NEW DELHI—A set of companies which includes DLF Ltd and the Bharti Enterprises Limited donated nearly Rs. 600 crores to the Bharatiya Janata Party (BJP) in the six years till 2017-18, shows an analysis of data on corporate funding to political parties.
A review of three separate analytical studies by the Association for Democratic Reforms (ADR) from 2004-05 to 2017-18 showed that this group—first called the Satya Electoral Trust and later renamed Prudent Electoral Trust—has consistently topped the list of corporates who fund India’s national political parties since 2014.
The trust—which has major contributions from DLF and Bharti Group—toppled Aditya Birla Group’s General Electoral Trust from the No. 1 position the year the Narendra Modi government came to power, and has remained there ever since.
The Prudent/Satya trust was also the top donor to the Congress in the period from 2012-13 to 2017-18, but its contribution was much lower at Rs 81.15 crore.
Electoral Trusts are not-for-profit companies which pool in money, mostly from multiple corporates and business houses, to donate to political parties. All the transactions are recorded and sent annually to the Election Commission in audited reports.
As a sector, electoral trusts contributed much more to the official donations of national political parties than any other source, as per the ADR studies.
Political funding through such trusts is, of course, only a small part of the overall money received by political parties in India. Political parties are not required to disclose the source of donations less than Rs 20, 000. But analysts are worried that a 2017 legislation—which introduced electoral bonds, widely used ahead of the 2019 general election—will make even accessing this limited information impossible. Big-ticket donors can simply buy these bonds and give it to political parties, who can encash it within a stipulated time period without disclosing the source of the money. This could change if the government were to amend the electoral bonds scheme or the Supreme Court, in context with an ongoing case, strike down the idea of an electoral bond in its entirety.
The steady change in the biggest players on the chessboard of political funding arose from the change of guard in the central government—from a weak, coalition-led government to a brute majority for a single party that is ostensibly leading a coalition.
The consequences of this on political funding are glaringly visible in the studies. The majority of the donations by the top donor companies have been heavily skewed in favour of the ruling BJP after 2014, while the Congress and other national parties have had to make do with a substantially smaller pie of donations.
The Prudent Electoral Trust, for instance, gave the BJP a significantly higher share of donations than the opposition Congress after 2014. In 2017-18, the latest year for which data are available, the BJP received Rs 405.5 crore while the Congress received only Rs 23.9 crores from this electoral trust.
Since the data in the three studies reviewed here predates the introduction of the electoral bonds scheme—which became operationalised steadily after January 2018 but has helped parties raise thousands of crores of rupees in a short time—it examines the role only of electoral trusts. The data is broadly in sync with the larger trend of increasing corporate funding as well as backing of India’s national political parties in recent years.
This trend was briefly speculated upon during the campaign for the recent Lok Sabha election when Mukesh Ambani, Chairman of Reliance Industries Limited, openly endorsed Congress party candidate Milind Deora.
Though it is not clear if Ambani also financially backed Deora’s election bid, his endorsement was enough to trigger speculation and commentary about corporate influence on India’s polity.
“If the outcome of the election is going to be determined by corporate influence, the government, regardless of the party in power, will follow priorities of corporates in making policy decisions.”
Speaking with HuffPost India soon after Ambani endorsed Deora, Jagdeep Chhokar, founder member of ADR, said that the unusual endorsement for a candidate from India’s richest man who has a cross-section of business interests showed that corporate influence in the electoral process was increasing.
“I don’t think it is good. If the outcome of the election is going to be determined by corporate influence, the government, regardless of the party in power, will follow priorities of corporates in making policy decisions. This is usually the case in free market economies where corporates dominate. It is undesirable in a society as diverse as India,” he said.
Donations from corporates to national parties increased by as much as 160% between financial years 2004-05 to 2011-12 and FY 2016-17 to 2017-18, a recent statement by ADR said.
On the right side
Most of the reports published recently have expectedly focused on the disproportionately high donations received by the ruling BJP from corporates, especially electoral trusts, in the past two years.
However, a closer look at the longer term data from 2004-05 till 2017-18 in the three studies confirms the widely held belief that the corporates used the electoral trusts to stay on the right side of ruling parties by funding them generously when they are in power.
Take, for instance, the Satya/Prudent Electoral Trust. From 2004-05 to 2012-13, there is no record of this trust donating to the BJP; instead, records show it contributed to the then ruling parties Congress and Nationalist Congress Party (part of the Congress-led UPA). It donated Rs 3 crore to the Congress in 2009-10 and 2011-12, and Rs 1 crore to the NCP in 2009-10.
But from 2013-14, the trust increased its donation amounts substantially in favour of the BJP, which was, by then, the obvious front-runner to win the 2014 general election. From 2013-14 till 2015-16, the Satya/Prudent trust donated Rs 193.62 crore to the BJP and Rs 57.25 crore to the Congress.
Apart from the Bharti and DLF Groups, Hero MotorCorp, DCM Shriram and Jubilant Foodworks Ltd, which holds the master franchise for Domino’s Pizza and Dunkin Donuts in India, also contributed significant sums to the Satya/Prudent Electoral Trust during this time.
The Aditya Birla Group’s General Electoral Trust, which had been the top donor before 2013-14, was now at No.2. But its funding pattern for the period also shows that its donations were skewed in favour of the BJP, though not as sharply as Satya/Prudent.
It donated Rs. 70.7 crore to the BJP from 2012-13 till 2014-15 and Rs 54.1 crore to the Congress in the year 2014-15. In the years before that, the funding pattern was exactly the opposite—the Congress would receive more donations than the BJP though the difference between the two was not as sharp.
Major General Anil Verma, who heads ADR, confirmed that the funding decisions of corporate donors are influenced by the need to be on the right side of the ruling party.
“They always back the party that is winning,” he said.
Only a handful of electoral trusts existed since the late 1990s but they have always been active donors to political parties. A number of new electoral trusts were registered after the government formally instituted a scheme for Electoral Trusts in 2013 but most remained inactive in the beginning. In recent years, though, it seems newer electoral trusts became active.
Data showing the top 10 corporate donors in 2016-17 and 2017-18—the latest years studied by the ADR—shows that relatively newer electoral trusts backed by corporate groups and individuals became active and donated significant amounts to the national political parties. There were also companies and, in at least one instance, a trust that donated separately.
But the funding was so skewed in favour of the BJP that only four of the top 10 entities donated to other national political parties in addition to the ruling party. Some of these donors are not well known and are on the list of top corporate donors perhaps for the first time.
For instance, the Bhadram Janhit Shalika Trust is not an electoral trust and is little known. It reportedly had connections in the with the controversial Sterlite Industries Ltd. It donated Rs 41 crore, which was the second highest amount for 2016-17 and 2017-18—Rs 39 crore to the BJP and Rs 2 crore to the Congress.
Some trusts donated their entire corpus only to the BJP. For instance, the Janta Nirvachak Electoral Trust, a relatively newer entity, is backed by the Kotak family and its businesses. A major part of its money was sourced directly from Suresh Kotak, the father of banker Uday Kotak and himself best known as the Cotton Man of India. His electoral trust donated Rs 25 crore in one transaction to the BJP. Another example is the Mahindra Group backed-New Democratic Electoral Trust, which gave Rs 11 crore to the BJP.