Political parties are sitting on a pile of cash they don’t want to talk about

This piece originally appeared on Livemint.com

Political parties demand financial probity and accountability from everyone else, but not so much from themselves. Funding patterns of political parties, both national and regional, show large chunks of donations whose source is not disclosed and in cash.

In spite of receiving tax waivers and subsidized land from the state, political parties don’t come under the Right to Information (RTI) Act. However, some information on their finances can be gleaned from their income-tax returns and disclosures to the Election Commission (EC).

The six national parties, led by the Bharatiya Janata Party (BJP), have registered an eight-fold increase in income in nine years, with almost all of it coming by way of donations by several names, shows data from the Association for Democratic Reforms.

 

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In 2014-15, 61% of their combined income of Rs 1,869 crore came from unknown sources, with every party showing a high presence of such donations.

 

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Political parties have to disclose the identity of only those donors who contribute above Rs20,000. But parties are showing nearly half their donations as being below Rs20,000, thus avoiding this disclosure.

 

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Of the six national parties, the Bahujan Samaj Party (BSP), a prime contender in next year’s Uttar Pradesh polls, relies the most on such unaccounted for cash contributions.

 

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Cash occupies a prime place in state elections as well. Parties have to disclose to EC the money raised and spent, and in what form (cash, cheque, draft or in kind), between the announcement of an election and its completion. For 71 state elections held in the last 12 years, partial disclosures made by political parties, both national and regional, show that 60% of the combined Rs3,368 crore collected was in cash.

 

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The share of cash in total collections, though falling, was still a high 42% in 2014. Meanwhile, spending in cash has all but disappeared.

 

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In another portent for the upcoming UP elections, the Samajwadi Party, another frontrunner, led all regional parties in cash collections for assembly elections in the last 12 years: Rs187 crore, of which 48% was in cash. That’s the currency whose rules have changed in one stroke. But will the rules of political funding ever change to allow tracing every rupee that political parties receive?

 

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News in Numbers, August 16, 2016: Oyo’s raises over Rs 400 crore, likely seat increase at IITs…

Rs 413 crore

What is it? The amount budget hotel aggregator Oyo (owned by Oravel Stays) has raised from Japan’s SoftBank Group Corp.

Why is it important? This comes at a time when investors including SoftBank have slowed down their funding plans amidst concerns about valuations of startups. However, a couple of other startups in the budget accommodation space have raised funding in recent times- Stayzilla raised about Rs 87 crore in May, FabHotels raised around Rs 54 crore in June and Treebo Hotels raised Rs 112 crore in July.

Tell me more: Recently, Oyo has started offering holiday packages (besides its core operations of budget accommodation) and introduced Oyo Flagship, where it leases properties, which is different from its previous strategy of booking hotels’ inventories for its customers in advance.

 

Rs 1,193 crore

What is it? The combined net loss of listed public sector banks in the April-June quarter of 2016-17 compared to net profit of Rs 9,449 crore in the same period a year ago.

Why is it important? It’s down down from Rs 23,493 crore in the fourth quarter of 2015-16. Reserve Bank of India had directed the banks to recognise and provide for bad loans and clean up their balance sheets by March 2017. The reducing losses might make it easier for them to raise fresh capital.

Tell me more: Gross non-performing assets (NPAs) or bad loans have almost doubled from Rs 288,743 crore in the first quarter of 2015-16 to Rs 576,158 crore in the same period in the current fiscal. High NPAs have led to slow credit growth.

 

66

What is it? India’s ranking on the Global Innovation Index 2016, up 15 positions from the previous year.

Why is it important? This is a reversal of trend. India was slipping over the last few years: it was 66 in 2013, 76 in 2014 and 81 in 2015. India’s 2016 ranking is mainly due to its high score on tertiary education and research and development, the quality of its universities and scientific publications, its market sophistication and ICT (Information and Communication Technology) services exports where it ranks the first in the world. Among middle-income economies, India is in the second position on innovation quality, after having overtaken Brazil.

Tell me more: China has become the first middle-income country to break into the top 25 of the index. The index is by Cornell University, INSEAD and the World Intellectual Property Organization, and is being published for the last nine years.

