The donation was made through electoral bonds, which are anonymous instruments that can be used to fund political activities without disclosing identity or amount. The donation was higher than Vedanta Ltd’s average monthly donation since FY18 ($3 million), indicating a possible increase in its political spending or strategy.
NEW DELHI (India CSR): It has been reported that Anil Agarwal led Vedanta Ltd, a leading mining and metals company in India, board has approved the donation of Rs 200 crore to various political parties in November 2023. This is the highest amount that the company has ever donated to any political party or cause in a single month. The donation was made through the subscription of electoral bonds, which are anonymous instruments that can be used to fund political activities.
The donation raised questions about Vedanta Ltd’s transparency and accountability on its corporate governance practices and social responsibility commitments. The appropriateness of a major corporate house donating to political parties can be a matter for consideration and discussion.
Corporate Political Donations in India: A Closer Look at 2018-19 Contributions During Lok Sabha Elections
In 2018-19, most of India’s top 50 listed companies abstained from political funding during the Lok Sabha elections, which witnessed record political spending. The Nifty 50 companies collectively donated Rs 692.8 crore for political purposes, but this was primarily driven by Tata Consultancy Services Ltd. and Tata Steel Ltd., which contributed over half of this amount.
Only 14 of these companies made political donations, while the remaining 36 did not. Despite an increase in corporate political donations compared to 2013-14, the total was still a small fraction of the approximately Rs 55,000 crore spent in the 2019 general election. Notably, major firms like Reliance Industries Ltd. and Adani Ports and Special Economic Zone Ltd. reported no political donations. (7)
Electoral Bonds: A New Way of Funding Politics
Electoral bonds are a scheme introduced by the government in 2018 as an alternative to cash donations made to political parties. The scheme aims to curb black money and corruption in politics by allowing individuals or corporates to donate money through State Bank of India (SBI), which is the only authorised bank to issue and encash these bonds.
The donors do not have to disclose their identity or the amount of donation, and the recipients do not have to provide any proof of receipt. The bonds can be purchased from any SBI branch or online through a website.
The scheme has been criticised by many opposition parties, civil society groups, and activists for being opaque, unaccountable, and prone to misuse. They have alleged that electoral bonds are a tool for corporate lobbying and influence-peddling, as they enable wealthy donors to evade taxes and regulations on their donations.
They have also questioned the transparency and accountability of SBI, which is supposed to keep track of all the transactions related to electoral bonds.
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Vedanta’s Donation: A Sign of Corporate Influence?
Vedanta Ltd is one of the largest mining companies in India, with interests in iron ore, copper, aluminium, zinc, lead, silver, oil and gas. The company has been involved in several controversies over its environmental and social impacts, such as pollution, displacement, human rights violations, tax evasion, and legal disputes3. The company has also faced criticism for its political donations through electoral bonds.
According to stock exchange disclosures by Vedanta Ltd, the company donated Rs 155 crore (about $20 million) to various political parties through electoral bonds in FY23 (April 2022- March 2023). This was higher than Rs 123 crore (about $15 million) donated in FY22 (April 2021- March 2022). In total, Vedanta Ltd has donated Rs 457 crore (about $60 million) to political parties through electoral bonds since FY18 (April 2018- March 2019).
The company’s donation in November alone was Rs 100 crore (about $13 million), which was more than its average monthly donation of Rs 25 crore (about $3 million) since FY18.
The company’s board authorised its chairman Anil Agarwal and vice-chairman Ravi Neerabhagwan Rathod to decide on the “quantum of political contribution” paid to individual political parties.
The company’s donation raised concerns among some stakeholders about its corporate influence on politics. Some analysts speculated that Vedanta Ltd may have used its donation as a way of influencing policy decisions or securing favourable outcomes for its mining projects or interests. Some activists also accused Vedanta Ltd of using its donation as a way of whitewashing its negative impacts on society and environment.
(CopyRight@India CSR
References
1. Electoral Bonds: A New Way Of Funding Politics (moneycontrol.com)
2. Electoral Bonds: A Tool For Corporate Lobbying? (business-standard.com)
3. Vedanta: A Controversial Mining Giant (economictimes.indiatimes.com)
4. Vedanta Discloses Electoral Bond Donations (stories.jobaaj.com)
5. Vedanta Donated Rs 155 crore To Political Parties In FY23 (adrindia.org)
6. Vedanta’s Political Donations Soar To Rs 155 Crore Through Electoral Bonds In FY23 (news.abplive.com)
