India Inc gets generous, especially when we go to polls

India Inc has often tried to show its humane side, donating money for various causes over the years. But if we take a look at the donations over the recent times across various companies, it seems that the generous loosening of purse strings is mainly towards political purposes.

According to data culled for around 1,055 listed companies whose results have been declared so far, corporate donations rose to a new high and stood over Rs 1,300 crore in 2014/15 compared to Rs 1,293 crore in the previous year. It is important to point out that when we talk about corporate donations, it includes contributions to relief funds, charitable trusts and contributions to political parties.

On an average, around 25-30 per cent of companies have been donating since 2004 within this sample. In total, around 66 companies donated above Rs 1 crore in 2014/15, as against 77 in 2013/14. The roster of donors continues to be donated by traditional powerhouses such as Reliance Industries, Mahindra & Mahindra and Ambuja Cements, which have been donating over five years with 36 new donors in the last two years.  

Corporate donations as a share of their profit before tax (PBT) rose to almost a decade high at around 0.9 per cent in 2013/14 and 2014/15. In 2003/04, donations as a per cent of PBT stood at 0.7 per cent, which subsequently fell to 0.4 per cent and 0.3 per cent in 2005/06 and 2006/07, respectively.

It again rose to 0.5 per cent and 0.6 per cent in 2007/08 and 2008/09 before going down to 0.4 per cent in 2011. The year 2014 was a significant year as the country saw its general elections. And joining the dots historically, India saw two more general elections over a decade. In 2008 there were 10 state assembly elections, year 2010 saw just one state assembly election, 2013 saw nine and 2014 saw four.

According to a report by the Association for Democratic Reforms (ADR), 90 per cent donations to national political parties in 2013-14 came from corporate and business houses. General electoral trust were the topmost donor to both the Indian National Congress (INC) and BJP, donating Rs 36.4 crore and Rs 26.57 crore, respectively between 2004/05 and 2011/12, as per another report by ADR.

If we delve deeper, we see that top corporate donors (donations above Rs 10 crore) contributed almost 87 per cent of the total donations in 2015. Some of top donors such as Mahindra & Mahindra contributed Rs 12.5 crore to political parties in 2014/15.

Ultratech Cement's contribution to political parties stood at Rs 53.95 crore whereas Bharti Airtel's contribution for political purpose stood at Rs 25 crore. The top most donor Reliance Industries, however, donated around Rs 743 crore for charity and trusts. There is no data historically to link the trend since under the old Companies Act, companies could avoid mentioning naming the political party.

Now, however, companies have to name the political party that they contribute to. So recent disclosures could be an eye-opener.