FUNDING OF ELECTIONS - ROLE OF INDIA INC
FUNDING OF ELECTIONS – ROLE OF INDIA INC
By Ruma Dubey
As elections come calling, corporate India would be in a quandary just as me and you. For us, the big question is whom to vote and for companies, it is much before elections – which political party should they donate to and how much?
Today, contribution to political parties, which comes under ‘donation’ in most balance sheets, is a legal activity and companies have formed ‘Trusts’ to make these donations. When payments are made in cheque, India Inc can claim tax rebates but the Finance Bill for current fiscal has stated that donations in cash will not get any rebates. This clamp down on cash is to discourage anonymous cash contributions/ donations to political parties and help identify the donor. Cheque payment brings in transparency and the EC can check if any money has come from foreign sources, as it is not allowed. Central Bureau of Direct Taxes (CBDT) specify that electoral trusts are not permitted to receive foreign funding, these rules were formed only on 31st January, 2013. Hence, the details of all donors who made any contribution to thepolitical parties through electoral trusts should be made public so as to ensure transparency in the financial aspect of functioning of political parties.
But we would have to be too naïve to think that cash does not get exchanged at all. When a huge NRI diaspora or ‘foreign funds’ want to contribute to one leader or political party, naturally, they are not going to wait for tax rebates and hawala routes are sure to get busy. Election is indeed the time when major portion of the black money comes back into the system.
Today, we have something known as the Electoral Trust – where companies are allowed to set up these trusts 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.
The companies would have another big question – how much to give each party? Do they contribute based on opinion polls, giving more to the party whom they think will come into power or do they follow an equitable mode of distribution? Given below are a few significant points which are self explanatory about this entire funding process.
- There are a total of 6 Electoral Trusts who have made contributions to political parties between 2004and 2012, as per the statements provided by the political parties to the Election Commission of India. These trusts include the General Electoral Trust of the Aditya Birla Group, Electoral Trust of Tata Sons, Bharti Electoral Trust of Bharti Enterprises, Public and Political Awareness Trust of Vedanta; it is not known as to who owns Satya Electoral Trust, Harmony Electoral Trust and Corporate Electoral Trust which are also major contributors.
- Between 2003-04 and 2011-12, three Vedanta Group firms – Sterlite Inds, Sesa Goa Solaries Holdings contributed a total of Rs 9.78 crore to the Congress and the BJP got more - Rs 19.41 crore from two firms – Vedanta Madras Aluminium, Sesa Goa and Public and Political Awareness Trust (which alone has given BJP Rs 14.50 crore).
- Total income of political parties as donations from Electoral trusts: Rs 105.86 crores, which is 2.16% of the total income of the parties.
- Between 2004-05 to 2011-12, General Electoral Trust (Aditya Birla group) contributed Rs.36.41 crore to Congress (INC) and Rs.27.07 crore to BJP.
- Electoral Trust (Tata Sons) contributed Rs.9.96 crore to INC and Rs.6.82 crore to BJP.
- Bharti Electoral Trust ( Bharti Entp) gave Rs.11 crore to INC and Rs.1 crore to NCP.
- Six national parties, over past 8 years – Congress, BJP, BSP, NCP, CPI,CPI(M) – have received a total of Rs 4,895.96 crore. Less than 25% of it is from known sources but big chunk of 75% is from ‘unknown’ sources.
- These “unknown sources” are obviously known to the political parties but this is to take advantage of the loophole in the funding system – political parties are not required to reveal the sources of payments of less than Rs 20,000.
- Between 2004-05 and 2011-12, Congress collected Rs.1,951.07 crore (82.5% of its total income) from ‘unknown sources’. Assuming all have paid below Rs.20,000, it has got 9.75 lakh well-wishers.
- For BJP, during 2004-12, 73% came from unaccountable sources, 61.8% for BSP and a staggering 91.58% for NCP. The only ‘honest’ party was CPI, whose only 14.7% of total income came from unknown sources.
- According to an analysis by the Stockholm"based International Institute of Democracy and Electoral Assistance (IDEA), ‘India is … among a mere 10% of countries in the world to allow either political parties or candidates to receive anonymous donations’. Another study of 40 countries shows that anonymity in the source of funding is not permitted in any of them. Some countries that have more transparency include our neighbours, Nepal and Bhutan.
For more valuable insight, kindly refer to data provided by Association for Democratic Reform and the following links will help:
http://adrindia.org/sites/default/files/Contribution%20Reports%20Release%20v5-2.pdf