Company donations exceed 7.5% cap by ₹1,377.9 crore in 202224
Five firms in 202324 and eight in 202223 which made political contributions through bonds beyond the original 7.5% cap had negative or zero net profits
is the Coordinator of the Energy and Wetlands Research Group, Centre for Ecological Science, Indian Institute of Science is a water conservationist
TBengaluru, often celebrated for being a ‘garden city’, the ‘IT capital’ of the country, and its pleasant weather, has been making headlines this year for facing a severe water crisis following the drought of 2023. The water crisis is also likely to hit other urban centres and rural areas. According to a recent weekly bulletin by the Central Water Commission, even as peak summer is around the corner, most of the major reservoirs in the southern States of Karnataka, Tamil Nadu, Andhra Pradesh, and Telangana are filled to only 25% of their capacity or less. Is the urban water system breaking? T.V. Ramachandra and S. Vishwanath discuss the question in a conversation moderated by K.C. Deepika. Edited excerpts:
This is not the first time that a major city in India has been hit by a water crisis. What does it say about the water infrastructure in our cities?
T.V. Ramachandra: We see water crises in cities because there is mismanagement of water in most parts of the country. Bengaluru, for example, is undergoing unplanned urbanisation. In 1800, in a city landscape of 740 square kilometres, there were 1,452 interconnected water bodies and about 80% green cover. But today, 86% is paved surface and the green cover is less than 3%. Now, more than 40% of Bengaluru’s water requirement comes from groundwater sources. The city landscape should have been porous to allow groundwater recharge. There is a linkage between surface water bodies and groundwater resources. The city receives about 5560% of its water requirement from the Cauvery river. But if you look at the Cauvery watershed, during the last four decades or so, 45% of the forest cover has been lost. The Cauvery catchment has 18% forest cover while 75% is agriculture. And then there is another factor, which is climate change.
S. Vishwanath: In the 20th century, we have designed our institutions of water provision as water supply boards. We have to change the paradigm of governance to maintain the water management board, where water not only includes piped water from a river but also local water. The city has rainwater, ground water, surface water, lakes, tanks, river streams. It has wastewater or what we now call used water. All of these forms, if managed well, should be sufficient for the city. So, we have to change the governance of water through institutions, starting from the river basin. We don’t have river basin institutions looking at the landscape, he Hindu, along with an independent set of researchers, looked at donations via electoral bonds to the ruling BJP and other parties by companies whose aggregate donation amounts surpassed the original 7.5% cap in 202223 and 202324. The Finance Act, 2017, had deleted the provision on the 7.5% cap that was in the original Section 182(1) of the Companies Act, 2013. The 7.5% cap was calculated based on the companies’ average net profits during the three immediately preceding financial years, as reported in the CMIE Prowess IQ Database. The findings are as follows:
Fiftyfive of these companies were found to have made donations which exceeded the 7.5% cap in two years (202223 and 202324) alone. The total amount donated above this cap stood at ₹1,377.9 crore, which was more than 69% of their aggregate donation of ₹1,993 crore. The BJP alone received close to 71% of the total donations (₹1,414 crore). The Congress received 10% (₹199.5 crore); the Trinamool, 5.6% (₹113.5 crore); and the BRS got 5.2% (₹105 crore).
Thirtythree companies made an aggregate donation of ₹1,225.7 crore in FY 202324 through electoral bonds. Of this, ₹933.8 crore (76.2%) was above the 7.5% cap amount of the preceding threeyear average net profits of these companies. Of the aggregate donation of ₹1,225.7 crore of these 33 companies in FY 202324, ₹829.5 crore (over 67%) went to the BJP.
Twentyeight companies made an aggregate donation of ₹767.3 crore in FY 202223 in electoral bonds, out of which ₹444.1 crore, i.e., 57.8%, was above the 7.5% cap amount of the preceding three
Residents collect water from a tanker in Bengaluru. year average net profits of these companies. Out of the aggregate donation of ₹767.3 crore of these 28 companies in FY 202223, ₹585.3 crore, i.e., more than 76.2%, went to the BJP.
Five companies in 202324 and eight companies in 202223 which made political contributions through electoral bonds beyond the 7.5% cap had negative or zero net profits, which raises questions on their source of funds and indicates possible money laundering. Companies with negative profits could not have made donations under Section 182(1) of the Companies Act, 2013.
Six out of 33 companies whose contribution through electoral bonds surpassed the 7.5% cap did not report their profits for all the three preceding years. We have taken averages of their reported years only.
If the analysis is extended to previous years up to 201819, the amount donated beyond the 7.5% cap will increase significantly.
