ELECTION FUNDING – THE MONEY SAYS IT ALL!

Now that we are out of the World Cup and the Budget also disappointed, with no real triggers apart from earnings, we thought we could have a quick read on this new report.

This time of the year, after elections, we usually see some interesting reports coming from the Association of Democratic Reforms (ADRs), an NGO which works on electoral and political reforms.

And it has some very interesting findings. Have a quick read to know what happens behind the scenes; this is just a fraction of the machinations which happen to raise funds, yet this in itself tells us so much.

Today’s Lok Sabha has more muscle and power than ever before.

• In the BJP, total number of MPs are 301 of which 116 have declared criminal cases against them and 265 of the 301 are crorepatis.
• In the Congress, of the 51 elected MPs, 29 have criminal cases and 43 are crorepatis and the third largest party today, DMK, has 23 MPs of which 10 have criminal cases and except for only one, 22 DMK MPs are crorepatis.

Today, we have something known as the Electoral Trust – we have 22 registered such Trusts set up by companies mainly for the purpose of funding political parties and companies get tax benefits for funds given to various political outfits. The Trust gets tax benefits only if they distribute 95% of total contributions received by them in any financial year to the registered political parties within that year itself. NRIs can make contributions to these Trusts and no contribution by cash is allowed.

Just as we vote for a political party expecting an improvement in quality of life, companies also contribute, knowing fully well that leaders need to be kept humoured or else their various projects, sanctions might never come in. This is a tacit understanding between the party and company – you scratch my back, I scratch yours. Both need each other and each needs to keep the other happy to ensure he is not ousted out.  Corporates are some of the biggest contributors to political parties and fighting elections needs lots of money. It is payback time only after elections are over.

Now for an insight into the donations received from corporate and business houses in FY18 and FY19.

• During FY18, various sectors of business houses donated a total of Rs.985 crore, constituting 93% of the total contribution to political parties from known sources. Donations from corporates to National Parties increased by 160% from the period FY12 to FY18.
• Out of 6 National Parties, BJP received the maximum donations of Rs.916 crore from 1731 corporate donors followed by Congress, which received a total contribution of Rs.55 crore from 151 corporate donors, and NCP got Rs.8 crore from 23 corporate donors.
• During Fy17 and FY18, BJP’s and Congress’s voluntary contributions above Rs.20,000 from corporate/business houses is 94% and 81% respectively.
• Not surprisingly, CPI has the lowest share of corporate donations at 2%.
• Bharti group owned Prudent Electoral Trust, which was earlier known as Satya Electoral Trust was the top donor to two of the National Parties, between FY17 and FY18, with the Trust donating a total of 46 number of times in 2 years, amounting to Rs.429.42 crore of which BJP got Rs.405.52 crore in 33 donations and Congress got Rs.24 crore in 13 donations from Prudent/Satya Electoral Trust.
• Prudent Electoral Trust is the largest electoral trust in India, with over 90% of all corporate donations to electoral trust going into its kitty - DLF Group, Bharti Group, UPL, Torrent Power, DCM Shriram, Cadila Group and Haldia Energy were the big contributors in this Trust.
• B.G. Shirke Construction Technology Pvt. Ltd was the top donor to NCP in FY17/18.
• Bhadram Janhit Shalika was formerly known as SIL Employees Welfare Trust, which is owned by Sterlite Industries, was the second largest contributor to the BJP at Rs.39 crore and third largest was Janta Nirvachak Electoral Trust, promoted by the Kotak group at rs.25 crore.
• Prudent Electoral Trust and Raj West Ltd, owned by JSW group were the top two contributors to Congress at Rs.24 crore and Rs.5 crore respectively.
• A N Enterprises Infrastructure Services contributed to Congress and NCP; it is owned by the RC Bidawe group, which owns J Kumar Infra and builds most of the roads in Maharashtra.
• IRB Infrastructure owned Modern Road Makers contributed Rs.14 crore to BJP.
• AB General Electoral Trust of Aditya Birla group gave Rs.12.50 crore to BJP and Rs.1 crore to Congress.
• Apex Jewellers and Cadila Healthcare donated Rs.10 crore each to BJP.
• New Democratic Electoral Trust, promoted by the Mahindra & Mahindra group gave Rs.11 crore to the BJP.
• Serum Institute of India, owned by Cyrus Poonawalla is a staunch NCP supporter with money going only to this one party.
• There is no mention of contribution from Reliance group’s People’s Electoral Trust and none from Tata’s Progessive Electoral Trust.
• Sector wise, manufacturing was the biggest contributor, followed by real estate and mining/construction and import/export companies in third number.

Transparency issues continue to dog though better than before:

• Of the total Rs.985 crore contributions, Rs.22.59 crore came from unsegregated category, which includes companies with no details available online or those with no clarity regarding the nature of their work.
• A total of 916 donations through which National Parties received Rs.120 crore do not have address details in the contribution form.
• National parties have received Rs.2.59 cr from 76 donations which do not have PAN details in the contribution form.
• Donations with undeclared address of corporates also formed a large sum of Rs.121 crore, which was 12.29% of the total corporate donations.
• 98% of such donations without PAN and address details worth Rs 2.50 cr belong to the BJP.
• A total of 916 donations through which National Parties received Rs.120 crore do not have address details in the contribution form and 99% of such donations worth Rs.119 crore without address details belong to the BJP.

For more valuable insight, kindly refer to data provided by Association for Democratic Reform and the following links will help: https://adrindia.org/content/analysis-donations-corporates-business-houses-national-parties-fy-2016-17-2017-18