 

1 lakh

What is it? The total number of seats at Indian Institutes of Technology (IITs) by 2020, according to a proposal to be considered next week.

Why is it important? If approved, this would be the biggest seat increase at the IITs since the Other Backward Class quota was implemented at the institutions between 2008-09 and 2010-11. As a consequence IITs may have to admit day scholars (they have an hostellers-only policy now). Currently, there are around 72,000 students in all the 23 IITs.

Tell me more: The IIT Council, the highest decision-making body of the premier organisations, would consider adding seats to their BTech, MTech and research programmes, of which the former is likely see an addition of nearly 3,500 seats.

 

86

What is it? The number of private medical colleges that were denied permission for enrolment and teaching by the Medical Council of India (MCI) after physical inspections.

Why is it important? The decision has been overturned for 26 of these colleges by the Supreme Court-appointed Lodha Committee, which allows these to admit students for the new session that begins on September 30. This raises questions about the Lodha Committee’s decision against the backdrop of the poor quality of medical education in India, which is plagued by fraud and unprofessional teaching practices. For instance, one out of every six of India’s medical schools has been accused of cheating, according to a Reuters analysis.

Tell me more: The enrolment allowed for the 26 colleges is conditional: the Lodha Committee has asked the colleges to submit an undertaking to assure that they would comply with all the rules before the new session begins and that it can withdraw its permission if it finds any of the colleges to be non-compliant.

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News in numbers, Feb 5, 2016: Reliance-Birla deal, India’s estimated exports in FY16…

 

Rs 4,800 crore

What is it? Amount for which Reliance Infrastructure has agreed to sell its cement assets to Birla Corp.

Why is it important? This would help Reliance Infrastructure reduce some of its debts (total is Rs 16,000 crore). And for Birla Corp., this would mean its capacity would go up to 15 million tonnes from 9.3 tonnes and may be, quicker than it intends to.

Tell me more: Anil Ambani’s Reliance Group is counted among the top 10 indebted groups in India according to a Credit Suisse report, with total debt of Rs 1.14 trillion.

Rs 15,000 crore

What is it? Amount the Petroleum Ministry has sought from the Finance Ministry to shore up India’s second phase of strategic oil reserves.

Why is it important? Crude oil is stored in underground rock caverns that can be used in case external supply is cut off. India imports around 80% of its oil needs and this is expected to go up to 90% in the next 20 years, according to an India Tech-PwC report.

Tell me more: India is spending nearly Rs 5,000 crore “towards crude filling costs” in three storage facilities – Vishakapatnam, Mangalore and Padur – which can hold over 5.1 lakh truck-tanker loads of crude oil. This can power India for about 13 days as against strategic oil reserves of 90 days of net oil imports, the global standard set by the International Energy Association.

$265-270 billion

What is it? India’s estimated exports in 2015-16, according to the Federation of Indian Exports Organization (FIEO). This is 13-15% lower than the exports recorded in 2014-15.

Why is it important? Lower commodity prices account for a large portion of this fall, but export volume too is shrinking. Nearly half of 76 commodities for which volume data is available registered a drop in quantity sold in April – October 2015. These 76 commodities account for 44% of exports.

Tell me more: Job creation fell by a net 43,000 in April-June 2015, of which export-oriented companies reported a decline of 26,000.

10-12%

What is it? Projected growth of India’s IT and software services export revenue to about $121 billion in 2016-17 by industry lobby Nasscom.

Why is it important? Software industry employs 3.7 million people and lower growth rate would mean hiring would stagnate at 200,000 in next financial year. In comparison, nearly 1.6 million engineers graduate each year, and most of them vie to gain employment in the software industry.

Tell me more: The growth forecast of 12-14% in the current fiscal and also, the third consecutive year in which there is a decline in projections. The lower end of the projection for next fiscal is the lowest in five years.

$120 million (over Rs 800 crore)

What is it? Amount 400 food delivery startups in India have raised from venture capital firms and other investors in the last three years.

