Unknown sources of income spiked after electoral bond entry

Source: The post is based on the article “Unknown sources of income spiked after electoral bond entry” published in The Hindu on 17th November 2022

What is the News?

The data analyzed from the Association of Democratic Reforms(ADR) annual reports reveal that the share of “unknown sources of income” of political parties has increased following the introduction of electoral bonds.

What are the key findings from the ADR report regarding electoral bonds?

Source of Income of Political Parties: The ADR classifies the income of political parties into two major types — known and unknown: 

The known sources of income are further classified into two types — voluntary donations made above ₹20,000 whose donor details are submitted to the ECI and “other sources of known income” such as the sale of movable and immovable assets etc.

The unknown sources include donations below ₹20,000 via electoral bonds, the sale of coupons for which the details of donors are not available to the public. 

Note: An amendment to the Representation of the People Act by the Finance Act, 2017, created a provision to exempt parties from declaring funds collected using electoral bonds.

Share of an unknown source of income: The share of unknown sources of income for national parties has increased from 66% between 2015-17 to 71% between 2019-21.

– In the same period, the electoral bonds formed 57% and 64% of the national and regional parties’ total incomes.

– So, based on this data, One can conclude that the unknown share of income went up and electoral bonds were a major reason behind the rise.

Split of various unknown sources of income: After the introduction of the electoral bond scheme, the burden of unknown income has merely shifted from other routes such as donations below ₹20,000 and coupon sales to electoral bonds.

Major share of electoral bonds: BJP has cornered a lion’s share of the electoral bond income. The party received 67% of funds through electoral bonds by all parties between 2018-21. If only national parties are considered, the share goes up to 81%.

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