Although political parties are required to submit details of donors who have made donations above Rs20,000 to the Election Commission, every year, they report that 75% of the donations are unknown
While 75% of the sources of funding for political parties are unknown, the latest study undertaken by Association of Democratic Reforms (ADR) shows that within the 25% of known funding sources, a whopping 87% comes from the corporates, mainly from trusts and groups of companies and the manufacturing sector.
The analysis by ADR put up on its website on 8th January shows that, out of Rs435.87 crore collected by national parties between the financial years 2004-05 and 2011-12, Rs378.89 crore was donated by corporates and business houses, thus constituting 87% of the total contribution from known sources of political parties. Since, except for the Indian National Congress and Communist Party of India (Marxist), no other national party has submitted its donations report for the financial year 2012-13, ADR’s report covers donations received from national parties only between FY05 and FY12.
In ADR’s earlier report of 13 September 2013, based on innumerable documents procured under Right to Information (RTI) from various relevant government departments, it was found that 75% of the sources of political parties is unknown. This, despite the fact, that, political parties are required to submit details of donors who have made donations above Rs20,000 in a financial year (between 1st April and 31st March) to the Election Commission of India, every year. Parties are required to provide details of the name, address, PAN, mode of payment and amount contributed by each donor who has made donation above Rs20,000. However, this is largely not adhered to.
The report shows that Bharatiya Janata Party (BJP) received the maximum donations of Rs192.47 crore from 1,334 corporate donors followed by Congress which received Rs172.25 crore from 418 donors. The main donors to the Congress are Aditya Birla Group which donated Rs36.41 crore, Torrent Power Ltd which donated Rs11.85 crore and Bharti Group’s Bharti Electoral Trust which donated Rs11 crore. The BJP too received generosity from the Aditya Birla Group which donated Rs26.57 crore and Torrent Power Ltd which donated Rs13 crore. It also received Rs10 crore from Asianet V Holding Pvt Ltd. Sharad Pawar-led Nationalist Congress Party (NCP) received Rs1 crore each from Ambuja Cement, Hindustan Construction Co Ltd and Infina Finance Pvt Ltd.
The report states, “the maximum number of donations was made by the manufacturing sector (595 donations, Rs99.71 crore) followed by 340 donations (Rs24.10 crore) from the real-estate sector. The least number of donations was made by the hospitals (16 donations, Rs14 lakh) followed by 45 donations each by the shipping and transport (Rs3.67 crore) and communication sectors (Rs13.26 crore) to the national parties.”
The corporates’ inclination towards Narendra Modi-driven BJP is reflected in the maximum number of donations to BJP. The report states: “Out of the national parties, BJP received the maximum donations of Rs192.47 crore from 1,334 donors from corporate/ business sector followed by Congress receiving a total contribution of Rs172.25 crore from 418 donors from corporate/ business sector.’’
Although foreign funding is banned for political parties, the report states, “A total of Rs29.26 crores was accepted by Congress and BJP together between 2003-04 and 2011-12. ADR has filed a petition in the Delhi High Court to take action against the two largest national parties, Congress and BJP.’’
A total of Rs105.86 crores was donated by six Electoral Trusts to the national parties.
The ADR recommends that, “the Supreme Court gave a judgment on 13 September 2013, declaring that no part of a candidate affidavit should be left blank. Similarly, no part of the Form 24A submitted by political parties providing details of donations above Rs20,000, should be blank; all donors who have donated a minimum of Rs20,000 as a single or multiple donations should provide their PAN details and; details of donors who make donations to the Electoral Trusts should be available in the public domain to increase transparency in funding of political parties.’’
Until any stringent measures are taken by the government in implementing the strict norms of political funding, unaccounted money will continue to be the fuel of election campaigning.
