Electoral Bonds: Where Are the Disclosures?
Last week, the State Bank of India (SBI) disclosed data on the now-defunct electoral bonds in two sets. Purchasing these bonds was voluntary; however, which entrepreneur would willingly part with their hard-earned money for grasping, self-serving politicians? They do so under coercion or incentives. Hence, voluntary donation is rather small, as is evident from the large number of companies absent from the list. Today, most large companies in corporate India are listed on the stock market. And yet, only about 100 listed companies across a few sectors have contributed to political parties through electoral bonds. Very few large companies (Nifty 200 stocks) feature on the list.
 
While there are Vedanta (over Rs400 crore), Bharti Airtel (Rs198 crore), Torrent Power (Rs106 crore) and United Phosphorus (Rs60 crore), most other companies on the list have donated small sums relative to their profits. Sun Pharmaceuticals, which made over Rs8,900 crore in net profit last year, donated Rs31.50 crore, barely 0.3%. Mahindra and Mahindra donated a similar amount (Rs25 crore) and so did Bajaj Finance (Rs20 crore), Bajaj Auto (Rs18 crore), Hero Motors (Rs20 crore), TVS Motor (Rs26 crore) and UltraTech Cement (Rs35 crore), Maruti Suzuki (Rs20 crore) and Piramal Enterprises (Rs48 crore).
 
More interesting is the fact that a large number of big listed companies did not donate through electoral bonds at all: Reliance Industries, ICICI Bank, HDFC Bank, Kotak Bank, Tata Motors, Tata Steel, Titan, all the software giants like Tata Consultancy Services, Infosys, HCL Technologies, Wipro are missing. There are no multinationals on the list, nor is construction giant Larsen & Toubro (L&T), even though many other donors were from the construction sector.
 
For those who have donated, the question is: Where are the disclosures to shareholders? At a time when the market regulator and stock exchanges are insisting on extreme transparency, it is obvious that companies that have donated money to political parties should mandatorily disclose these to shareholders with an explanation. A quick check of some of the 2022-23 annual reports of large listed companies like Mahindra & Mahindra, Cipla, Bharti Airtel and Piramal Enterprises shows no mention of electoral bonds. Vedanta discloses donations in 'other expenses' with a footnote identifying that it was for electoral bonds. This disclosure is even more necessary for those who donated while facing charges, or, perhaps, other forms of scrutiny or coercion.
 
While many large listed companies do not figure as donors, it is interesting that all large listed pharmaceutical companies and many unlisted ones have emerged as donors. Several of them have been facing government action (some genuine, some allegedly trumped up) for tax evasion, poor quality of drugs, or overcharging. Among the big donors through electoral bonds are Divi's Laboratories (Rs55 crore), Cipla (Rs39.20 crore), Alkem Laboratories (Rs15 crore), Dr Reddy's (Rs84 crore), and Sun Pharma and Mankind Pharma (Rs24 crore). None of them has significant disclosures to offer regarding electoral bonds.
 
A close analysis of the electoral bonds makes it clear that companies are either donating out of fear or for incentives—quid pro quo for contracts, projects or orders. Of course, the line between incentives and coercion often blurs in the messy negotiations between political parties and businesses. In any case, shareholders and citizens remain in the dark in both situations. Take, for example, the massive capital expenditure by the Central government on roads, bridges, sanitation, drinking water, railway modernisation and energy. Winning bids for these projects is based on objective criteria but it is not always so in practice. These businesses also spend large sums in cash. Pamireddy Pitchi Reddy's four companies led by Megha Engineering (Rs966 crore) have emerged as the second biggest donor (Rs1200 crore) in the list. Megha reportedly purchased electoral bonds on several occasions, just before it secured major projects. BG Shirke Construction (donated Rs117 crore), the other major construction company in the list, bagged a huge affordable housing project and other deals in Maharashtra.
 
So, what can be done about disclosures, at least for listed companies? IFB Agro's annual report of 2022-23 provides a rare and only example of explicit disclosure: "The business continues to face issues as reported earlier and in order to maintain the continuity of the business and to protect the interest of all the stakeholders, the Company paid Rs 18.30 Crs towards subscription of the Electoral Bonds during the year. The Company has further paid Rs15 Crores towards subscription of Electoral Bonds in the Month of April 2023." In all, IFB Agro has paid over Rs92 crore in electoral bonds since 2021.
 
