Context: According to an Association for Democratic Reforms (ADR) report 25 regional parties collected 55.50% of their total income from unknown sources in the 2019-20 fiscal.

• After the introduction of Electoral bond scheme 2018, there has been an increase in the income of political parties from unknown sources.

Association for Democratic Reforms (ADR)

• The Association for Democratic Reforms (ADR) is an Indian non-partisan, non-governmental organization which works in the area of electoral and political reforms.
• It strives to bring transparency and accountability in Indian politics and reduce the influence of money and muscle power in elections.

Electoral Bond Scheme

• It is an instrument of political funding aimed at increasing transparency in the process.
• It is a debt instrument.

Under the scheme

• The donor can donate any amount of money, via cheque or digitally, without revealing his identity.
• There is no upper limit for a company to donate fund via electoral bond.
• The definition of foreign companies has been tweaked under the Foreign Contribution Regulation Act,2010 (FCRA), to enable them to donate via electoral bonds.
• The anonymity provided to the donor has increased the funding available to the political parties from unknown sources.

Suggestions to stop political funding from unknown sources

• Full details of all donors should be made available for public scrutiny under the Right To Information.
• Any party which does not submit its IT returns on or before the due date, their income should not be tax-exempted and defaulting parties should be derecognized.
• The principle of anonymity of the bond donor enshrined in the Electoral Bond Scheme, 2018 must be done away with as it infringes the citizen's fundamental ‘Right to Know’ by withholding crucial information regarding electoral funding
• All political parties which receive donations through Electoral Bonds should declare the total amount in their Contributions Reports the total amount.
• The procedures and reporting framework for the above must be standardized to ensure that a true picture of the financial position of the political parties is revealed to the general public.
• The ECI/Central Board for Direct Taxes/Comptroller and Auditor General or any other relevant institution should be entrusted with the responsibility to oversee that there is no discrepancy between the value of Electoral Bonds redeemed and the value of donations received through Electoral Bonds.
• All Political parties must provide all information on their finances under the Right to Information Act. This will only strengthen political parties, elections and democracy.