Why this matters
A recent Times of India report shows that corporate donations routed through nine electoral trusts reached very large sums in 2024–25, with a dominant share going to the party in power Times of India. That datapoint matters because it tells us how money flows into political life after the end of the electoral-bond era — and it forces us to think about transparency, fairness and institutional design.
What are electoral trusts? (brief primer)
- Electoral trusts are entities registered under company law with the specific purpose of collecting donations from companies, firms and individuals and distributing them to registered political parties.
- They were introduced to create a regulated route for corporate political contributions. Trusts must maintain audited accounts and file contribution reports with the Election Commission, so they are more transparent than anonymous instruments like the now-scrapped electoral bonds.
- By regulation, an electoral trust distributes the bulk of its receipts within the financial year and keeps limited administrative overheads.
Why do corporates use electoral trusts?
- Aggregation and convenience: Trusts pool funds from multiple companies and then disburse them to parties, reducing administrative friction for donors.
- Layered disclosure: Trusts do disclose donor lists to regulators, but they typically do not map each donor to the specific beneficiary party in public-facing reports. That separation can make donor-to-recipient lines harder to trace for outside observers.
- Risk management and predictability: Corporates often prefer institutionalised, recurring channels (trusts, bank transfers) rather than ad-hoc donations that may invite scrutiny or administrative hassle.
What the Times of India data suggests (neutral summary)
- Donations via nine trusts rose sharply in the first full year after electoral bonds were struck down, concentrated heavily in a small number of trusts and flowing disproportionately to one large national party Times of India.
- The pattern — a few trusts channeling very large sums, often backed by prominent corporate groups — shows how the end of anonymous bonds did not eliminate big-money political funding; it reorganised it into semi-transparent vehicles.
Legal and transparency implications
- Transparency improved relative to anonymous bonds because electoral trusts must disclose donors and recipients in their statutory filings. However, the practical separation of donor lists from party receipts (and delays or gaps in public uploads) weakens effective public scrutiny.
- Concentration of funds in a few trusts raises questions about influence: when a small group of corporates funds a large share of party finance, voters and watchdogs rightly ask whether that creates incentives for preferential policy treatment.
- Existing laws (company law disclosure, income-tax rules and Election Commission reporting requirements) provide a framework, but enforcement, timeliness and granularity of public data remain the key constraints.
Policy responses worth considering
Below are options that preserve legal channels for donations while strengthening equity and public confidence:
- Improve data granularity and timeliness: publish machine-readable contribution reports promptly on Election Commission platforms, with clear mapping between donors and beneficiary parties.
- Close the donor-recipient gap: require electoral trusts to link individual donor entries to the ultimate party disbursal in public filings, so audit trails are clearer.
- Limit concentration and increase diversity: consider thresholds or reporting triggers for very large aggregates, and encourage caps or staggered disclosure that reduce single-trust dominance.
- Strengthen independent audit and penalties: empower a designated regulator (or a dedicated ECI unit) to audit high-value trust activity and penalise reporting lapses swiftly.
- Explore partial public funding / a National Election Fund: a predictable public allotment (with eligibility rules) can reduce private money’s sway without eliminating voluntary contributions altogether. I have discussed related transparency ideas previously in earlier pieces where I argued for stronger, public-facing mechanisms to prevent opaque quid-pro-quo dynamics (my earlier reflection on trusts and bonds).
A balanced takeaway
Electoral trusts are a lawful and, in many ways, preferable route to anonymous bonds because they require records and audits. But the present pattern — a few trusts channelling huge sums and donors being clustered around big corporate groups — shows that disclosure on paper alone is not enough. Effective transparency needs timely, linked data plus institutional capacity to enforce rules and make the information usable for journalists, civil society and voters.
If policy aims to both preserve legitimate corporate engagement in democratic life and to limit improper influence, the next steps are practical: link donor-to-recipient trails, publish data promptly in machine-readable form, and consider systemic alternatives (stronger public funding or a national election fund) to reduce the outsized role of private money.
I’ll continue watching how regulators and parties respond to the new post-bond architecture — and what it means for the health of our democratic choices.
Regards,
Hemen Parekh
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