In West Bengal, where IFB Agro operates, politically powerful 'syndicates' dictate business activity, including the hiring of staff, contractors and suppliers and collecting regular payments. On 26 June 2020 and again on 22 December 2020, IFB Agro disclosed to stock exchanges that its distillery in south 24 Parganas was attacked by 150 armed goons. They forced the distillery to close, beat up employees and held them hostage. Despite complaints to the police, nothing happened. It also said that its alcohol business was suffering because it was "singled out by certain excise officials for not succumbing to their illegal demands." Since its complaints came to nothing, IFB Agro chose to publicly disclose its reasons for donation. Why can't other listed companies display the same courage as IFB Agro?
 
If listed companies do not want to disclose their reasons, they have another choice: follow the example of Kiran Mazumdar Shaw. She controls two listed companies (Syngene and Biocon) neither of which was a donor. But she decided to donate Rs6 crore from her personal account. Given the tens of cores of salaries promoter-managers pay themselves, they can certainly do this rather than spending shareholders' money—and keeping them in the dark.
 
(This article first appeared in Business Standard newspaper)
 
 
Comments
but allegation of insider trading after so many ye
2 weeks ago
the thinking is useless any entity can provide anyone any sort of money or any benefit can be transferred through beneath the table under the aegis of govt entity may through transfer gift or through doubtful entity so remarkable house name is not on the list with big buck this had been practiced from the envoy of thomas row to jahangir via mansabdar it is the summit of the iceberg,the real issue will be agitated when 2029 when bjp will be in opposition but that time many renowned face of ruling party will be in opposition so blank hue and cry will be the result it is unfortunately indian character and it's proceeding
aarvi1948
2 weeks ago
The ideal transperent electoral bonds would be - a percentage of the companies' profit to the " Election Commission of India" instead to payment to parties, which in turn should be distributed to the parties according the average vote share percentage of the recently held 3 elections
Gupta10
Replied to aarvi1948 comment 2 weeks ago
Also, if you remember, Mr. TN Seshan had put a cap on expenditure by every candidate and that was a very noble thought too. I think that figure was 10 lakh rupees. But we all know that the actual spends are far far higher with the help of the cash economy. Hence, even if there is state funding of elections, quid pro quo will continue as political parties, especially those in power, will still go after corporates for donations in cash to deal with the cash expenditure.
Gupta10
Replied to aarvi1948 comment 2 weeks ago
Sounds nice. But then how would you allocate funds to an independent candidate fighting an election for the first time? How would a new political party get funds (for e.g. when AAP launched 10 years ago, they would have received zero allocation of funds while others would get crores). I just quote that as an example without merits of how good or bad AAP is today. Also, if you find a way to give money from the govt budget or from EC as you say, then political parties will set up fake candidates just to get more money and those candidates won't even campaign because they don't want votes but just wanted to get that share of booty. When you think of these issues practically, there is no simple answer to how elections should be funded. There are significant hurdles in all options.
saurabh.khanna
2 weeks ago
It should be called mutual support bonds. Aapka saath- aapka vikas-aapka haath
arun
2 weeks ago
Corruption everywhere. Save the corrupt by asking them to join BJP or else ED will do the trap work.

Nitin Gadkari is scrapping the cars after 15 years. Little does he know that the life of a car engine is 1,50,000 Kms to 3,50,000 Kms. Why scrap the car based on time line even when most of the life of car engine is still remained unused in 15 years. Middle class cannot buy new car every now and then. Middle class buys a car once n a life time and takes care of that car as a family member. The scrapping policy and the heavy fines for not scrapping is causing great loss to the middle class.

Senior citizen citizen railway concession is also scrapped. Cheaper trains replaced by expensive Vande Bharat trains.

The copy cat Nitin Gadkari copies everything from the west. In any European country if you drive an EV car for 1 to 3 hours, you can reach from one end of the country to the other. This does not work for India as the distances are great and EV owner cannot keep on charging the car on the highway multiple of times. Imagine how many charges when travelling from Kashmir to Kanyakumari. Ove this, after 5 years one has to spend over Rs 5 Lakh on buying new car batteries.

Gadkari is scrapping CNG cars even when they do not cause pollution. The reason for scrapping cars is that they cause pollution. The fuel prices have increased 3 times. All this to help the manufacturers to sell their EV cars by building pressure on the middle class and make up the losses of reduced car sales during Covid years.

We all know what is his interest in all this? MONEY MONEY MONEY. Kill the middle class for the sake of MONEY.

Now his new game is to introduce new GPS sensor plates for the cars and make the toll staff belonging to middle class families jobless.

What has the government given to middle class? Pulses have reached Rs 300 per Kg, Cooking gas cylinder Rs 1200. We do not want luxury, we need to first feed the middle class. All governments work for the minorities, poor and the rich. No government wants to do any welfare for the middle class.

