Why Tatas, Birlas use electoral trusts to fund politics

In the latest report by Association for Democratic Reforms, the NGO has found that electoral trusts play an important role in the funding of national and regional political parties which use funds received through this avenue for their election campaigns.

While many of the regional parties prefer to get individual donors who give less than Rs 20,000 in the form of  donations, so that the party does not have to disclose the names of the donors, the bigger parties like the Congress and BJP receive funds from the electoral trusts that are invariably funded by corporate houses in order to maintain transparency in the distribution of funds.

Why do corporates and politicians prefer electoral trusts

 Why Tatas, Birlas use electoral trusts to fund politics

Corporate funded electoral joy? Reuters

When companies donate to electoral trusts they do not reportedly have the compulsion of disclosing the parties to which they have made contributions, something which could land them in trouble, particularly if the party they're backing does not win, says a report in the Hindu Business Line.

Aditya Birla Group's General Electoral Trust

Little is known about the trust which is bankrolled by the Aditya Birla group, that has interests in a wide range of industries that are operational across states.

"No group wants to be seen to be aligned with any political party for fear, if it has backed the wrong one, of getting the short end of the stick," Haribhakti, trustee of the General Electoral Trust was quoted as saying in an Economic Times report.

It is however known that the group started their electoral trust soon after the Tatas in 1996 and is one of the biggest electoral trusts in the country and is the biggest contributor to the two big national parties.

The trust contributed Rs 36 crore to the Congress and Rs 26 crore to the BJP  when measured between FY 2003-2004 to FY 2010-11, according to the ADR report.

Tata Sons' Electoral Trust

The trust, formed in 1996, may not be one of the biggest electoral trusts making donations to political parties and elected representatives across the board but it is one of the most famous, with contributions coming from all the Tata group companies, a Times of India report said.

During the 2004 elections the trust is reported to have distributed Rs seven crore and the corpus for the next elections is built over the next five years with contributions.

However, an Indian Express report said that the trust accepted contributions from other corporates as well as individuals.

The money is distributed to parties in two tranches of 50 percent each, with half given to parties on the basis of their strength in the Lok Sabha before the general elections and the other half depending on their performance in the elections, according to the report.

Parties qualify to receive funds only if they get at least a minimum of 16 of the total 543 seats in the Lok Sabha.

"We didn't want to dirty our hands and get into this game," Dinesh Vyas, senior Supreme Court advocate and trustee of the Tatas' Electoral Trust was quoted as saying in a Economic Times report.

However, some like Trinamool Congress chief Mamata Banerjee have famously turned down the money offered by the electoral trust. After winning the 2009 elections on the back of a campaign against the Tatas over their factory in Singur, Banerjee refused to accept a cheque of Rs 27 lakh from the trust.

Bharati group's Bharati Electoral Trust

Funded by the Bharati Group, that has interests in telecom and is diversifying into other sectors like retail, it has also been one of the bigger contributors to the national parties, Congress and BJP.

Between FY 2003-2004 to FY 2010-11, it continued to be one of the biggest donors to the Congress party, donating Rs 11 crore to the party. It has also made contributions to the LJP headed by Ram Vilas Paswan, the Telugu Desam Party and the Shiromani Akali Dal among the regional parties and ranks among the parties' largest contributors.

However, it also has made a contribution of Rs one crore to the Satya Electoral trust which is one of the largest contributors to the Nationalist Congress Party, according to the company's annual report.

While these are the three biggest electoral trusts that are known of, scant data has been made available about them even online and it is only through the Election Commission that the data regarding them was obtained. With most parties still preferring opaque means of raising funds, electoral trusts may offer the way forward for other corporates to donate in a somewhat transparent manner.

Here's the complete ADR report released today

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Updated Date: Sep 10, 2012 18:48:35 IST