Why is it important? Despite all the funding, the startups have failed to replace the traditional delivery networks that have been in existence since the 1890s. The famous Mumbai’s ‘dabbawalas’ (colloquial term for those who deliver the meal boxes) provide approximately 200,000 lunch boxes from central kitchens and cooks’ homes every day. The biggest food startups in India including FoodPanda, TinyOwl and Zomato have had to let go of people and scale down operations in the last few months.

Tell me more: Mumbai’s dabbawalas have been popular for their low error rate (of meal boxes going astray) despite being run by a group of semi-literate people who use no technology and charge a nominal amount of Rs 400-1,200 per month depending on the distance and time taken.

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News in numbers, Nov 19, 2015: Ola’s raises $500 mn, Kashmiri migrants’ rehabilitation…

 

92.3%

What is it? Share of its total external funding ($1.3 billion) that cab aggregator Ola has raised in the last one year ($1.2 billion).

Why is it important? Ola took three years to reach the $1 billion valuation mark, but just about a year to hit $5 billion. This assumes importance given the concerns in some quarters about the sustainability and profitability of India’s unicorns such as Ola, Flipkart and Zomato.

Tell me more: On Wednesday, Ola raised $500 million in fresh funds from investment management firm Baillie Gifford, China’s largest taxi hailing service Didi Kuaidi and existing investors Falcon Edge Capital, Tiger Global, SoftBank Group and DST Global.

 

$28.8 billion

What is it? The amount by which the turnover of Apple in Greater China exceeds its turnover in India, according to company filings.

Why is it important? In 2014-15, the maker of iPhones and iPads reportedly crossed $1 billion in revenues in India, with a doubling of revenues in two years. Despite this scorching growth, Apple’s chief executive Tim Cook has, in the past, expressed impediments to business caused by a multi-layer distribution channel.

Tell me more: In 2014, Apple recorded $29.8 billion in revenues from Greater China, $14.9 billion from Japan, $10.3 billion from the rest of Asia-Pacific. Its revenues in the US stood at $65.2 billion and in Europe at $40.9 billion.

 

Rs 20,000 crore

What is it? The amount the government is seeking to raise from a 10% stake sale in state-run Coal India, which the Cabinet approved on Wednesday

Why is it important? If the government is able to raise this, it would reach at least about 47% of its disinvestment target of Rs 69,500 crore for 2015-16. Finance Minister Arun Jaitley has admitted it is difficult to achieve the disinvestment target this year with low commodity prices impacting share valuations. Coal prices have tumbled to new lows in recent times due to slowing demand.

Tell me more: So far, the government has raised Rs 12,701 crore (18.3% of its target) by selling stakes in Power Finance Corporation, IOC, Rural Electrification Corporation and Dredging Corporation. If the disinvestment target is missed, it would be the sixth year in a row.

 

19%

What is it? The increase in value of assets held by investors in mutual funds between September 2014 and September 2015, to Rs 12,93,633 crore, according to data from Association of Mutual Funds in India (Amfi).

Why is it important? It is in this backdrop that the mutual fund is seeing its second change of ownership in 2015. On Wednesday, Invesco bought out the 51% stake of its local partner, Religare, in Religare Invesco Asset Management Company. Earlier this year, Reliance Mutual Fund bought Goldman Sachs Mutual Fund.

Tell me more: The growth in the mutual fund industry, in general, has failed to make a satisfactory business case for many mutual fund hopefuls, including prominent foreign names like Deutsche Bank, PineBridge and ING in recent years.

 

Rs 2,000 crore

What is it? Amount to be used for rehabilitating Kashmiri migrants, a proposal approved by the Cabinet on Wednesday.

Why is it important? An estimated 450,000 Kashmiri migrants, along with some Sikh and Muslim families, fled the Kashmir Valley when militancy reared its ugly head more than a couple of decades ago. But only one Kashmiri Pandit family has returned to the Valley in 25 years. Also, of the 3,000 state government jobs to be provided, only 1,963 posts have been filled. This shows the previous rehabilitation package of Rs 1,618 crore sanctioned in 2008 has not worked, raising questions if additional funding would do anything to improve the situation.

Tell me more: The new package is aimed at providing an additional 3,000 state government jobs with financial assistance and transit accommodation to Kashmiri migrants.

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