In 2022-23, four of the top 10 donors to India’s political parties through electoral trusts (ETs) were companies based out of Hyderabad. Megha Engineering and Infrastructures Limited (MEIL), run by PV Krishna Reddy, was the biggest donor, contributing Rs 87 crore to Prudent Electoral Trust, which in turn donated to four parties – BJP, BRS, YSRCP, and AAP. Its highest donations went to BJP (Rs 256.25 crore, or 71%), followed by BRS (Rs 90 crore), according to an analysis of electoral trusts’ contribution reports filed with the Election Commission of India by the Association for Democratic Reforms.
Similar to electoral bonds, an ET is a trust set up by companies to facilitate donations from companies and individuals to political parties.
After MEIL, Pune-based vaccine maker Serum Institute of India was the second highest donor with Rs 50.25 crore. ArcelorMittal Nippon Steel India was third, donating Rs 50 crore.
Out of the companies based out of Hyderabad, while MEIL was the biggest corporate donor, Medha Servo Drives Pvt Ltd was the fifth biggest (Rs 30 crore), Greenko Energy Project Pvt Ltd was seventh (Rs 20 crore), and Medha Traction Equipment Pvt Ltd was ninth (Rs 5.01 crore).
Overall, Telangana was the state from which the highest donations were made to ETs in 2022-23 – 13 donations worth Rs 145.51 crore, all to Prudent. And overall, BJP was the biggest beneficiary, receiving Rs 259 crore. BRS was the second largest beneficiary, followed by YSRCP. Congress received only Rs 50 lakh in total, from Samaj Electoral Trust. While five ETs received and distributed funds this year, Prudent is the primary one with Rs 363.15 crore, since the remaining four trusts combined only disbursed Rs 3.33 crore.
The top 10 corporate donors gave Rs 332.26 crore, forming 90.66% of the total donations, all to Prudent.
MEIL’s Krishna Reddy’s net worth is about Rs 15,817 crore, according to Forbes. He also owns a sizeable stake in the TV9 media network. Medha Servo Drives and Traction Equipment fall under the same company, whose Managing Director is Y Kasyap Reddy. The company recently opened a massive private rail coach factory near Hyderabad, the MoU for which was signed with the BRS government in 2017. Renewable energy firm Greenko’s MD is Anil Kumar Chalamalasetty, and the company was the title sponsor of the Formula E World Championship race in Hyderabad last year under the BRS government.
Read: Hyderabad’s future as Formula E host city becomes uncertain under Congress govt
What are electoral trusts?
An Electoral Trust is a trust set up by companies to facilitate donations from companies and individuals to political parties, just like electoral bonds. While the controversial electoral bonds scheme was introduced by the BJP government at the Union in 2018, the electoral trusts scheme was introduced by the UPA government in 2013. And while electoral bonds have been criticised for making political funding opaque, thereby enabling quid pro quo with political parties and siphoning ‘black money’, electoral trusts are relatively more transparent.
Electoral trusts are required to disclose their sources of funding and the political parties the funds are distributed to. However, it’s difficult to directly connect which donor is funding which party.
As per rules notified by the Central Board of Direct Taxes (CBDT), companies registered under Section 25 of the Companies Act, 1956 can form an electoral trust. Any Indian citizen, a company registered in India, or a firm or Hindu Undivided Family can donate to an electoral trust. These trusts must donate at least 95% of contributions received in a financial year to political parties registered under the Representation of the People Act, 1951.
While there are 18 ETs registered with the CBDT, only five of them declared receiving any donations during that year. Prudent ET received the highest contributions (Rs 363.16 crore). The next highest was Samaj ET, which got only Rs 2 crore. Samaj donated Rs 1.50 crore to BJP and Rs 50 lakh to Congress.
BJP received Rs 259.08 crore or 70.69% of the total donations received by all political parties from ETs. BRS received Rs 90 crore or 24.56% of the total donations. The other three political parties — YSRCP, AAP and Congress — received a total of Rs 17.40 crore collectively.
What is Prudent Electoral Trust?
Prudent ET, formerly known as Satya, is the richest electoral trust in India today and one of the BJP’s biggest funders since it was incorporated in 2013, before the 2014 general elections. It is promoted by one of India’s biggest conglomerates, Bharti Enterprises, which owns the telecom company Bharti Airtel among other businesses. Bharti Airtel was also among the top 10 donors to electoral trusts this year.
In the past, Prudent has received donations from major corporations such as real estate company DLF, automobile company Hero MotoCorp, JSW Steel, and Aditya Birla Group, among others. And a lion’s share of its funds has gone to the BJP in recent years. In FY 2021-22, Prudent raised Rs 464 crore and gave Rs 336 crore (72%) to BJP. In FY21, out of Rs 245.7 crore, it gave BJP Rs 209 crore (85%). In FY20, out of Rs 271.5 crore, it gave Rs 203 crore to BJP (75%). Between 2014 and 2018, Prudent donated Rs 594.37 crore (82%) to BJP of the Rs 726.13 crore it raised.
There are other ETs too that have regularly funded BJP. Tata Group’s Progressive Electoral Trust, for instance, has declared that it didn’t receive any donations in the past two years. But earlier in 2018-19, this trust was BJP’s biggest donor, contributing Rs 356 crore. However, while Progressive ET claims to follow a formula to decide each party’s share of donations based on its seat share, the method followed by other trusts like Prudent to map donations to parties is not transparent.
Electoral trust funds in 2022-23
The five ETs that declared contributions in FY23 received a total of Rs 366.495 crore, of which Rs 366.48 crore (99.99 %) was disbursed to various political parties. Out of three companies that donated Rs 363.71 crore, 34 donated to Prudent (Rs 360.46 crore).
A total of 42 contributions worth Rs 363.16 crore were received by Prudent, one contribution of Rs 2 crore was received by Samaj ET, two contributions of Rs 75.50 lakh by Paribartan ET, two contributions of Rs 50 lakh by Triumph ET, and three contributions of Rs 8 lakh by Einzigartig ET.