporates donate? How are the trends for getting a donation for the leading political parties in India? As we get the data from the Association Of Democratic Reforms (ADR), it shows that the largest amount of donations are coming from these corporates. ADR data also showed how rapidly increased the donation amount year by year. In 2004-’05 the amount is nearly 26 crore which later in a decade and so climbs up to Rs 422 crore.  In the financial year 2018-’19 the largest Indian political party Bharatiya Janata Party (BJP) got a donation of Rs 2,35,402 lacs, which is near about 81 percent of their whole income. From the other leading nation parties ( As shown in figure 2) Indian National Congress is holding the 2nd spot with the donation of Rs 55,155 lacs. Now there is a thing which can easily be observed that the corporates are more interested to donate the ruling party. Under the iconic leadership of Narendra Modi BJP gets around 4.5 times of what National Congress get.

Figure 2: Total donation to the leading parties in the financial year 2018-’19

Political Party	BJP	INC	CPI(M)	AITMC	BSP	CPI	NCP
Total Donation	235403	55156	3723	14154	–	408	4133

 

And it is very obvious that corporates are not going to donate without any interest. It is seen that they expect some advantages for their business. Especially for import-export and tax benefits. And after 2018 the foreign companies are also showing interest in the ruling party to get the chance to expand their business in India without any difficulties. Also, they get some additional support from the government when they come to this country, in terms of tax benefits and weavers scheme.

 Miscellaneous and Other Sources

As per the report of the Association of Democratic Reforms (ADR) shared by political parties shows that a big sum of the amount of the political parties are coming from other sources. The name of the sources is not revealed by the parties. Maybe the donation comes as an electoral bond. Now if we look at the figures, it shows that in the financial year 2018-’19 total of Rs 8,305.93 crore collected by all the parties. Out of that Bahujan Samaj Party (BSP) gets the highest sum of Rs. 3886.65 lacs, which is more than half of their total income. Communist Party of India (Marxist) secure the second spot with Rs. 2393.99 of donation. Surprisingly Bharatiya Janata Party received only Rs. 24.53 lacs from other sources, which is less than 1 percent of their total income.

Growth of Political Parties:

The report is also showed how the income of these parties are growing by leaps and bounds. While looking at the annual report year by year, some parties grow around 100 times in the last 10 years. This growth is not independent of whether the party is in a ruling position or not.

Figure 3: 10 years growth

Political Party	Income on 2008-‘09	Income on 2018-‘19	Growth Percentage
BJP	22,022	2,41,008	994
INC	49,687	91,803	85
CPI(M)	6,283	10,096	60
AITMC	101	19265	18974
BSP	18202	6979	-62
NCP	4001	5071	27
CPI	116	715	516

In figure 3, it is clearly visible that all the parties are increasing their income. But it is also noticed that the party who is in the ruling position for that time frame are growing more than others.

Note: Here we discussed only the National Parties of India. There are a lot more parties in India. They have also submitted their reports to The Election Commission. For details please refer to ARD reports.