Number of donations made by corporate/ business sectors:
Maximum number of donations was made by the manufacturing sector (595 donations, Rs99.71 crore) followed by 340 donations (Rs24.10 crore) from real-estate sector
Least number of donations was made by the hospitals (16 donations, Rs14 lakh) followed by 45 donations each by the shipping and transport (Rs3.67 crore) and communication sectors (Rs13.26 crore) to the national parties
Top corporate donors to national parties
Congress: General Electoral Trust of the Aditya Birla Group donated the maximum amount (Rs36.41 crore) followed by Torrent Power Ltd (Rs11.85 crore) and Bharti Electoral Trust of Bharti Group (Rs11 crore)
BJP: General Electoral Trust of the Aditya Birla Group donated the maximum amount (Rs26.57 crore) followed by Torrent Power Ltd (Rs13 crore) and Asianet V Holding Pvt Ltd (Rs10 crore)
NCP: Ambuja cement donated the maximum (Rs1 crore) followed by Hindustan Construction Co Ltd (Rs1 crore) and Infina Finance Pvt Ltd (Rs1 crore)
CPI and CPM: CPI received a total of Rs11 lakh from 13 corporate donors while CPM received a total of Rs1.78 crore from 108 corporate/ business houses
Political parties which received maximum contributions from various sectors:
Congress received maximum contributions from trusts & group of companies (Rs70.28 crore), while BJP received maximum donation from manufacturing sector (Rs58.18 crore) and power and oil (Rs17.06 crore)
Maximum donations from mining, construction, export/ import sector was received by Congress (Rs23.07 crore) while maximum donations from the real estate sector was received by BJP (Rs17.01 crore)
Donors who have not declared PAN and address:
A total of 301 donors contributing Rs25.28 crore to the national parties have not declared either their PAN details or address in the contribution form
BJP has the listed the maximum number of donors (273) who have not declared their PAN and address while contributing a maximum of Rs22.53 crore
Donors who have not declared their mode of payment:
Mode of payment of donations by 58 donors who have donated Rs1.02 crores to the national parties have not been declared by the national parties
Recommendations of ADR
The Supreme Court gave a judgment on 13 September 2013, declaring that no part of a candidate affidavit should be left blank. Similarly, no part of the Form 24A submitted by political parties providing details of donations above Rs20,000, should be blank
All donors who have donated a minimum of Rs20,000 as a single or multiple donations should provide their PAN details
Political parties are not permitted to accept contributions from foreign companies or companies controlled in India by foreign companies but a total of Rs 29.26 crores was accepted by Congress and BJP together between FY 2003-04 and 2011-12. ADR has filed a petition in the Delhi High Court to take action against the two largest national parties, Congress and BJP
A total of Rs105.86 crore was donated by six Electoral Trusts to the national parties. ADR recommends that the details of donors who make donations to the Electoral Trusts should be available in the public domain to increase transparency in funding of political parties.
Here is the ADR report on political donations…
(Vinita Deshmukh is consulting editor of Moneylife, an RTI activist and convener of the Pune Metro Jagruti Abhiyaan. She is the recipient of prestigious awards like the Statesman Award for Rural Reporting which she won twice in 1998 and 2005 and the Chameli Devi Jain award for outstanding media person for her investigation series on Dow Chemicals. She co-authored the book “To The Last Bullet - The Inspiring Story of A Braveheart - Ashok Kamte” with Vinita Kamte and is the author of “The Mighty Fall”.)
According to ZyFin Research’s indicator there may be a moderate IIP expansion in January
ZyFin Research, a financial research and analytics company, expects moderate expansion in Index of Industrial Production (IIP) during January. ZyFin’s Business Cycle Indicator (BCI) as of December 2013 stood at 4.7%, compared to 4.2% registered in November 2013. This was led by improving foreign trade statistics with a rise in container cargo handled by Indian ports, slight decline in petrol import bill and forex reserves.
“There have been some early indications of improvement in consumer demand as measured by Zyfin’s Consumer Outlook Index for December. If this trend sustains in the near future, the looming risk of rising inventory can be averted lending itself into a steep recovery in industrial activity. We need to keep a close watch on how consumer demand evolves in 2014,” said Debopam Chaudhuri, vice president of research and development, ZyFin Research.
According to ZyFin Research the BCI indicates the state of the Indian business cycle more than two months in advance of the release of the IIP, and eliminates the lag associated with the IIP data, allowing reliable and advance detection of turns in the business cycle. A continuous uptrend for three months in BCI signifies an improving business cycle and vice versa.
