Behind the doors of a small, non-descript office in the heart of New Delhi lies the headquarters of an electoral trust run by just two men that is the largest-known donor to India’s ruling Bharatiya Janata Party (BJP), according to a Reuters review of public records.

The Prudent Electoral Trust has raised $272 million since its creation in 2013, funnelling roughly 75% of that to Prime Minister Narendra Modi’s party. The trust’s donations to the BJP total 10 times as much as the $20.6 million it issued to the opposition Congress party, the records show.

The previous Congress-led government introduced electoral trusts in 2013 to allow for tax-exempt contribution to parties. It said the mechanism would make campaign financing more transparent by reducing cash contributions, which are harder to trace.

But some election experts say the trusts contribute to opacity around the funding of political parties in India, where this year’s general election – due to be called within weeks – is expected to return Modi to power for a rare third term, polls predict.

While Prudent does not disclose how donations made by individual corporate donors are distributed, Reuters used public records from 2018 to 2023 to track flows from some of India’s largest companies.

Eight of India’s biggest business groups donated at least $50 million in total between 2019 and 2023 to the trust, which then issued cheques for corresponding amounts to the BJP, according to the Reuters analysis.

Four companies whose transactions were identified by Reuters - steel giant ArcelorMittal Nippon Steel (ESRG.UL), telco Bharti Airtel, infrastructure developer GMR and energy giant Essar - have not given money to the party directly and do not appear on its donors’ list.

GMR and Bharti Airtel said in response to Reuters questions that Prudent determines how their donations are distributed.

Prudent decides “as per their internal guidelines, which we are unaware of,” said a GMR spokesman. He added that the company doesn’t “like to align with any political party.”

Bharti Airtel, which created Prudent before transferring control to independent auditors Mukul Goyal and Venkatachalam Ganesh in 2014, said it has “no influence on the decisions, directions and mode of disbursal of funds.”

Spokespeople for the other groups did not respond to calls, text messages and emails. Goyal and Ganesh did not respond to questions sent via email and post. When asked on a brief phone call about how Prudent functioned, Goyal said: “That is something we do not discuss.”

Prudent - the largest of India’s 18 electoral trusts - is legally required to declare how much it has collected from each donor and the total amounts disbursed to each party.

But it is the only one among India’s four largest electoral trusts to accept contributions from more than one corporate group.

Trusts “provide one layer of separation between firms and parties,” said Milan Vaishnav, an expert on Indian campaign finance at the Carnegie Endowment for International Peace, a Washington-based think-tank.

Political finance in India is widely seen as murky, with most political donations in India undisclosed, Vaishnav added.

BJP said in its latest public disclosure in March 2023 that its political war chest - funds it had available including cash reserves and assets - was valued at 70.4 billion rupees ($850 million). That gives it a colossal financial advantage over Congress, which had 7.75 billion rupees in funds.

BJP spokespeople did not respond to repeated requests for comment for this story. The records show that Prudent was also the largest-known donor to the Congress party in the decade to March 2023.

Layer of separation

India’s Supreme Court said in a February campaign finance ruling that corporate contributions are “purely business transactions made with the intent of securing benefits in return.”

Reuters was unable to establish if political parties know the identities of donors that give through trusts that receive contributions from multiple groups.

MV Rajeev Gowda, head of research for Congress, told Reuters that electoral trusts are a “semi fig-leaf” and that he believed parties knew the donors’ identities. Gowda, who doesn’t manage the party’s finances, didn’t provide evidence.

BJP’s next largest known donor is Tata Group’s Progressive Electoral Trust, which has given the party 3.6 billion rupees collected from the salt-to-airline conglomerate’s companies. Progressive is also Congress’s next largest donor, having given it 655 million rupees.

Progressive’s by-laws require it to distribute funds proportionate to the number of seats held by each party in parliament. Prudent has no similar restrictions and Reuters’ analysis of its donations found no such pattern.

