A recent analysis by the Association for Democratic Reforms has shown that the businesses houses of India, including corporates contributed Rs. 1179 Crore to Electoral Trusts in FY 2023-24 and out of this huge sum, Rs. 856. 45 Crore was disbursed to the ruling Bharatiya Janata Party (BJP) and Rs. 156 Crore to the Indian National Congress (INC).
The Prudent Electoral Trust donated Rs. 723 Crore to the BJP; Rs. 85 Crore to the Bharat Rashtra Samiti (BRS)–the then ruling party in the state of Telangana; Rs. 72.50 Crore to the YSR Congress-the then ruling party in Andhra Pradesh. During the fiscal year 2023-24, electoral trusts received 51.23% of their total donations, amounting to Rs 624.195 cr, from the top 10 corporate donors. DLF Ltd, ArcelorMittal Nippon Steel India Ltd, Maatha Projects LLP, CESC Ltd, and Maruti Suzuki India Ltd were amongst the top donors to electoral trusts. Both DLF Ltd and ArcelorMittal Nippon Steel India Ltd contributed the highest amount of Rs 100 cr each. Following closely, Maatha Projects LLP donated Rs 75 cr, while CESC Ltd and Maruti Suzuki India Ltd each contributed Rs 60 cr.
After the Supreme Court declared the electoral bonds scheme to be unconstitutional in February 2024, electoral trusts have made a comeback, to fill the big gaping void left by the electoral bonds scheme. The Prudent Electoral Trust received the largest share of donations. Nearly three-quarters of those donations, amounting to Rs 797.1 crore out of a total of Rs 1,075.7 crore, were made after the Supreme Court’s decision on February 15.
How massive is ₹1,179 crore—the total sum funnelled by these Electoral Trusts into political parties? To grasp its scale, this is nearly the entire 2025 budget allocation for judiciary infrastructure or the estimated funding for cutting-edge R&D at Bhabha Atomic Research Centre (BARC). These are pillars of national progress, yet the same amount has been mobilised not for science, justice, or public welfare, but to tighten the grip of corporate power over our politics—all under the guise of “transparent” donations.
This article seeks to examine the democratic legitimacy of the Electoral Trusts, without invoking their presumptive constitutional status against their now unconstitutional successors-electoral bonds.
What are Electoral Trusts?
A legal trust is a financial or legal arrangement in which one party (the trustor or settlor) transfers assets to another party (the trustee) to hold and manage for the benefit of a third party (the beneficiary). Trusts are commonly used for estate planning, asset protection, and charitable giving.
In case of Electoral Trusts in India, the donors are the corporates, the trustee is whoever manages the trust, and the beneficiary is the political party. Sometimes, the trustor is also a corporation which would establish a trust and later transfer it to other auditors. For example, the Prudent Electoral Trust was established by Bharti Enterprises (the parent of Bharti Airtel) but was later transferred to independent auditors to be managed.
How are they structured?
Electoral Trusts (Trusts) are registered under Section 8 of the Companies Act, 2013 (Section 25 of the now repealed Companies Act, 1956), requiring approval from the Central Board of Direct Taxes (CBDT) and adhere to the CBDT rules. They must adhere to the provisions of the Income Tax Act, 1961. Trusts cannot accept foreign donations or contributions from government companies, ensuring domestic funding sources.
Operational Structure
- Donations: Trusts receive voluntary contributions from Indian citizens, domestic companies, firms, or Hindu Undivided Families (HUFs) via cheques, bank drafts, or electronic transfers. Donors must disclose their Permanent Account Number (PAN).
- Fund Distribution: At least 95% of collected funds must be disbursed to registered political parties, with the remaining 5% administrative expenses. Trusts cannot use donations for members’ benefit.
- Transparency: Trusts must maintain audited accounts, disclosing donors, recipients, and disbursements to the CBDT and the Election Commission of India (ECI).