The key highlights of ZyFin Research Business Cycle Indicator (BCI) for December 2013 are:
BCI (INBFBCI) is an independent, real-time indicator of the business cycle in India. BCI is a monthly composite indicator of primary and secondary micro variables provides timely information on the state of business cycle in the Indian economy.
This is with regard to the Cover Story published in Moneylife
(28 November 2013) about how an investor won his arbitration case against a broker.
While the story is, indeed, laudable, it does dent my confidence as an investor in the Indian stock markets. And, my impression is not only based on some brokers cheating the investors; it is actually due to a plethora of systemic issues like:
(a) companies defrauding investors by giving incorrect information about their current state of business; (b) manipulation of stock markets by brokers, companies and other entities; (c) SEBI acting merely as a messenger of a complaint (in the case of small retail investors), but, more importantly, believing the accused more than the complainant, in spite of the complainant having all the data; (d) government destroying investors’ wealth by offloading stake through FPOs (follow-on public offers) at a substantial discount to the market price; and (e) lack of corporate governance even in the top blue-chip companies and with no follow-up action by government or the regulators.
I was very active in raising several issues bringing them to the regulators’ notice; but the lack of action from their side has put to rest my activism. Instead, I have started wondering whether it is worth it to invest money in stock markets, tracking the markets which are prone to huge manipulations (lot of information asymmetry), following up on complaints to regulators and companies, and then having an endless wait for the ‘right’ action.
I feel it is much better to explore other investment avenues, or rather not invest at all. At least, there would be some personal time with one’s family and friends rather than seeing one’s money getting wiped off due to Indian markets. I don’t think Indian markets are meant to be small-investor-friendly. They are designed to benefit businesses, manipulators and other influential entities who know what to trade and when to trade. Small investors are like ‘donkeys’ whose backs are used to ride upon and jump off when the objective has been met. It is not about lack of action, but rather NO action by government and the regulator.
I don’t think we need a lot of analysis on stocks, companies, mutual funds, etc, because
no amount of analysis can achieve the systematic correction required in the whole set up. I doubt whether this is the way the system is meant to be. No correction would happen, no matter what happens in the system. I might sound like a huge pessimist, but let me support the above argument with one personal example.
I had invested in tax-free bonds through ICICI Direct. These bonds, after getting listed on the NSE and the BSE, are tradable like any other stock. ICICI Direct, on its own, increased the brokerage for these bonds to 1% against a flat brokerage of 0.55% that it charges for stocks.
In another instance, the tax-free bonds that I invested were supposed to be listed on both the NSE and the BSE, as per offer document. I had invested in the IPO through ICICI Direct after going through the offer letter which clearly indicated that these would be listed on both the exchanges. However, once the bonds were listed, the risk department of ICICI Direct did not allow the securities to be listed on the NSE and allowed them to be tradable only on the BSE. I wanted to sell the bonds one day on the NSE at a price which was Rs20 higher than that on the BSE. This did not happen (as the system did not allow me to trade on the NSE) and I could not trade. Currently, the bonds are trading at Rs120 lower than the price I had wanted to exit three months back, giving me an unrealised loss of Rs12,000 from the allocation price.
In the first case, after registering a complaint on SCORES, ICICI grudgingly refunded the excess brokerage but cautioned me that it would be 1% for any subsequent trades. In the second case, in spite of having all the data in my favour, ICICI chose not to respond to the complaint, even until now, with absolutely no follow-up by the NSE and SEBI.
I think this settles my case.
Tarun Agarwal, by email
RISING NON-PERFORMING ASSETS IN BANKS
The gross non-performing assets (NPAs) of commercial banks are mounting. The trend observed in the case of public sector banks (Government of India is the major shareholder) is alarming. The quantum of bad loans in all the banks (including foreign and private banks) is now over Rs2.25 trillion. Moody’s Investors Service expects further deterioration of the asset quality of banks by March 2014. They estimate that gross NPA level will go up to the extent of Rs2.70 trillion to Rs2.90 trillion.
