Political parties like the BJP and Congress spend hundreds of crores during elections. From where does such a huge amount of money come?

Answer by Balaji Viswanathan:

Let us understand the election campaign financing in detail. While in the US you can spend unlimited, but can collect only a certain maximum from people, India is complete opposite. Parties can collect any amount, but can spend only so much. During election years, parties like Congress collect upwards of Rs.500 crores in a single year.

Voter donations: All parties rely on donations primarily. Donations under Rs.20000 need not be disclosed. Most parties use this route. For instance, BSP doesn't report any source and Communists report only 1% of their income. BJP has the highest portion of named sourced – close to a quarter of their donations are over Rs.20000 and thus reported. Most of this comes through the sale of coupons that you can get in exchange for cash (if you have donated to your local temple event, you know how it works).

Major Corporations: Many companies directly donate to their campaigns. It goes without saying that they are expecting some favors.

Electoral Trusts: Most major corporations have electoral trusts that fund all big parties in bulk. All parties are eligible for this funding as long as they secure 16+ seats in the Parliament. The amount is divided proportional to each party's strenth. Birla group leads in this. They paid 36 crore to the Congress and 26 crore to the BJP in the last 5 years. Airtel donated 11 crore to Congress and 9 crore to BJP. Add Tatas, Videocon, Mahindra, Bajaj, Godrej, Vedanta, Reliance and a few hundred other big corporations and it is not hard to see how BJP and Congress were able to spend 100s of crores on their campaigns.

  1. Why Tatas, Birlas use electoral trusts to fund politics
  2. 14 electoral trusts set up as elections draw closer
  3. Anonymous donors 'run' political parties in India, Congress tops the list – The Times of India
  4. Indian National congress (INC) donors list.
  5. BJP's advertisement plan may cost a whopping 5000 crores.
  6. Page on upenn.edu

Political parties like the BJP and Congress spend hundreds of crores during elections. From where does such a huge amount of money come?

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