Mushrooming of political parties with no accountability

Central Information Commission in a path-breaking judgment classified the political parties under the category of public authority. The concerned parties were directed to nominate Information Officer as provided under the RTI Act. The parties are under total non-compliance and the Central Information Commission is unable to enforce the judgment. The plight of Election Commission of India (ECI) is no better, as would become clear from the discussion below.

In India, there is no law or comprehensive code that institutionalizes the structure, funding and functioning of political parties. There was no mention of political parties in the Constitution of India when adopted. The political party is mentioned for the first time under 62nd Amendment of the Constitution in the year 1985. ECI is mandated under section 29A of the Representation of the People Act, 1951 (RPA) with the power to register political parties. As per notification of ECI in 2012, there were 1334 registered parties, out of which six were recognized national parties and 53 recognized State parties. Recognition of national and State registered parties after the initial process of registration is made in the Election Symbols (Reservation and Allotment) Order, 1968 based on the percentage of votes polled.

There has been a spurt in the number of registered political parties since 1989. It rose from 251 in 1989 to 1334 in 2012. The proliferation is largely attributed to privileges granted to political parties. All contributions received from individuals and companies in excess of rupees twenty thousand by the political parties qualify for tax relief. There is a specific performance obligation to qualify for this entitlement. Apart from de3claration of the contributions received, it is incumbent on the political parties to submit their audited financial statements to ECI within six months after the end of each financial year. As per the EC:I, only 174 registered political parties submitted an annual audited financial statement for the year 2010-11, approximately 90% of the registered political parties flouted the mandatory guidelines. The submission of annual contribution report of donations in excess of rupees twenty thousand was dismal, mere 8% of all registered political parties had complied with ECI mandated requirement. ECI did not make any specific recommendation for action to the tax collecting agencies or the foreign donation division of the Home Ministry. Providing mere routine information was of no significance. A report published in April 2014 states that ECI has written to the Central Board of Direct Taxes now regarding the failure of political parties to submit their mandatory expenditure contribution reports. ECI thus has now moved into action for getting the cancellation of tax benefits by Central Board of Direct Taxes. The process of issuing notice and determination of tax liability by tax authorities could take years in terms of conclusion. Another important reason for plethora of political parties is the flaunting of authority by displaying flags and name of the office bearers thus influencing the local administration. It is a licence for interfering in the district administration.

The larger question is that ECI seems to be helpless in ensuring the compliance of mandatory requirements provided under the guidelines as issued by ECI under section 29A of the RPA, 1951. The reason is that ECI has no powers to deregister political parties confirmed through various judicial pronouncements. Only under certain set of circumstances, ECI may take those political parties off the list of registered parties which have not contested elections continuously for six years. In 14th Lok Sabha elections, only 230 political parties contested elections. In 15th Lok Sabha, the number of political parties having contested elections was 363. Thus, there is a strong case to de-list political parties. Delisting was done only in the year 2000 when 208 political parties were de-listed. It is also noteworthy that the Commission has asked the defaulting political parties to submit annual audited account of party funds for the first time in July 2011.

ECI has been interacting with the Law Ministry for more than ten years to enforce accountability at the level of political parties. It has suggested that legal provisions be introduced to regulate the functioning of political parties and the Commission should be empowered with registration as well as deregistration of political parties. As is known, Hon’ble Supreme Court held in a judgment dated 10.5.2002 that the Election Commission has no power to deregister a political party on the ground of non-compliance of undertaking given at the time of registration. Further, the Commission has been of the view that since the failure of the political parties to submit the accounts does not attract any punishment, the Commission has been reluctant to issue show causer notice. The proposal of ECI in this regard is also pending in the Law Ministry. A very important suggestion by ECI is that the income tax exemption for donations should be given only for those political parties which contest elections and win seats in the Parliament/State Legislatures. This suggestion is also gathering dust along with several other recommendations on electoral reforms and political party reforms.

There is no transparency and absolute lack of contest in conducting the affairs of the political parties. It was in August 2013 that ECI initiated consultation with the political parties for formalizing guidelines on transparency and accountability in party funds. The process is still on. The outcome is a foregone conclusion. Unless the Parliament enacts a law for giving powers to ECI in terms of de-registration of political parties and also ensuring compliance of transparency and accountability in party funds, the fledgling performance of ECI will not improve. It is difficult to appreciate and understand the reasons for inaction at the Law Ministry level regarding this very urgent fundamental reform.

By The author is former Secretary to Government of India and
presently Director, Public Interest Foundation

(This article was published in Financial Chronicle on 11 May, 2014)