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Electoral Bonds: The Quid Pro Quo Factor

By Debashis Basu
April 03, 2024 09:59 IST
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Which entrepreneur would willingly part with her or his hard-earned money for grasping, self-serving politicians? asks Debashis Basu.

Illustration: Uttam Ghosh/

The State Bank of India has disclosed the data on now defunct electoral bonds in two sets.

Purchasing these bonds was voluntary; however, which entrepreneur would willingly part with her or his hard-earned money for grasping, self-serving politicians? Entrepreneurs 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 of corporate India are listed on the stock markets. 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 Rs 400 crore/Rs 4 billion), Bharti Airtel (Rs 198 crore/Rs 1.98 billion), Torrent Power (Rs 106 crore/Rs 1.06 billion), and United Phosphorus (Rs 60 crore/Rs 600 million), most others have donated small sums relative to their profits.

Sun Pharmaceuticals, which made over Rs 8,900 crore (Rs 89 billion) in net profit last year, donated Rs 31.50 crore (Rs 315 million), barely 0.3 per cent.

Mahindra and Mahindra donated a similar amount (Rs 25 crore/Rs 250 million), and so did Bajaj Finance (Rs 20 crore/Rs 200 million), Bajaj Auto (Rs 18 crore/Rs 180 million), Hero Motors (Rs 20 crore), TVS Motor (Rs 26 crore/Rs 260 million), UltraTech (Rs 35 crore/Rs 350 million), Maruti Suzuki (Rs 20 crore), and Piramal Enterprises (Rs 48 crore/Rs 480 million).

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 Mahindra Bank, Tata Motors, Tata Steel, and Titan.

All the software giants like Tata Consultancy Services, Infosys, HCL Technologies, and Wipro are missing.

There are no multinationals on the list, nor is construction giant Larsen & Toubro, 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 2022-2023 annual reports of large listed companies like Mahindra and Mahindra, Cipla, Bharti Airtel, and Piramal Enterprises shows no mention of electoral bonds.

Vedanta discloses donations under '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 donated.

Several of them have been facing government action (some genuine, some allegedly trumped up) for tax evasion, poor quality of drugs, or for overcharging.

Apart from Sun Pharma, among the big donors through electoral bonds are Divi's Laboratories (Rs 55 crore/Rs 550 million), Cipla (Rs 39.20 crore/Rs 392 million), Alkem Laboratories (Rs 15 crore/Rs 150 million), Dr Reddy's (Rs 84 crore/Rs 840 million), and Mankind Pharma (Rs 24 crore/Rs 240 million). 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 incentive 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 (Rs 966 crore/Rs 9.66 billion), have emerged the second-biggest donor (Rs 1,200 crore/Rs 12 billion) on the list.

Megha reportedly purchased electoral bonds, on several occasions, just before it secured major projects.

BG Shirke Construction (Rs 117 crore/Rs 1.17 billion), the other major construction company on 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 2022-2023 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 Rs 15 Crores towards subscription of Electoral Bonds in the Month of April 2023.'

In all, IFB Agro paid over Rs 92 crore (Rs 920 million_ through electoral bonds since 2021.

In West Bengal, where IFB Agro operates, politically powerful 'syndicates' dictate business activities, including hiring staff, contractors, and suppliers, and collect regular payments.

On June 26, 2020, and again on December 22, 2020, IFB Agro disclosed to the 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 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 (Synegene and Biocon), neither of which was a donor. But she decided to donate Rs 6 crore (Rs 60 million) from her personal account.

Given the tens of crores of salaries promoter-managers pay themselves, they can certainly do this rather than spending shareholders' money -- and keeping them in the dark.

Disclaimer: These are Debashis Basu's personal views.

Feature Presentation: Rajesh Alva/

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Debashis Basu
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India Votes 2024

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