Electoral trusts may have been side-lined by electoral bonds as the preferred means of donating to political parties, but they are still disbursing healthy amounts to fund parties. The largest electoral trust, Prudent Electoral Trust (PET), donated over 71 per cent of the total disbursal to BJP in FY23. 

The United Progressive Alliance in 2013 conceptualised the electoral trust scheme, allowing companies under Section 25 of the Companies Act, 1956, to establish electoral trusts. Any Indian citizen or corporate entity could donate to these electoral trusts under Section 17CA of the Income-Tax Act, 1961. 

Electoral bonds and electoral trusts 

Over the span of 10 years, electoral trusts disbursed approximately ₹2,557.74 crore to various political parties. The donations have surged from ₹85.37 crore to ₹366.48 crore, indicating a 360 per cent growth in political contributions over the decade. 

The Bharti-backed PET accounted for around 88 per cent of the total sum donated by electoral trusts in 10 years. Notably, the BJP has been the largest beneficiary of PET’s donations on an annual basis. 

On the other hand, from FY18 to FY22, political parties in India received ₹9,191.41 crore through electoral bonds. Notably, the BJP alone accounted for 57 per cent of the total donations from bonds. 

Prudent Electoral Trust 

The annual contribution report of PET indicates its distribution of funds to various political parties. In FY23, PET donated ₹363.15 crore, with the BJP receiving the majority at 70.6 per cent.

Other beneficiaries included the Bharat Rashtra Samithi with 24.8 per cent, Yuvajana Sramika Rythu Congress Party with 4.4 per cent, and the Aam Aadmi Party with 0.2 per cent donations. 

Similarly, in FY22, PET’s total contribution amounted to ₹464.81 crore, with 72.4 per cent allocated to the BJP. The Indian National Congress (INC) received 3.6 per cent of the donations, while the remainder was distributed to other national and regional political parties. 

The contrast with electoral bonds highlights that electoral trusts, unlike bonds, must disclose their political financers in annual reports. The PET relies on significant contributions from major Indian corporate organisations. In the FY23 report, 42 donors contributed to PET, with 88.7 per cent of the contributions coming from eight corporate entities, each contributing more than ₹10 crore. PET’s top three contributors in FY23 were Megha Engg & Infra, Serum Institute of India Pvt Ltd, and Arcelor Mittal Nippon Steel India Ltd, contributing substantial amounts of ₹87 crore, ₹50.25 crore, and ₹50 crore, respectively.