Political donations from Electoral Bonds are 10 times of Electoral Trusts
Sai Krishna Muthyanolla
February 28, 2020
Access here Comprehensive Data on Electoral Bonds (as of February 2024)
Electoral
Trusts were introduced in 2013 to provide another way for donations to
political parties. While the contributions to electoral trusts increased till
2016-17, they have gone down ever since. In 2018-19, donations through
anonymous electoral bonds are 10 times the contributions received by electoral
trusts.
TheElectoral Trust Scheme was
introduced in January 2013, which created a provision forpolitical parties to receive funding through these Electoral Trusts. Since theinception, the electoral trusts formed a major part of the funding received bythe political parties.
AnElectoral trust is deemed as a company registered under Companies Act, 1956 andcan receive donations from an individual, company or association. These fundsare required to be disbursed among the political parties who meet the criteriaset by the respective trusts. While, one gets to know the names of thecontributor as well as the beneficiaries, Electoral trusts do create anintermediate layer that makes it difficult to  identify correlation between the donor &the beneficiary.
Meanwhile,Electoral Bonds were introduced in January
2018 and have become a key part of funding
received by political parties with around ₹ 6 thousand croresworth of electoral bonds sold since their introduction.
Inthis story, we analyse the trends in donations received by electoral trusts andtheir disbursal to political parties, especially in the context of theintroduction of electoral bonds as a source of political party funding.
Only
5 trusts have declared the receipt of contributions in 2018-19
There are a total of 26 approved electoral trusts which are registered with Central Boardof Direct Taxes (CBDT) as of 19 February 2020.
As per the guidelines laid out in Electoral Trusts Scheme 2013,the approval provided to a registered Electoral trust is valid for the sameassessment year relevant to the financial year in which the application wasmade. It can be extended to a period of three assessment years. Hence, it isrequired for the electoral trusts to apply for registration once the approvalperiod is completed.
As per Association for Democratic Reform’s ’Analysis of Contribution Reports of
Electoral Trusts – FY 2018-19’, registration of 4 of these 21 trusts were notrenewed as on 02 December 2019. A total of 15 trusts have submitted theircontribution reports to Election Commission of India (ECI)
for 2018-19,while 5 trusts have declared the receipts of contributions from individuals& corporate houses.
The five Electoral trusts which have receivedcontributions in 2018-19 include – Prudent, AB General, New Democratic, Samajand Janhit.
In 2018-19, around 70% of the total contributions
to Electoral trusts was to a single trust
The five Electoral trusts have received a totalof ₹ 252 crores of which they have managed to disburse ₹ 251.55 crores i.e.around 99.85% of the total contributions received in 2018-19. Electoral trustsare required to disburse minimum of 95% of the total income received in thecurrent financial year, to the political parties. A major portion of the totalwas received by Prudent Electoral Trust with ₹ 182.33 crores followed by A.B.General which received ₹ 57.25 crores. This is in line with previous year wherein Prudent ET (Satya) received ₹ 169 crores out of the total 194 croresreceived by all the electoral trusts in 2017-18.
Inconsistent trend in the volume of
contribution received by Electoral trusts
The highest amount of contributions received byElectoral trusts during the 6-year period of their existence was in 2016-17,where in a total of ₹ 325.45 crores were received, and ₹ 325.27 crores wasdisbursed to political parties. During all these years, the disbursalpercentage has been higher than 99.8%, more than the minimum required 95%.
In 2013-14, when Electoral Trusts Scheme wasintroduced, there was only one electoral trust- Satya Electoral Trust whichreceived the contribution which amounted to ₹ 85.4 crores. In the next year,the amount more than doubled to ₹ 177.55 crores. received by 6 Electoral trustsalbeit Satya E.T being the highest receiver. There was a sharp fall for 2015-16with only two electoral trusts declaring to have received contributionsamounting to a total of ₹ 49.5 crores.
This was followed by the high in 2016-17 ashighlighted earlier. In 2016-17, 6 Electoral Trusts have stated to havereceived contributions in the reports submitted. The highest contribution wasreceived by Prudent Electoral Trust to the tune of 283.7 crores. This trust wasearlier known as Satya Electoral Trust; therefore, it continues to be the trustreceiving the major share of contributions.
Electoral Trusts received lesser funding inboth 2017-18 and 2018-19. In 2017-18, 5 electoral trusts have receivedcontributions amounting to ₹ 193.78 crores. This has increased in 2018-19, with₹ 252 crores received by 5 electoral trusts. 2018-19 also happens to be theyear with second highest total amount received by electoral trusts.
