NEW DELHI: In an order that will bring transparency to political funding, the information commissioner on Tuesday upheld citizens’ right to seek details of income-tax returns submitted by political parties. Barring the Communist parties, all others were against allowing a peep into their declared income and sources.
The direction came on an RTI application of a Delhi-based NGO seeking details of tax returns of political parties from the I-T department. A refusal by the department of taxes to pass on the details forced the applicant to move a petition before the apex transparency panel.
Information commissioner A N Tiwari in his 18-page order referred to the contentions of 20 political parties including the Congress and the BJP. Even as majority of political parties objected to disclosing their tax returns, sources in the commission said that a few of them expressed intention to open up tax details for public scrutiny. Even as it directed a disclosure of the I-T returns of political parties, the commission is known to have categorically exempted revealing of their Permanent Account Numbers (PAN).
Activist group ADR has filed a caveat, whereby it would be granted a hearing if the order is stayed
New Delhi: Political parties could seek legal recourse to try and prevent the implementation of the Central Information Commission (CIC) order that requires them to make public their income-tax returns under the Right to Information Act which will, for the first time, bring their sources of funding under public scrutiny.
In anticipation of this, activist group the Association of Democratic Reforms, or ADR, which had filed the petition that resulted in CIC’s order, has filed a caveat, in both the Delhi high court and the Supreme Court, whereby it would be granted a hearing in case the order is stayed.
The commission, in its order of 29 April, which was reported in The Economic Times of 30 April, had directed that the details on tax returns by the political parties be furnished to ADR within six weeks.
A CIC officer, who did not wish to be identified said that political parties could move the courts to get a stay on the order, just as a few stock exchanges such as the National Stock Exchange and a few public utilities have done.
“The laws of the land do not make it mandatory for political parties to disclose sources of their funding and even less so the manner of expending those funds,” CIC noted in its ruling. “In the absence of such laws, the only way a citizen can gain access to the details of funding of political parties is through I-T (income tax) returns filed annually with I-T authorities.”
The order also listed objections raised to this move by most political parties, including the Congress, the dominant constituent of the ruling United Progressive Alliance government, and its main rival the Bharatiya Janata Party (BJP), mainly on the grounds of infringement of privacy.
“An I-T return is not a confidential document. It is a statutory and public document,” said senior advocate P.P. Rao.
Veerappa Moily, chairman of the Congress party’s media cell, however, said: “I don’t think the Congress party has an issue with furnishing details, since we are already filing returns.”
Ravi Shankar Prasad of the BJP, a Rajya Sabha member, said he had not studied the order. “There is already a mechanism created by the Election Commission. So the parties are already subject to scrutiny.”
The Election Commission of India (EC), an independent electoral authority, requires that political parties submit their annual accounts to it.
The Communist Party of India (Marxist), or CPM, was among the few parties that did not raise an objection and maintained that funding of political parties must be made transparent. “Only the Left parties can claim that they do not receive any black (unaccounted) money. That is why we have no objections to making the details public. EC does seek some details, but not on a round-the-year basis. We need more transparency as there is no way to even measure the amount spent by some parties in elections,” said Mohammad Salim, deputy leader of the CPM in the Lok Sabha.
Supreme Court advocate Prashant Bhushan said CIC’s order was on firm legal ground. “As a public authority, a political party must make disclosures such as IT returns in public interest,” Bhushan said, arguing that though a political party is not a company under the Companies Act, 1956, it is a public authority.
Referring to an earlier judgement of the Supreme Court that asked candidates to disclose details of their assests and liabilities before elections, Rao said that it is every voter’s right. “Funds of political parties come from the public and the public has a right to know even details of the I-T returns of political parties.”
According to Jagdish Choker, one of the founding members of ADR, financial transparency of political parties is of utmost importance since they are public entities.
However, no authoritative estimates of their expenditure, particularly during elections, is available. “Section 77(1) of the Representation of the People Act states that any expenditure by a candidate’s political party, friends and relatives will not be considered as a part of his election expenditure. Hence, the expenditure most candidates submit to EC is just a fraction of the real amount. What we plan to do with the current disclosure order is to get a statement of what political parties have received and spent in one year. We shall then compare it with the income and expenditure of each candidate and check if the election expenditure exceeds the income of the candidate, the political party or both put together,” he says.