In a letter addressed to the Union Ministry of Law and Justice dated May 26, 2017, the Director (Election Expenditure) of the Election Commission of India had objected to the amendment to the Section 182(1), saying: “Certain amendments have been proposed in Section 182 of the Companies Act…[and] the limit of 7.5% of the average net profits in the preceding three financial years on contributions by companies has been removed...This opens up the possibility of shell companies being set up for the sole purpose of making donations to political parties, with no other business of consequence having disbursable profits.” These warnings on the setting up of shell companies and possible money laundering, which the data now indicate, were ignored by the Union Finance Ministry, which implemented the electoral bonds scheme in January 2018.
deforestation, sand mining, pollution, agricultural practices, and so on. We have to keep tabs on these and make sure that we do not alter the landscape irretrievably, so much so that the river stops flowing or flows with heavy polluted water. At the city scale, we have to create institutions which are able to be nuanced in their understanding of all forms of water and manage it as an ecological resource. That is the lesson that we have to learned from Bengaluru and all the other urban areas of India.
The irony that many are pointing out is that these are the same cities that are inundated during rains. Where are we going wrong?
SV: Again, the water management process. We have created institutions which operate as silos. In Bengaluru, the Bangalore Water Supply and Sewerage Board is in charge of piped water supply. The Bruhat Bengaluru Mahanagara Palike, with the Karnataka Tank Conservation and Development Authority playing a role, overlooks surface water bodies. Groundwater is with the Groundwater Authority. Wastewater, which flows into drains or lakes, is nobody’s property. And wastewater is what partially causes floods. So, it is bad planning and bad design of our landscape.
The other issue is concretisation and poor construction of roads. Roads are becoming impediments to hydrological flows; they act as dams and barriers.
TVR: First, as mentioned, there are too many agencies. Fragmented governance is the root cause of the problem. Second, most of these state agencies are headed by individuals who lack competence. I would prefer subject experts sitting there. If we manage water well, we will have sufficient water. With 700850 mm of annual rainfall, we will have about 15 TMC of water in the city. Bengaluru requires 1819 TMC of water. That means 70% of the water that the city needs is available in the form of rainwater. We need to harvest rainwater through rooftop harvesting in houses or by rejuvenating lakes and retaining the rainwater. If we reestablish the interconnectivity of the lakes, we will solve the problem of flooding; the water will move from one location to the other and there won’t be flooding. When we talk about floods, the government comes up with plans for remodelling, which is nothing but mismanagement of storm water drains. The government concretises and narrows storm water drains, which is against the hydrological principle for any drain.
The moment the Cauvery suffers, Bengaluru dies. When will Bengaluru realise that it is essential for it to make sure that the Cauvery flows in a pristine condition and is full?
There are two arguments regarding the Bengaluru situation. One is to depopulate the city by creating new centres of livelihood. The other is to create better water infrastructure. Where do you stand on this?
SV: After the 1991 reforms, considering the kind of capitalist model of economy that we adopted, urbanisation has become irreversible. People were attracted to Bengaluru because of the climate. Then they were further attracted to the city because it became an economic engine and provided great livelihood opportunities. We will continue to grow. If we plan for future growth and set up infrastructure right from the beginning, it is possible to enhance livelihoods and livability and also accommodate the population that will continue to come in. What is failing us is our inability to anticipate or deal with the growth of the city, especially in the periphery. I am optimistic that if we manage resources well, manage our lakes and aquifers and rainwater, and treat wastewater, we can support an increasing population.
TVR: For any city to be livable, we should not cross the carrying capacity. Unfortunately, Bengaluru has crossed the limit. There has been an 1055% increase in concrete area over five decades, 18% loss in vegetation, and 79% loss in water bodies. This shows that we have made a huge blunder. We can hope for the better with good management but where are the managers?
We have not trained people to cope with this situation which has risen because of five decades of mismanagement.
I think we should opt for clusterbased development. Our agenda should be to reverse migration, so that youngsters can move to other districts. If we can shift industries to taluk headquarters, those regions will develop. Developing other parts of the country and the State is a requirement. Why should we make sure that everything is concentrated in Bengaluru and make it more unliveable?
Much of the focus is on urban centres. There is not enough attention being paid to regions along the river basins. Isn’t it high time that governments start respecting ecosystems away from the cities that ultimately help these cities thrive?
SV: The question I ask is, how do we create a governance framework which will protect our environment at the river basin scale? We had the Gadgil and Kasturirangan Committee Reports. Both were rejected by people who occupied the Western Ghats or by politicians who manipulated them to do that. Bengaluru exists because the Cauvery. The moment the Cauvery suffers, Bengaluru dies. When will Bengaluru realise that it is essential for it to make sure that the Cauvery flows in a pristine condition and is full of water? This should become a common point of conversation among ordinary citizens. We should not be worried only about piped water or tanker prices. Those are symptoms. The real cause of the problem is environmental destruction. Unless we build the right institutions to manage our systems and resources and bring in expertise, we will continue to suffer.
Every time there is a crisis, we see kneejerk reactions. What should governments do to secure the future of our cities?
SV: Wellrounded institutions that should be able to understand the problem, define it correctly, and then frame longterm and sustainable solutions.
TVR: The right institutions, yes, but also accountability in the system. We are creating projects just to use funds. Unless we tackle corruption, planning will fail. We should also elect the right people.