{"id":352623,"date":"2025-12-23T22:55:24","date_gmt":"2025-12-23T17:25:24","guid":{"rendered":"https:\/\/forumias.com\/blog\/?page_id=352623"},"modified":"2025-12-23T22:55:24","modified_gmt":"2025-12-23T17:25:24","slug":"answered-examine-the-resurgence-of-electoral-trusts-as-a-primary-channel-for-political-funding-following-the-scrapping-of-the-electoral-bond-scheme-critically-analyze-how-this-shift-impacts-transpa","status":"publish","type":"page","link":"https:\/\/forumias.com\/blog\/answered-examine-the-resurgence-of-electoral-trusts-as-a-primary-channel-for-political-funding-following-the-scrapping-of-the-electoral-bond-scheme-critically-analyze-how-this-shift-impacts-transpa\/","title":{"rendered":"[Answered] Examine the resurgence of Electoral Trusts as a primary channel for political funding following the scrapping of the Electoral Bond Scheme. Critically analyze how this shift impacts transparency in election finance and the Right to Information of voters."},"content":{"rendered":"

Introduction<\/strong><\/h2>\n

Following the Supreme Court\u2019s February 2024 verdict striking down electoral bonds, corporate political funding has shifted sharply towards electoral trusts, reviving debates on transparency, voter information, and democratic accountability in India\u2019s election finance regime.<\/p>\n

Background: Political Funding Architecture in India<\/strong><\/h2>\n
    \n
  1. Chronic Opacity Problem<\/strong>: ADR reports repeatedly flagged opaque funding as a threat to free and fair elections.<\/li>\n
  2. Evolution of Instruments: <\/strong>Electoral Trusts (2013, UPA) \u2192 Electoral Bonds (2018, NDA) \u2192 Return to Trusts (2024).<\/strong><\/li>\n
  3. Judicial Trigger<\/strong>: SC held electoral bonds unconstitutional for violating voters\u2019 Right to Information (Article 19(1)(a))<\/strong>.<\/li>\n<\/ol>\n

    Electoral Trusts: Structure and Functioning<\/strong><\/h2>\n
      \n
    1. Legal Basis<\/strong>: Notified in 2013; governed by Income Tax Act, 1961 (Section 17CA).<\/strong><\/li>\n
    2. Eligible Donors<\/strong>: Indian citizens, domestic companies, firms, HUFs, associations.<\/li>\n
    3. Operational Rules<\/strong>: Minimum 95% fund disbursal<\/strong> to registered political parties. Mandatory PAN\/passport disclosure.<\/li>\n
    4. Regulatory Oversight<\/strong>: Annual audited reports to ECI<\/strong> and CBDT<\/strong>.<\/li>\n<\/ol>\n

      Resurgence After Electoral Bonds Verdict<\/strong><\/h2>\n
        \n
      1. Sharp Funding Increase<\/strong>: Contributions rose from \u20b91,218 crore (2023\u201324) to \u20b93,811 crore (2024\u201325).<\/li>\n
      2. Corporate Dominance<\/strong>: Three trusts accounted for 98% contributions<\/strong>, indicating concentration.<\/li>\n
      3. Major Donors<\/strong>: Tata Group (Progressive Trust), Mahindra Group (New Democratic Trust).<\/li>\n
      4. Reason for Preference<\/strong>: Legal certainty + transparency without judicial risk.<\/li>\n<\/ol>\n

        Positive Impact on Transparency<\/strong><\/h2>\n
          \n
        1. Donor Disclosure<\/strong>: Unlike bonds, donor identity is known to regulators.<\/li>\n
        2. Traceable Money Trail<\/strong>: Banking channels only; audited financials.<\/li>\n
        3. Voter Information Enhancement<\/strong>: Enables civil society (ADR) to analyse party\u2013corporate linkages.<\/li>\n
        4. Compliance with SC Judgment<\/strong>: Aligns with constitutional emphasis on informed voting.<\/li>\n<\/ol>\n

          Limitations and Democratic Concerns<\/strong><\/h2>\n
            \n
          1. Indirect Opacity<\/strong>: Voters access data indirectly via ECI disclosures\u2014not real-time.<\/strong><\/li>\n
          2. Corporate Influence Risk<\/strong>: Concentration of funding may enable policy capture.<\/li>\n
          3. Uneven Political Playing Field<\/strong>: Larger parties attract disproportionate trust donations.<\/li>\n
          4. No Spending Cap on Donations<\/strong>: Law Commission (255th Report)<\/strong> warned against unlimited corporate funding.<\/li>\n<\/ol>\n

            Comparison with Electoral Bonds<\/strong><\/h2>\n