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

TIn 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,

S. Vishwanath:

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 threeyear 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.

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

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?

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.

TVR:

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