Gupta10
2 weeks ago
All fair points made. But the issue is much larger. The question is how to voters vote? We know for a fact that a large number of us vote based on who gives us more freebies from the government or who gives us free liquor and cash before elections. In addition, massive expenditure is needed for rallies, door to door campaigning, printing materials, etc. Possibly lot of money has to be paid to media too, all unaccounted, so that you get the "right" press coverage. What sources do political parties have to raise funds for these objectives? Do any of us want to go and donate a day's salary to political parties? The clear answer is no. We can have a holier than thou attitude and expect a political party to be totally clean. Yes, that is possible, but the sad reality is that such a party would never win an election, certainly not at a national scale, where money power is important because voters only vote based on money. In Hindi, they say, "loha hi lohe ko kaat sakta hai".... to clean politics, you first need to get dirty and dive into it. Keeping saintly postures won't get you anywhere. The big challenge then is once you dive into that dirt, how do you clean yourself and allow you to last in that pool of dirt while remaining clean. It is a near impossible task. Worse still, you have the challenge of remaining clean and also cleaning that pool when all kind of dirty sharks would start attacking you from all sides.

I find solace in the fact that this corruption or quid pro quo is at least limited to donating to the political party and funds are used for elections. At least the money is not seen as going in personal accounts in Swiss banks. Maybe that is also happening but yet to see any evidence. Both are wrongs, but this one is a shade better or less wrong and it has no alternative unless someone can think of a cleaner way to raise money in a democracy. Even US doesn't have it where corporates pay based on which President is leaning positively towards their goals or they pay heavily through "lobbying".
murali
Replied to Gupta10 comment 2 weeks ago
?????? ?? ?? ???????
????
Absolutely breathtaking and brilliant
Only wish let these guys lay good roads give clean water and take care of sanitation and affordable health care
Anyway corruption is accepted way of life
murali
Replied to murali comment 2 weeks ago
Typed in Hindi font which bounced back
Badiya jawab

murali
2 weeks ago
None of the political parties or its leaders are above reproach.
Show cause notices are issued to small business owners and hefty penalty is imposed for trivial non compliance.
There is no corporate governance or disclosures by the corporates and they just get away as they have the wherewithal to withstand all these
At the end of the day it is only a post mortem analysis.
Administrator wants to arm twist and brow bear the judiciary all the freedom of the freedom of the press
We aam aadmi are sitting ducks
murali
Replied to murali comment 2 weeks ago
Error crept
Administrator want to arm twist and brow beat the judiciary and freedom of the press
murali
2 weeks ago
None of the political parties or its leaders are above reproach.
Show cause notices are issued to small business owners and hefty penalty is imposed for trivial non compliance.
There is no corporate governance or disclosures by the corporates and they just get away as they have the wherewithal to withstand all these
At the end of the day it is only a post mortem analysis.
Administrator wants to arm twist and brow bear the judiciary all the freedom of the freedom of the press
We aam aadmi are sitting ducks
yerramr
3 weeks ago
The whole information secured with the highest Court nudging the biggest bank that claims use of latest technology for full disclosure, seems to hide more than it reveals as indicated in this article. There are many pigeons in the cupboard. Who will release them?
Kamal Garg
3 weeks ago
I think making donations through electoral bonds on personal account (paid by the person him/her self) is a much better and safe option as no disclosures are required, topnotch corporate governance and that nobody would come to know of it. Kiram Mazumdar's case came to light only when the alphanumeric numbers were disclosed as per court directive, otherwise, no body would have ever come to know about it.
david.rasquinha
3 weeks ago
Well said by Debashis Basu on corporate non-disclosure. But we are missing the real scandal. As per SBI, the total Electoral Bonds from 2019-2024 was about 23,000 crore. Peanuts! That amount would not cover even a couple of state elections. Clearly the EBs are merely the tip of the ice berg and cash donations continue to form the vast majority. So much for the faux claims of eliminating cash donations via EBs.
C.George
Replied to david.rasquinha comment 2 weeks ago
I agree 100%. Other donations to political parties might be 20 times more than electoral bonds (minimum i would say). These will find against over invoiced expenses of the corporates under other p & l account. Really worrying part is that some well known political parties were happy to pay back 80% of the monies received on proper channels back to the donees by way of other means.
barokhoka1956
3 weeks ago
It is only one form of Extortion by the Government whether in Central and/or in State(s). Mr. Sathya2011 rightly said it is only the tip of iceberg.
sathya2011
3 weeks ago
The information is only the tip of the iceberg and what may be hidden information will never be known.
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