While release of data on corporate funds received by political parties shows a great move towards transparency, the question regarding the monetary relationship between political parties and businesses still remains unanswered.

A quick examination of the numbers available of the trend from April 1, 2015 to March 31, 2017 reveals that the business contribution to politics has grown more than 9 times from about Rs 62 crore to Rs 563 crore.

Now, assuming this is reflective of the real trend—after factoring in an increase in reporting and/or funding directly by corporates vs indirectly earlier—it appears that India Inc has stepped up its payouts to the political class, presumably to ensure “ease of doing business”.

What’s more important to note is that this is growing at a pace far ahead of the growth in business profits, as revealed by a simple study of the profit growth of companies forming part of the NSE-50 (Nifty).

While contributions to political parties grew at an annually compounded rate of 84 percent over the 5 years to end of fiscal 2017 (FY2017), profits of Nifty companies grew at a compounded rate of only 9 percent.

The contribution of political parties also outpaced the growth in payouts by companies in the Nifty to their shareholders by way of dividends by a wide margin. Does this indicate that the political cost of doing business is on the rise?

Another interesting revelation from the data is the marginalisation of the Congress party in the business funding sweepstakes. While the grand old party, as it is often referred to, commanded a share of over 50 percent of political funding in FY2005, this has shrunk to just 6.4 percent in FY2017.

In sharp contrast, the share of BJP has expanded from a little under 50 percent to over 90 percent, over the same period.

Is this why the Congress is calling the BJP-led government “Suit, boot ki Sarkar”? Has the Congress lost its funding base or is it getting more funds from the “non-corporate” segment? Or are the reported numbers not fully capturing their business support base? These are questions that will gain significance as the national elections approach.

If money flow is an indication of strength before an election, the wind is clearly behind the BJP sails.

First Published:Aug 2, 2018 2:29 PM IST