Corporates are the major donors to Electoral Trusts
As per the contribution reports submitted byElectoral Trusts in 2018-19, only two individual donors are reported to havemade contributions with the rest of the contributions from corporates orassociations. The contributions made by these two individuals was ₹ 50 lakhs &₹ 11 lakhs, and both of the contributions made to Prudent Electoral Trusts.
For the year 2017-18, 71% of the 194 croresreceived by electoral trusts was contributed by top 10 donors.
2016-17, which is the year with the highestcontribution to Electoral trusts has 58% of the total contribution receivedfrom the top 10 donors.
BJP is the major beneficiary of the funds
disbursed by electoral trusts
Over the six-year period between  2013-14 and 2018-19, a total of ₹758.5 croreswere disbursed by various Electoral Trusts to BJP. The second highestbeneficiary is Indian National Congress which received less than 1/5 of the funds received by BJP with ₹ 140.7 crores. A major chunk of this isduring 2018-19 when Congress Party received ₹ 43 crores. Among the othernational parties, NCP received ₹14.2 crores over the years.
Few of the regional parties were disbursed morefunds by Electoral trusts especially during election years. Biju Janata Dalreceived the highest funds from electoral trusts among the regional partieswith ₹ 48.5 crores, of which ₹ 27 crores were received from A.B GeneralElectoral Trust in 2018-19.
The three major regional parties in the twoTelugu speaking states of A.P & Telangana have received considerableamounts from Electoral trusts in 2018-19 when assembly elections were held. YSRCP,TDP and TRS received ₹ 27 crores, ₹ 25 crores and ₹ 16.2 crores respectively fromthese electoral trusts.
Most of the electoral trusts have not received
any contributions
As highlighted earlier in the story, 10 out ofthe 21 electoral trusts in 2018-19 have stated that they have not received anycontribution. This is continuation of a trend since the introduction ofelectoral trusts in 2013-14.
Every year, many of the Electoral Trusts havereported as not receiving any funds. While the number of trusts who have notsubmitted the contribution reports is higher than earlier, even among the onesthat have submitted the contribution reports, many of them have not receivedany contributions.
As observed by ADR in their report, 6 Electoral trusts have not received anydonations since the time of registration.
Only Prudent Electoral Trust (earlier known asSatya Electoral Trust) has not only submitted the contribution reports everyyear but also has received contributions every year.
Electoral Trusts receive significantly lesser
contributions compared to Electoral Bonds
The highest amount received by Electoral Trustsin a financial year was ₹ 325.5 crores in the year 2016-17. This was prior tothe introduction of Electoral Bond scheme in January 2018.  For 2017-18, ₹220 crores worth of ElectoralBonds was purchased which is higher than the amount received by ElectoralTrusts in that financial year i.e. ₹ 194.1 crores.
Although the Electoral Trusts received a higheramount in 2018-19 with ₹ 252 crores, the total amount of Electoral Bonds purchasedin that financial year is ₹ 2,550.78 crores i.e. around 10 times thecontribution received by the electoral trusts.
The contributions received by electoral trustsfor 2019-20 can only be ascertained after submission of contribution reports inlater part of the 2020. Meanwhile, a sum of ₹ 3,355.93 crores worth ofElectoral Bonds have already been purchased in 2019-20 by end of 12 phase i.e. 01 Oct – 10 Oct’2019. There was another batch of Electoral Bondssale in January 2020, whose details have been sought by Factly under RTI. It ispossible that the contributions to electoral trusts might further reduce in2019-20 and they may be only a fraction of the amount through electoral bonds.
There is a dire need for greater transparency
A major portion of the electoral trustsreporting as not receiving any contributions does raise questions about the veryexistence of such electoral trusts, as the main purpose is to receivecontributions from various sources and disburse them among the politicalparties. Further-more few of the electoral trusts not even submitting thecontribution reports also increases the ambiguity surrounding them.
As in the case of electoral bonds, citizens will get to know aboutthe beneficiaries of disbursement by electoral trusts only after about 6 monthsfrom the end of a financial year, which defeats the entire purpose of electoralfunding transparency.
It is early to ascertain the impact of introduction of electoral bonds on electoral trusts since it has been only two years since their introduction. However, it does appear that corporates and other donors are favouring electoral bonds for political donations because of the inbuilt anonymity. Electoral Trusts which started to gain more traction in 2016-17, have seen a fall in subsequent year post the introduction of Electoral Bonds. Although the value did increase the next year, the corresponding amount for electoral bonds is much higher. This increase can also be attributed to 2018-19 being the year of General Elections as well as key assembly elections. The real effect of electoral bonds on electoral trusts can only be ascertained after few more years.