Ever since it came into effect, the Right to Information (RTI) Act has forced the Indian state, notorious for its stonewalling ways, to open up.
Now political parties are facing the heat. In a recent order, the Central Information Commission (CIC), which oversees RTI, has declared all political parties should disclose their income tax returns.
The reason given by the CIC is that information on the funding of parties is a "democratic imperative and is in public interest". We agree entirely.
In the US, for instance, the Federal Election Commission, an independent regulatory body, keeps records of campaign finance and enforces laws on the limits and prohibitions on contributions.
Anyone can log on to their website and access the latest campaign finance information on presidential candidates or on those running for other offices.
One can also find out the names of individual or corporate fund givers, how much they have donated and to whom.
Though this is by no means foolproof — slush funds do find their way to election candidates — it is a remarkably transparent system.
The Indian electoral system, by contrast, is opaque and the funding of political parties and candidates has largely been unregulated.
This has meant that a huge amount of black money has made its way to parties and their leaders. As a result, potentially good candidates, who don't have financial muscle, have been effectively kept out of the electoral arena.
It's only a few years ago that things changed for the better with candidates contesting Parliament and state assembly elections having to reveal their financial worth when filing their nominations.
This happened after a PIL was filed in the courts seeking disclosure of an election candidate's background.
Candidates also have to maintain an account of campaign expenses, stick to a maximum limit and file a return of expenses. However, we still have little idea of the amount and sources of contributions to parties and their leaders.
We are saddled with a situation where leaders such as Mayawati have amassed vast fortunes, claiming that they have been showered with "gifts" from their supporters.
And that has been accepted by the income tax authorities. Disclosure of tax returns could be a first step towards making political parties a little more transparent.
Unsurprisingly, parties have come out against efforts to reveal their IT returns. They must agree to reveal their sources of funds for public scrutiny. For, murkiness in campaign finance is at the root of much corruption.
The Central Information Commission wants party transactions to be more transparent and has enabled people to seek details of tax returns filed by political parties under the Right to Information Act.
Elections mean big business, at times the money poured into campaigns translates into the number of votes.
While, the Left parties say that they have nothing to hide many parties may have trouble explaining who their main contributors are.
Senior CPI leader AB Bardhan received nearly Rs 3 lakh as contributions to party fund in 2003-04 but there are no details of where the money came from.
A B Bardhan, Party General Secrtetary said, ''These were small amounts and hence it was not possible to keep separate details. For amounts more than Rs 10,000 we keep records.''
The Congress said that there is no need for extra scrutiny. But in 2003-04, the party received Rs 25 lakh from a charitable trust in Haridwar, donations that charities cannot make as per law.
Now the party is blaming the income-tax department for it. Stayavrat Chaturvedi, spokesperson said, ''Income tax department does go into all the details of the legitimacy of the sources of income. Hence there is no need for scrutiny.''
Donations like this from the Samajdwadi Party District president of Mainpuri, who contributed Rs 31 lakh to the party fund in 2003-2004 will now come under public scrutiny.
The funds are not restricted to India alone, London based Vedanta Resources that funds a trust in India gave Rs 5 crore to the BJP in 2003-04.
But political parties in India cannot accept foreign funds. Prakash Javdaker, spokesperson explained, ''We don't receive foreign funds per se and a proper account is maintained and receipts are made against donations.''
But such denials may not be enough as the public can now ask pointed questions.
No law, so parties don't reveal funding details
Reported by Kanwar Sandhu and Manish Tiwari, Hindustan Times New Delhi/Chandigarh, May 03, 2008
Most political parties — specially the smaller, regional ones with
national ambitions — want to keep their coffers away from public
scrutiny. They have persistently refused to declare their source of
The honorable exceptions are the biggies — the Congress, BJP, CPI and
the CPM — and 11 lesser-known outfits. They have been giving the
Election Commission details of donations and contributions received by
But here are the rank no-shows: Agriculture Minister Sharad Pawar's
NCP, Railways Minister Lalu Yadav's RJD, Uttar Pradesh Chief Minister
Mayawati's BSP, and Parkash Singh Badal's Shiromani Akali Dal.
