The Role of Electoral Trusts in Promoting Political Funding Transparency

What Are Electoral Trusts?

Electoral Trusts are non-profit organizations designed to enhance the transparency of political funding. These entities serve as intermediaries, gathering voluntary contributions from individuals and corporations and subsequently distributing these funds to registered political parties.

Who Can Form an Electoral Trust?

Any company registered under Section 25 of the Companies Act, 1956 (now under Section 8 of the Companies Act, 2013) is eligible to establish an electoral trust, provided they obtain approval from the Central Board of Direct Taxes (CBDT).

Who Can Donate to Electoral Trusts?

Eligible donors include:

• Indian citizens
• Companies registered in India
• Hindu Undivided Families (HUFs)

However, foreign entities, government organizations, and individuals prohibited under the Representation of the People Act, 1951, are not allowed to contribute.

What Restrictions Apply to Electoral Trusts?

Electoral Trusts are subject to specific restrictions:

• They must not utilize funds for any purposes other than distribution to political parties.
• Foreign donations or contributions from government-owned entities are not permissible.
• They are required to disclose the names and details of their donors to the Election Commission of India (ECI).

How Are the Funds Distributed by Electoral Trusts?

• Proportionate Distribution: Electoral Trusts allocate funds based on the vote share received by political parties in the previous general elections.
• Transparency Requirement: Details of donors, including names and Permanent Account Numbers (PAN), are disclosed, and amounts are transferred directly to the bank accounts of political parties.

Who Were the Top Donors to Electoral Trusts in FY 2022-23?

The top ten donors and their contributions to Electoral Trusts (in ₹ crore) are as follows:

• Megha Engineering & Infrastructure Ltd. – ₹87.00
• Serum Institute of India Pvt. Ltd. – ₹50.25
• ArcelorMittal Nippon Steel India Ltd. – ₹50.00
• Abhinand Ventures Pvt. Ltd. – ₹50.00
• Medha Servo Drives Pvt. Ltd. – ₹30.00
• ArcelorMittal Design and Engineering Centre Pvt. Ltd. – ₹25.00
• Greenko Energy Projects Pvt. Ltd. – ₹20.00
• Bharti Airtel Ltd. – ₹10.00
• Medha Traction Equipment Pvt. Ltd. – ₹5.01
• Jupiter Wagons Ltd. – ₹5.00

This data highlights the increasing involvement of corporations in fostering transparent political funding through Electoral Trusts. “Transparency ensures trust, and trust builds the foundation of a stronger democracy.”