The financing of the world's most extensive electoral process remains a perplexing issue, as the involvement of businesses in supporting both disclosed and undisclosed expenditures during elections has been a matter of public knowledge for a considerable period.
[13] Section 29C of the Representation of the People Act, 1951 stipulates specific requirements for public disclosures on the donations received and expenditure made by political parties.
[14] During the financial years of 2014-15 and 2015–16, a collective of 26 regional political parties have failed to submit their donations report to the Election Commission of India (ECI).
[3] EC investigations have revealed that numerous such political parties are engaged in either evading substantial amounts of income tax or participating in money-laundering activities.
For instance, Jan Raajya Party of Uttar Pradesh is currently under investigation for suspected efforts to legitimize illicit funds following the demonetization in November 2016.
[3] In September 2022, a kite selling shop — the premises of Sardar Vallabhbhai Patel Party at Dattapada Road in Borivali, Mumbai was subject to a raid conducted by officials of Income Tax Department.
[3] Jan Raajya Party in Kanpur was investigated and feud between its co-founders Ravi Shankar Yadav and Omendra Bharat was revealed.
In November 2016, Arunesh Kumar Singh, the incumbent party president at the time, lodged a First Information Report (FIR) against Yadav, accusing him of engaging in financial misdeeds.
It remains unclear how the smaller party utilized the significant contribution from the DMK, as neither its audit report nor its election expenditure statement for the 2019 Lok Sabha polls were available on the website of the chief electoral officer, Tamil Nadu.
Remarkably, within a year of its establishment in November 2019, the party received substantial sum of over ₹2.67 crore from a diverse pool of 159 donors located throughout the nation.
It is worth noting that this period coincided with the onset of the COVID-19 pandemic in India, which undoubtedly presented unique challenges and circumstances.
Records shows this Party allocated an amount exceeding ₹1.42 crore towards activities categorized as 'election/general propaganda' and additionally, an expenditure of over ₹97 lakh was dedicated to 'administrative costs'.
[3] The audit report of the Jan Sangharsh Virat Party indicates that the address in Ahmedabad, whereas the registered office listed on the Election Commission website is situated in Sant Ravidas Ward, Sagar district of Madhya Pradesh.
[3] Election Commission has initiated a drive in May 2022 to cleanse the political landscape as it was observed that a significant proportion of the RUPPs had exhibited minimal electoral engagement.
[3] The commencement of the clean-up initiative involved the authentication of information furnished by the parties, including their address and particulars of office-bearers, while also considering their electoral engagement or absence thereof.
In May 2022, the Election Commission removed 87 non-existent RUPPs from its registry of registered parties, whose addresses were discovered to be fraudulent through either physical verification conducted by the respective chief electoral officers or through reports of undelivered letters or notices from the postal authority.
[3] In June 2022, a total of 111 registered political parties were removed from the list due to their failure to comply with the legal obligation of informing the Election Commission about their authentic communication address.
Furthermore, 253 political parties were declared inactive and subsequently removed from the list as they had not participated in any elections, either at the assembly or Lok Sabha level, during the years 2014 and 2019.
Nevertheless, this action primarily signifies that these parties are deprived of obtaining a symbol, thereby rendering them ineligible to participate in elections, a circumstance that a considerable number of them do not engage in regardless.
Despite this limitation, these parties persist in their existence and retain the ability to receive funds and enjoy the benefits of income tax exemption.
[3] In 2018, the Modi-government with the support of opposition Congress changed the legal provisions which enforced prohibition of foreign funding to Indian political parties.
This newfound privilege enables them to accept political contributions from foreign-residing Indians, as well as foreign business entities with their subsidiaries established within India.