Why direct corporate funding of political parties should stop, like electoral bonds
A national fund to which all donations flow and which apportions funds on vote shares appears more sensible, transparent and fear-free way of funding
Suspicion of quid pro quo hangs heavy in the air as the details of direct corporate funding to political parties, via their electoral trusts in FY25, have been released by the Election Commission of India (ECI).
At Rs 3,811.4 crore, the total amount corporates directly donated to political parties through nine electoral trusts is small change in more ways than one. For one, it is much less than the over Rs 6,000 crore the BJP alone is reported to have received from all sources in the same fiscal year.
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Three key revelations national dailies have made are:
(i) 82 per cent donations went to the BJP, which rules at the Centre and more than a dozen states;
(ii) The next big national party, the Congress, received a mere 8 per cent, and
(iii) Donations from these nine trusts jumped from Rs 1,218 crore in FY24 to Rs 3,811.4 crore—after the Electoral Bond was scrapped in February 2024 by the Supreme Court, by declaring it “unconstitutional”.
A caveat: The ECI data are not in machine-readable format and processing difficulties throw up different numbers in different national dailies—which are quite close to each other though.
When EBs smacked of quid pro quo
Suspicion about quid-pro-quo deals first surfaced after the Electoral Bond details were made public in March 2024, following the Supreme Court order junking the bond as “unconstitutional” and directing the State Bank of India (SBI), the issuing authority, and ECI to make the data public.
The suspicion was from the sheer proximity of direct corporate donations and policies and other official actions affecting those corporations. None of those involved—corporates, government agencies and political parties—cleared the air, deepening the suspicion.
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The pattern continues.
Last month, Scroll published a report raising a red flag over donations to the BJP by a big corporate house soon after the BJP-led coalition government at the Centre cleared its two semiconductor projects, thereby paving the way for huge government subsidies.
The Centre’s Semicon India Programme gives 50 per cent of the total project cost for all semiconductor projects as fiscal incentive (direct subsidy) on a “pari-passu basis” (on equal footing). State governments, where the project is located, give additional subsidies.
Scroll had reported in April 2025 of similar donations by two other corporates to the BJP after the Centre cleared their semiconductor projects, one of which had never made such large donations earlier.
In none of these cases, the corporates, Central government or BJP cleared the air.
But this need not be the way corporates fund political parties.
Why ‘national fund’ for elections make sense
When asked if he suspected quid pro quo in direct corporate funding, former Chief Election Commissioner (2010-12) SY Quraishi told The Federal: “Yes, I suspect quid pro quo. I allege it is nothing but quid pro quo. Businessmen know who to fund because they need something in return.”
He dismissed Rs 3,811.4 crore of direct corporate funding as “chicken feed” in comparison to what actually passes hand. Having conducted multiple elections over several years, he should know.
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Consider this.
Prime Minister Narendra Modi made a telling comment amidst the 2024 general elections (polling held during April 19-June 1, 2024).
News agency PTI quoted him saying at an election rally in Telangana's Vemulawada on May 8, 2024: “I want to ask from Telangana soil, let the Shehzada announce, how much has been lifted from Ambani-Adani? Has tempo-loads of money reached the Congress? What deal has been arrived at, that abusing Ambani-Adani has stopped overnight?”
A ‘tempo’ is a three-wheeler goods carrier; it doesn’t carry digital transactions.
Need for public awakening
Quraishi said it is this suspicion of quid pro quo that he started advocating a “national fund” to finance electioneering. Political donations from all—corporates, trusts and individuals—should flow into this fund and flow out to political parties based on their electoral performance, that is to say, proportionate to their vote share.
“Corporates don’t have to fear vindictive actions from one political party or the other,” he added, lamenting that though he has been writing and speaking about it since 2013 there is no debate, not even in the media.
Also read: BJP received Rs 2,600 Cr in donations in 2023-24, Congress Rs 281 Cr: EC
Trilochan Sastri, one of the founders of Association for Democratic Reforms (ADR), supports public funding but said since laws have failed, it would take public awakening and pressure for this to happen. He recalled how his co-founder of the ADR Jagdeep Chhokar, who passed away recently, argued that private funding of elections must stop before public funding is allowed.
A prominent businessman, who supports such an idea, said on the condition of anonymity that corporate funding must be transparent and ensure fair-play and free competition.
A “national fund”, run jointly by representatives of political parties, corporates, jurists and civil society to ensure fair-play and transparency, seems a better workable idea than “state funding” India toyed with in 1990s and 2000s without going anywhere.
Why state funding didn’t click
Once upon a time in India, high cost of electioneering, the use of black money, and quid-pro-quo deals were serious issues and freely debated in public.
In 1990, the Dinesh Goswami Committee was the first to propose limited and in-kind “state funding” (no cash) because of fiscal constraints. This was endorsed by the Indrajit Gupta Committee of 1998, which asked for simultaneous curbs on electioneering spending; Law Commission report of 1999 and Second Administrative Reforms Commission report of 2007. In its plenary in 2010, Congress president Sonia Gandhi too proposed it.
In the interim, in 2003, the Supreme Court left nothing to the imagination when it said: “The sources of some of the election funds are believed to be unaccounted criminal money in return for protection, unaccounted funds from business groups who expect a high return on this investment, kickbacks or commissions on contracts.”
The last known report on election reforms came from the Law Commission’s 2015 report. It also supported limited and indirect state funding and listed three key reasons why direct political funding is always suspect: (i) money power disturbs level playing field (ii) quid pro quo corruption in electoral funding and (iii) state and regulatory captures by corporates for favourable policies and less stringent regulations.
A limited and indirect state funding never appealed to political parties, comfortable as they are in using cash of the rich corporates to get votes of the poor.
A global phenomenon
But state or public funding is a global phenomenon.
The database of Sweden-based International IDEA, an intergovernmental organization supporting democracy, shows 124 of 181 countries it tracks have direct public funding of elections – regularly, in campaigns alone or for both.
Some of these countries are:
• Regular funding: The UK, France, Sweden, Norway, the Netherlands, Denmark, South Korea, South Africa, Indonesia
• Only campaign funding: The US, New Zealand, Canada, Australia
• Both: Germany, Spain, Russia, Israel, Brazil
A 2020 paper of the University of California said, “Public funding has effectively reduced the dependence of parties on private donations and provided financial standing for most political forces”. At the same time, it also flagged “a significant inequality in access to funding”.
It is time India revives the debate, studies the global successful models and takes steps to prevent its democracy and governance from being hijacked by moneybags.
