BRS, YSRCP received highest donations from electoral bonds

Hyderabad: The Supreme Court, ahead of the 2024 mega general elections, has pulled up the State Bank of India, seeking data on the list of electoral bonds and its donors, and the state and national parties who subsequently received funding from undisclosed sources.

To recall, in a landmark verdict delivered on February 15, a five-judge Constitution Bench scrapped the NDA’s electoral bonds scheme that allowed anonymous political funding, calling it ‘unconstitutional’ and ordered disclosure by the Election Commission of the donors, the amount donated by them and the recipients by March 13.

Now, after SBI wanted an extension till June to submit the details, the top court has asked for the electoral bonds’ data by March 12. Further, the SC directed ECI to make public details of bonds as submitted by SBI.

NewsMeter assessed the contribution reports submitted by the regional political parties to the Election Commission of India and found that Bharat Rashtra Samithi (BRS), which was in power in Telangana until December last year, received the highest funding from the two Telugu states.

Here’s a breakdown of data on donations received by each party

BRS

Former chief minister K Chandrashekar Rao-led BRS, now sitting in the opposition in Telangana, received a whopping Rs 683 crores in donations in the financial year 2022-23 of which Rs 529 crores came via electoral bonds.

This means 80 per cent of its donations are from electoral bonds from ‘undisclosed sources’ since this method of donation conceals the donors.

Going by disclosed sources, BRS sitting MLA Gangula Kamalakar, BRS Rajya Sabha MP Ravi Chandra Vaddiraju, who is also the chairman and managing director of Gayatri Granites, Hansa Power and Infra Limited; and P Jayachandra Reddy, owner of Rajapushpa Properties, donated Rs 10 crores each. Out of the Rs 154 crores donated from individuals, Rs 40 crores came from these four.

In November, ahead of the Telangana State election 2023, electoral bonds and political funding worth Rs 1,148.38 crores were raised. It is pertinent to note that the SBI’s Hyderabad branch raised Rs 376 crores, which was the highest across 14 cities.

YSRCP

NewsMeter assessed the contribution reports of YSRCP and found that there were three sources of funding. YSRCP received Rs 16 crores through electoral trusts, Rs 52 crores from electoral bonds and Rs 30 lakhs from individual donations. In total, YSRCP received Rs 68 crores.

TDP

The contribution reports indicated the TDP did not receive any funding/donations via trusts or bonds. In total through individual donations, the party received Rs 11.92 crores.

AIMIM

Hyderabad Parliamentarian Asaduddin Owaisi-led AIMIM party received Rs 24 lakhs, 100 per cent of funding came from Aurangabad.

What are known and unknown sources?

Political parties have multiple sources of funding. The contribution channels include electoral trusts, electoral bonds, individual funders, and party subscriptions. The sources are further categorised as ‘known’ and ‘unknown’.

Association for Democratic Reforms (ADR) defined known sources as donations above and below Rs 20,000, whose donor details are available through contribution reports as submitted by parties to the Election Commission of India (ECI).

Unknown sources are income declared in the annual audit reports. However, the source of income for donations below Rs 20,000 are not revealed. Such includes donations via electoral bonds, sales of coupons, relief funds, miscellaneous income, voluntary contributions, and contributions from meetings/morchas.

Funding through electoral trusts

Apart from electoral bonds, donors such as private companies can route money to political parties through electoral trusts. Prudent Trust is one among several trusts, set up initially by the Bharati Group.

As the richest trust in India, Prudent received a whopping Rs 363.16 crores in political funding of which Rs 363.15 crores has been distributed, as told to the Election Commission of India.

Electoral trusts from Hyderabad-based MEIL, Medha, are among the top 10 political donors with contributions up to Rs 122 crore in FY23.

India’s 54th richest man PV Krishna Reddy’s company Megha Engineering Infrastructures Limited (MEIL) donated Rs 87 crores to Prudent electoral trust in FY 2023.

Krishna Reddy, whose wealth skyrocketed to US $4.05 billion in 2023, according to Forbes magazine, is likely to be the biggest political funder based out of Hyderabad. He is followed by another Hyderabad-based company Medha Servo Drives which contributed Rs 35 crores in the same year.

Interestingly, not a single donation went to the Congress party. The entire amount was distributed between the BJP, BRS, YSRCP, and AAP. BJP eats up the largest share of the funding. Of the total political funding received by Prudent Trust, Rs 75 crores has been donated to BRS, Rs 16 crores to YSRCP, and Rs 90 lakhs to AAP, and the rest Rs 276 crores goes into the kitty of the BJP.

How are electoral bonds purchased?

While purchasing an electoral bond (EB), no tax is levied on the buyer. Instead, the government pairs the money to the bank for processing the electoral bonds and cashes it through its political party.

In the Electoral Bonds Scheme 2018, donors who buy electoral bonds are not required to pay any service charges (commission) to the SBI or even bear the cost of printing the EBs. It is the government or ultimately, the taxpayers, who bear this cost, which enables the transactions to remain ‘Anonymous Tax-Free Funding’ to political parties through an opaque EB scheme.

This means that Rs 13 crores, 50 lakhs, and 73 thousand have to be paid by the taxpayers through the government for enabling transactions of anonymous tax-free funding to political parties through the opaque Electoral Bonds Scheme 2018.

In addition, there is a huge amount spent/being spent for using government machinery and manpower for managing and operating the electoral bonds for the tax-free benefits of political parties at the cost of taxpayers.

Taxpayers paid commission for processing electoral bonds

More than Rs 13 crores have been levied on prime minister Narendra Modi-led BJP government in the Centre regarding the sale of electoral bonds in 29 phases over six years. This amount is the commission to the State Bank of India (SBI) for processing the electoral bonds, including printing. The six years cover more than 29 phases from 2018 to 2023.

NewsMeter obtained a copy of a Right to Information (RTI) reply, which showed that a total of Rs 11,60,65,674 (inclusive of GST) has been charged by the SBI to the government i.e. levied on the taxpayers as commission so far, consequent to the sale of electoral bonds.

Regarding the printing costs, Rs 1,90,01,380 (inclusive of GST) has been levied on the government or taxpayers towards the printing of 6,74,250 electoral bonds. An additional Rs 6,720 for a ‘Device to verify Mask-A-Print Security.’ The total comes up to Rs 13,50,73,000 which has been imposed on the government.

Out of the Rs 11 crores, the government has so far paid Rs 8,57,06,831 which covers commission for 25 phases. The payment for the rest is ‘under consideration for payment.’