"It's true that most political parties don't submit their annual
report on donations," S.Y. Quraishi, one of the three election
commissioners of India, told the Hindustan Times. "But we can't take
action against political parties not furnishing details of their
funding as there is no penal provision in the law."
The Central Information Commission ruled on Wednesday that party
accounts filed with the Income Tax department can be accessed by the
public under Right to Information provisions.
They are already required to declare their source of funding —
contributions and donations — by a provision of the Representation of
People's Act 1951, the law governing elections.
This law was amended in 2003 to allow political parties — under
Section 29(B) of the Act — to accept donations from private
individuals and companies (barring those owned by the government).
Section 29(C) of the same Act made it compulsory for parties to give
the Election Commission every year a list of contributions and
donations — upwards of Rs 20,000 — received from individuals and
But there is nothing in the law to force the parties to fall in line —
no punishment, no penalty or fines. And it's the lack of a coercive
mechanism, according to Quraishi, that enables parties to brazen it
Of the 50 recognised and 900 unrecognised but registered political
parties in the country, only 15 political parties filed their annual
report to the ECI in 2005-06 and — one less — 14 in 2006-07.
But, let it be said, not all smaller parties have been similarly
recalcitrant. Former Union minister Sharad Yadav's Janata Dal
(United), Chandrababu Naidu's TDP, the Thackerays' Shiv Sena and
Jayalalithaa's AIADMK have been filing disclosure statements with the
election commission. The rest have just not bothered. The commission
can't punish them, so why bother?
Also, officials say there was no provision requiring or enabling the
commission to look into the veracity of the disclosures made by the
The Congress's disclosure for 2005-06 was Rs 5.96 crore and Rs 3.61
crore by the BJP. Is that all they received in a year?
It's the law of politics. In office, power brings wealth. Out of office, wealth brings power. Yet political parties will go to any limits to make sure their wealth remains hidden.
And that's why the Information Commission's ruling asking political parties to make sure their Income Tax returns were available for public scrutiny is an important step.
Parties fought this tooth and nail. The BJP called the information confidential and others called it an infringement of privacy. Some even argued that political parties are not public organisations to come under the purview of the Right to Information (RTI).
The bare truth is no one knows how much a political party earns, or what it spends, what part of the money can be traced to any source.
“Once you get into office, doesn’t matter which party it is there are multiple returns—ten times, hundred times,” says Jai Prakash Narayan, president of the Lok Satta Party.
Somashekhara Reddy made his fortune in the mines of Bellary, Karnataka. When the demand for steel shot up in 2003, mine-owners in Bellary struck gold. Little wonder then that the candidates in Bellary this time are all mine barons.
“For taking policy decisions and development, politics is 100 per cent needed. We entered politics for that and to serve people,” says Reddy.
And the ones who are politicians like CK Jaffer Sharief are making sure they have mines to fall back on. It's the coming of age of the new politician: He could be a contractor, a real estate agent or even a mine owner.
The massive amount of money in politics doesn’t shock Yogendra Yadav, professor at the Centre for the Study of Developing Societies. "Lets not be hypocrites and suddenly be shocked after discovering it. We have closed all the avenues or we have not provided for any legitimate avenue for channeling white money into politics. The problem I insist is not that there is too much money in politics. The problem is that there is too less white money in politics,” he says.
Gone are the days when the cadre raised 70 percent of the money and when small contributions created the financial backbone of a party.
So whether it was the Jana Sangh's Nanaji Deshmukh and his friendships with industrialists like Nusli Wadia or the Congress's S K Patil and Atulya Ghosh, men celebrated for their fund-raising skills, collecting money was a tame affair and did not dominate party politics
“Mahatma Gandhi's relationship with Birla is well known. Mahatma Gandhi used to live in Birla house in Delhi but nobody, not even Mahtma's Gandhi's worst enemy, could accuse him of playing to the tunes of Birla. He never submitted to Birla's wishes and Birla also never dominated Gandhi's politics,” says former BJP member Madhu Deolekar.
