What are electoral bonds?
Electoral bonds are a type of financial instrument that was developed in India to provide a transparent and anonymous way for individuals and corporations to donate money to political parties.
The Indian government unveiled this financial tool in 2018. These bonds are offered in denominations of Rs 1,000, Rs 10,000, Rs 1 lakh, Rs 10 lakh, and Rs 1 crore. They may be purchased using a KYC-compliant account to donate to a political party.
These bonds are issued by the State Bank of India (SBI) and can be acquired by an Indian individual or corporation that is incorporated in India. Electoral bonds are intended to maintain donor anonymity while ensuring transparency in political funding.
Nonetheless, due to questions about transparency and potential misuse, the program has also come under criticism and has been the focus of legal scrutiny.
The Supreme Court asked for the disclosure of electoral bond purchase specifics when it scrapped the political funding tool earlier in 2024.
Let’s take a look at the top bond buyers, along with some key figures revealed in the initial data release by SBI:
Unlisted Companies
1. Future Gaming and Hotel Services
Future Gaming and Hotel Services, a Coimbatore-based company, has emerged as the top buyer of electoral bonds. The $2 billion gaming company purchased electoral bonds worth Rs 1,368 crore between April 2019 and January 2024. Run by “Lottery King” Santiago Martin from Coimbatore, the company focuses on online lotteries.
2. Megha Engineering & Infrastructure
Megha Engineering & Infrastructure Ltd. (MEIL), a Hyderabad-based company, emerged as the second-largest donor to political parties and bought electoral bonds worth Rs 966 crore between April 2019 and October 2023.
3. MKJ GROUP
The Jalans of Kolkata have accumulated the third-highest amount of electoral bond spending. The founder and chairman of MKJ Group, Mahendra Kumar Jalan, oversees a diverse range of companies. The group used four organizations to spend a total of Rs 617 crore.
Some other unlisted companies in this list include Qwik Supply Chain (Rs. 410 crore), Haldia Energy (Rs. 377 crore), Essel Mining & Industries (Rs. 224 crore), etc.
Listed Companies: 100 Indian Stocks Make the List
1. Vedanta Group
Vedana was the fourth-biggest donor on the list. The mining major, controlled by billionaire Anil Agarwal, purchased electoral bonds worth Rs 400 crore. The company has a revenue of $18 billion, is India’s largest private-sector oil producer, and has a big presence in aluminium, zinc, silver, copper, iron, and steel. Over the years, the firm has been involved in several legal disputes with the government.
2. Bharti Airtel
The Bharti Group, led by Sunil Mittal, has donated Rs 247 crore to political parties in the last five years through electoral bonds. Group companies Bharti Airtel, Indus Towers, and Bharti Telemedia made the payments; Airtel contributed 80%, or Rs 198 crore, of the total.
3. Jindal Steel & Power
Jindal Steel & Power ranked as the fifteenth largest donor and invested 120 crore in bonds. Jindal Stainless, a Jindal Group company, purchased bonds for Rs 30 crore. While Jindal Poly Films purchased bonds worth Rs 35 crore, Jindal Saw purchased bonds worth Rs 29 crore.
Additional corporate purchasers included Spicejet, IndiGo, Grasim Industries, Piramal Enterprises, Torrent Power, DLF Commercial Developers, Apollo Tyres, CEAT tyres, Edelweiss, PVR , Sula Wines, Welspun, Sun Pharma, Vardhman Textiles, Phillips Carbon Black Limited, ITC, Kaypee Enterprises, Cipla, Dr Reddy’s Laboratories and Ultratech Cement, reflecting several diverse participation from different sectors.
In an individual capacity, steel tycoon Lakshmi Niwas Mittal made contributions of Rs 35 crore through electoral bonds.
The top three political parties that received funds were:
Bharatiya Janata Party: ₹6,566 crore
Trinamool Congress: ₹1610 crore.
The Congress: ₹1422 crore.
It is vital not to succumb to the buzz surrounding electoral bonds. Despite the fervent debates and controversies on electoral bonds, investors must remain steadfast in their commitment to sift through market noise and instead prioritize fundamental analysis and adhere to long-term investment objectives.