The provisioning norms, based on the age and availability of security of the NPAs, impact the profitability of the banks. Banks’ NPAs do not earn any income for banks from the date they are classified as NPAs, to the date of their realisation. In turn, provisioning for NPA leads to erosion of bank profits. United Bank of India and Central Bank of India incurred losses to the tune of Rs490 crore and Rs1,500 crore, respectively, for the quarter ended September 2013. This was due to huge provisioning requirement for bad loans. Media have reported that banks made provisions to the tune of Rs1.40 trillion between 2008 and 2013.
Of late, restructuring of accounts is done to show them as performing accounts. These accounts are ‘dressed accounts.’ Most of the restructured accounts pose a danger to the banks in a short span of time. These accounts will also come under NPAs, in the subsequent quarters.
The banks source funds from the public for lending to various sectors. The trust and confidence reposed in by depositors will be gradually eroded as NPAs pose a threat to banks.
At this critical situation, bankers should monitor the advance accounts very closely and avoid further slippages to NPA category. This should be the foremost aim of bankers. While selecting new borrowers, banks should exercise greater care in their appraisal. Besides verification of the financial reports of the borrowers, bankers should make discreet enquiries on the creditworthiness, past performance and financial discipline of the promoters. Most bankers miserably fail in this area.
The selection of borrowers and close monitoring of the accounts will certainly reduce the number of accounts turning into non-performing ones.
RM Ramanathan, by email
QUITTING OF VETERANS
This is with regard to “V Balakrishnan the ‘keen anchor-builder’ of Infosys resigns”. The quitting of so many veterans, more particularly of the Bala variety, in quick succession, indicates that there is certainly something wrong—something much more than meets the eye. Dal mein kuch to kala hai.
IS IT INDIA’S NATIONAL PRIDE?
This is with regard to “Who is Devyani Khobragade?” To the best of my knowledge, there are stringent and all-encompassing vigilance and intelligence enquiries as well as background checks done on people heading out for diplomatic posts in sensitive locations. Had it not been for this unconnected episode of the servant issue snowballing into something that is big in the US, the rest of us Indians would not have come to know about the assets and other aspects of this officer’s performance. It would be interesting to know how those background checks were handled in the ministry of external affairs and other government departments. Presumably, these are also in public domain and available through Right to Information, or could they be placed on public record? The larger benefit to the nation, hopefully, is that some sort of fear would be stalking the minds of the corrupt and arrogant. This can only be done with more such articles. And it is a totally different issue from India’s national pride in the way that diplomats are treated.
KEEP UP YOUR GOOD WORK!
This is with regard to “Enforcement action accelerates against Ponzi and MLM schemes” by Sucheta Dalal. I am very glad that you have taken the initiative. Also, I understand that it is a long process. SpeakAsia is a closed unit now. But QNet, etc, are still working. More people are getting sucked into these schemes. Those who are stuck are eager to leave. What is the government’s plan of action to curb all these schemes? Keep up your good work!
‘NOT CUSTOMER FRIENDLY’
This is with regard to “RBI’s inflation index bonds better than bank FD for retirement savings” by Raj Pradhan. These inflation index bonds of RBI (Reserve Bank of India) are neither attractive nor acceptable for the saving community from middle class and lower middle class including retired category and pensioners. The reasons are: (a) the return assured is only 1.5 % above the inflation index which is flexible and not reflecting the ground realities of retail prices in the market; (b) the money is locked up and interest income is cumulative in nature; (c) the interest income is taxable; (d) the procedure involved is not customer friendly.
RBI DOESN’T GO BY MARKET GOSSIP
This is with regard to “Has RBI realised the limitations of monetary policy measures in taming inflation?” by Vivek Sharma. It may be too early to come to conclusions about RBI’s intentions, while leaving the rates untouched this time. Perhaps, this may be just to give a signal to speculators that RBI doesn’t go by market gossip. RBI has never claimed that changes in base rates alone, or even a combination of traditional monetary policy measures in the central bank’s armoury, can manage inflation.