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Corporate funds to parties should be transparent

Last updated on: August 14, 2012 08:27 IST

Corporate funds to parties should be transparent

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A K Bhattacharya

In the past five years, Indian companies are reported to have donated over Rs 4,400 crore to six major political parties.

These are the Congress, the Bharatiya Janata Party (BJP), the Bahujan Samaj Party (BSP), the Communist Party of India-Marxist (CPI-M), Samajwadi Party and the Nationalist Congress Party (NCP).

These figures, compiled by the Election Commission of India, have been reported in The Times of India. The amount may look small compared to the total funding requirements these political parties have to meet. But remember that corporate donations are only one of the many other sources of funding for political parties.

In spite of that, however, the total size of funds political parties get from Indian companies is not insignificant.

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Image: Indian rupee notes.
Photographs: Reuters.

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The Congress got an estimated Rs 1,660 crore and this accounted for the largest chunk in total corporate donations in the past five years.

The BSP was a close second at Rs 1,226 crore, followed by the BJP at Rs 852 crore, the CPI-M at Rs 335 crore, the Samajwadi Party at Rs 200 crore and the NCP getting Rs 140 crore.

In other words, corporate donations to the six political parties averaged at over Rs 870 crore every year from 2007-08 to 2011-12.

There are two surprise elements in these figures. One, a political party like the CPI-M could get, on average, Rs 67 crore every year in this period. Which companies would have contributed to the CPI-M coffers?

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Image: BJP party meet.


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True, the Left Front was in power for a few years in West Bengal and Kerala during this period and many Indian companies would have been eager to please the CPI-M with their donations.

But for the CPI-M to accept corporate donations without qualms reflects a stage in the party's evolution that will necessarily have an impact on its approach to business and economic policies.

Or perhaps the impact is already visible and the donation figures are a mere confirmation of the reason for that change.

Two, the BSP managed to rake in Rs 245 crore every year, second only to Congress' annual collection of over Rs 330 crore. How did the BSP manage to do even better than the BJP, which grossed only about Rs 170 crore a year?

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Image: Congress rally.

Tags: BSP , CPI-M , BJP , Congress

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The Election Commission, it seems, has no data about any company donating funds to the BSP. All the funds that the BSP has got in the past five years appear to be in multiples of Rs 20,000 and below.

Thus, there is no mandatory requirement for the BSP to disclose the source of such funds. So, some companies may have given funds to the BSP, but no one knows for sure their identity or how much they donated.

Not that all other political parties have made full disclosure of the source of such corporate donations. Not even the CPI-M. The bulk of these corporate donations are kept a secret by the political parties.

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As two more states are approaching Assembly elections later in the year and the country will have to soon get ready for a general election in 2014, it is perhaps important for the Election Commission to start the process of putting in place a more stringent and foolproof mechanism to monitor corporate donations to political parties.

The new policy regime to monitor corporate donations should bear in mind that companies in India have begun shedding their old inhibitions about funding political parties.

Increasingly, more companies are willing to even make disclosures about such donations.

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Image: Indian rupee notes.
Photographs: Reuters.

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There are now companies that make a mention of their donations to political parties in their annual reports.

It is, therefore, important that the new policy environment for corporate donations for political parties has a built-in incentive to encourage such behaviour as long as there is full disclosure.

A political party that agrees to take funds from a company but is reluctant to make full disclosure should be disallowed to receive such help.

At the same time, however, the procedures for collecting funds from companies should be made easier for a political party that is open to making such disclosure.

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Photographs: Reuters.
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In other words, a system where over 90 per cent of Rs 4,400 crore (Rs 44 billion) received from companies over a period of five years comes without any disclosure on the source of funds is a big threat to governance.

Irrespective of whether a political party is in power or not, all corporate donations it receives should be made public.

The people of the country have the right to know whether a political party's stance on a certain policy issue is influenced by the corporate interests of its donors.

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Photographs: Reuters.
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That will be possible only when the sources of corporate donations to political parties are subject to full disclosure.

As important as economic reforms is the need to introduce this basic political reform so that companies can transparently play a role in influencing the views of political parties.

Corporate donations to political parties are to be welcomed, but only after ensuring that everybody knows which company has contributed how much and to which political party.

 



Photographs: Reuters.
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