The issue with Electoral Trusts
The design of electoral trusts reflects a compromise between corporate interests and state regulation, embedding structural inequities into India’s political economy.
First, Trusts like Prudent Electoral Trust dominate the landscape, distributing funds disproportionately to major parties (e.g., the BJP and Congress—more to the BJP), entrenching incumbency and marginalising smaller voices. This concentration mirrors the broader political economy’s bias toward established power blocs, where corporate donors prioritise access to ruling parties over democratic pluralism. While Trusts disclose donor identities to regulators, they withhold critical details like trust deeds or allocation criteria, enabling deniability for corporations and opacity in fund distribution.
Second, the regulatory framework—governed by the Electoral Trusts Scheme (2013)—mandates minimal transparency. Trusts must distribute 95% of funds to registered parties but face no scrutiny over their internal governance. This loophole allows Trusts to operate as autonomous entities, ostensibly independent of donor influence, yet their opaque rules shield them from accountability. For instance, Prudent’s donations, though publicly reported, lack explanations for party-specific allocations, raising questions about quid pro quo arrangements. Essentially, we have multiple companies donating to the trust, and the trust funnelling the money to the party. We do not know whether the trust is funnelling the money to the party on the advice and suggestion of the donor or, if there is a cartel of sorts or anything as such. The public is kept in the dark as to what guides the division of money between parties, by trust when it executes the contributions.
Third, the rise of Electoral Trusts, post-electoral bonds, underscores the persistence of corporate dominance in political financing. Corporations leverage these trusts to maintain influence while avoiding direct exposure, perpetuating a cycle of crony capitalism. What was direct in Electoral Bonds’ case where there was complete anonymity for the donors, is indirect in Electoral Trusts which give the chance to companies to deny their role in disbursement of funds to the parties. The ECI’s limited oversight—relying on limited disclosures—further weakens accountability, leaving voters uninformed about the true sources of party funding. The disclosures mandated by the ECI and are publicly accessible do not have details of the trust deed, or the details of the criteria of division of funds between the parties.
Why Electoral Trusts undermine democracy
The shadows cast by Electoral Trusts reveal a deeper truth: the veneer of transparency masks a system designed to entrench power. These trusts, dominated by a few corporate giants, funnel funds to major parties while obscuring the strings attached. The illusion of autonomy—trusts claim independence from donors, yet their allocations disproportionately favour ruling parties—becomes a self-fulfilling prophecy. Smaller parties, starved of resources, fade into irrelevance, while voters internalize the inevitability of elite rule. This is not democracy; it is the cloaked control by capital, where power is consolidated without overt coercion.
The problem lies not just in the Electoral Trusts themselves but in the regulatory framework that enables them. The Electoral Trusts Scheme mandates minimal transparency, allowing trusts to operate as autonomous entities while shielding their internal governance from scrutiny. This loophole enables corporations to maintain influence while avoiding direct exposure, perpetuating a cycle of crony capitalism. The Election Commission’s reliance on self-reported disclosures further weakens accountability, leaving voters uninformed about the true sources of party funding.
Conclusion
To dismantle this system, we must embrace a vision of democracy that prioritises equity and accountability. First, Trusts must be required to disclose their internal rules and allocation criteria. Transparency is not merely a procedural requirement; it is the bedrock of democratic legitimacy. Second, corporate donations to trusts must be capped to prevent the concentration of political power. A model like Germany’s limit on corporate contributions could serve as a template. Third, public funding of political parties should be expanded to reduce reliance on corporate largesse.
Regulatory oversight cannot be passive; it must actively challenge the hegemonic practices that entrench corporate dominance. In the end, the choice is clear: will India’s democracy be a plaything of capital, or a vehicle for the people? The Electoral Trusts’ opacity is not a bug—it is a feature.
To dismantle this Electoral Trusts Scheme is to reclaim the promise of a nation where power belongs not to the few, but to the many.
(The author is a legal researcher with the organisation)
Related:
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Electoral Bonds: SC directs all parties to reveal political funding details to EC