As per Association for Democratic Reforms (ADR)'s report, 77% of total income of two major parties in India is from unknown sources. In this context what is section 29 C of Representation of People's act? How is this legal provision misused to fund political parties anonymously? Suggest measures to ensure transparency in funding ? Also, discuss the possibilities of state funding of elections.|

ADR, which works for electoral reforms reported that in the fiscal year 2016,  77% of total income of two major political parties came from unknown sources. Such “income from unknown sources” refers to that income where for donations are less than 20000 and the sources are not declared.
As per section 29C of the Representation of People  Act, 1951,  political parties need to declare their donations, only in case of donations above 20,000. However, this provision is grossly misused by political parties. Since contribution statements from political parties declare donors above 20,000, only limited amount of money come through this way. Rest come from unknown sources and it is often argued that political parties misuse 29C to channelize black money into the elections.
Both EC & Law commission has suggested amendment into 29C. In a report on electoral reforms Law Commission recommended that up to 20 crore or 20% of the party’s entire collection, whichever is lower, can be anonymous.
State funding can tackle the menace of corruption in political funding. In fact, Indrajit Gupta Committee, Law commission, and 2nd ARC had recommended partial state funding on the condition of internal transparency in political parties.Therefore the need of the hour is that political parties should accept RTI’s jurisdiction for transparency. Also, political parties should voluntarily disclose financial statements on their digital platforms, this will instill the public faith in political parties.

Topics: GS-II: Salient Features of the Representation of Peoples Act