But then politics ceased to be about Mahatmas long ago. It's about the maha-moneyed; those who can make the coffers jangle with ready cash. There is justification for it. How do sustain the aam political worker? Is the answer to ending political corruption more money? Or is more money in politics the problem itself?
(Only a part of the long article is here, the full article may be read at the link given above)
Small feats big changes How small acts of courage lead to big changes. Sunday Herald profiles a few courageous among us.
This one is for all those cynics who think ‘nothing can be done.’ Prof Trilochan Sastry not only thought otherwise, but went on to take up the task of cleaning up the political system. As a result, today, we are aware how much a political candidate is worth; whether he/she has any criminal records against them before we vote them to power. And very soon you can even find out how they made their crores, by actually looking at their IT returns.
Incredible, considering all this was unthinkable a few years ago. And those responsible for this electoral reform were people like us led by an unassuming professor at IIM Bangalore — Prof Sastry. “Most of the big leaders from Rajiv Gandhi to Narasimha Rao, to Laloo Prasad Yadav to Jayalalitha to practically everyone was involved in some scam or the other. I would get so angry, and would think was this why I did my PhD from MIT and came back to India,” recalls Prof Sastry of a journey that started with that one act of courage. To act.
Incidentally, Prof Sastry has been selected as one among 17 Indians listed in the World Economics Forum’s Global Young Leaders for 2008.
“I was working in IIM Ahmedabad and I mooted this idea of filing a PIL for electoral reforms. The reaction was lukewarm.” Nonetheless, Prof Sastry persisted. Finally in 1999, when general elections were announced following the fall of the Vajpayee government, Prof Sastry with about 10 like-minded IIM professors formed the Association for Democratic Reforms (ADR) and filed a PIL in the Delhi High Court seeking disclosure of assets and criminal records of contesting candidates. Despite a favourable judgement, the then BJP government and all parties across ideologies opposed it. In May 2002, the Supreme Court upheld the Delhi HC’s judgement. The then BJP government called an all-party meeting to discuss this landmark judgement. “I remember the anguish I felt at the whole approach by politicians to deny the people their right to an informed choice,” says Prof Sastry. Armed with the all-party consensus, the Union government decided to amend the Representation of the People Act to beat the apex court fiat. An Ordinance was mooted in August 2002.
After many appeals and special leave petitions, the fight reached the doorstep of the then President Abdul Kalam. “About 40 of us — people from all walks of life — met the President and requested him not the sign the Ordinance.” President Kalam returned it unsigned. “We also challenged the all-party order saying how it was an infringement of our Fundamental Right.” Finally in March 2003, SC struck down the Ordinance as unconstitutional.
The fight did not end there. To ensure that the order was implemented, Prof Sastry and his team established the Citizens’ Election Watch. Today there are 14,000 NGOs across the country partnering Prof Sastry and others in the battle for electoral reforms. “Public awareness is high. In Bihar today, no minister in the Nitish Kumar government has a criminal record against him. In UP, there were 206 MLAs with criminal record in the Mulayam Singh government. The figure has come down to 160 in the Mayawati government,” he remarks.
During the UP elections, Rahul Gandhi had called the ADR’s Varanasi office asking for details of the contesting Congress candidates. “Recently Advani called asking for the records of BJP candidates for the on-going Karnataka Assembly elections,” Prof Sastry reveals.
Last year, ADR had filed an application under the RTI Act with the income-tax department. They wanted audited accounts of political parties filed before taxmen to be given to them. This year the SC announced a judgement in their favour. “As they say follow the money...we want to track the money as all corruption arises out of the need to generate cash for elections,” he says.
For Prof Sastry and his team of ‘warriors’ the battle has just begun. “For us this is like the second war of independence,” he says. Considering fighting the internal enemy is much more difficult, Prof Sastry is prepared for a long haul.