Near instant transfers

Trusts are allowed to retain a maximum of 300,000 rupees for annual operating expenses. Remaining funds must be disbursed in the fiscal year they were received.

In its analysis of contribution reports filed by Prudent to electoral authorities, Reuters identified 18 transactions between 2019 and 2022 in which the eight corporate groups made large donations to the trust. Within days, Prudent issued cheques for the same amounts to BJP.

Before the 18 contributions, which are not exhaustive of all the donations made by the groups to Prudent, the trust did not have sufficient funds for the payments to BJP. Companies tied to billionaire L.N. Mittal’s ArcelorMittal group were among Prudent’s most prolific donors.

On July 12, 2021, for instance, ArcelorMittal Design and Engineering Centre Private Limited gave Prudent a cheque for 500 million rupees ($6.03 million). The next day, Prudent issued a cheque to BJP for the same amount.

ArcelorMittal Nippon Steel India also issued 200 million rupees to Prudent on Nov. 1, 2021, and 500 million rupees on Nov. 16, 2022. The respective sums were sent to BJP on Nov. 5, 2021, and Nov. 17, 2022.

A spokesman for ArcelorMittal did not respond to requests for comment.

Bharti Airtel, meanwhile, issued 250 million rupees to Prudent on Jan. 13, 2022 and 150 million rupees on March 25, 2021. The trust sent out cheques to BJP for those amounts on Jan. 14, 2023 and March 25, 2021.

And three companies in the RP-Sanjiv Goenka group - Haldia Energy India, Phillips Carbon Black and Crescent Power - cut cheques for 250 million rupees, 200 million rupees and 50 million rupees on March 15, March 16, and March 19, 2021 respectively. On Mar. 17, BJP received a 450-million-rupee cheque from Prudent; a 50-million-rupee cheque followed on March 20.

The RPSG group did not respond to requests for comment.

Donations from Serum Institute and companies in GMR Group, DLF Ltd (DLF.NS), opens new tab and Essar Group moved to BJP immediately after Prudent received them.

Reuters was unable to identify a similar pattern of funds being sent to the trust and transferred to Congress immediately afterwards.

However, Reuters found similar patterns involving two regional parties. Megha Engineering and Infrastructure transferred 750 million rupees to Prudent across three transactions on July 5 and July 6, 2022. The trust issued a 750-million-rupee cheque on July 7 to Bharat Rashtra Samithi, a centrist party in Telangana state, where Megha group is headquartered.

And property developers Avinash Bhosale Group, based in the western Maharashtra state, gave 50 million rupees to Prudent on Nov. 27, 2020. The trust issued a cheque for that amount to the Maharashtra Pradesh Nationalist Congress Party, which is independent of the national Congress party, on Nov. 30.

The corporate groups did not immediately return requests for comment. BRS’s general secretary said he was “not aware” of specifics about the donations, while a senior NCP official said that the party had recently split and “every record will not be available with us.

Cause of concern

Public records and party reports show BJP’s war chest has swelled since Modi became prime minister in 2014, from 7.8 billion rupees ($94.09 million) in March 2014 to 70.4 billion rupees in March 2023. Congress’ funds increased from from 5.38 billion rupees to 7.75 billion rupees in the same time period.

The financing gap between the BJP and Congress is a cause of concern, said Jagdeep Chhokar of Association of Democratic Reforms, a Delhi-based civil society group that was the main petitioner behind the electoral bonds challenge in the Supreme Court.

“Level playing field is an essential part of democracy,” he said.

Some BJP officials have said in the past that the large sums it has raised on its books are an example of its transparency.

BJP has been the major beneficiary of electoral bonds, a mechanism that allowed donors to give unlimited amounts to parties without public disclosure.

It received some 65.66 billion rupees of the 120.1 billion rupees worth of such bonds sold between their January 2018 introduction and March 2023. Such bonds made up more than half the contributions received by the BJP in all but one fiscal year since their introduction.

The Supreme Court called the mechanism “unconstitutional” in February and ordered the government-owned State Bank of India, which issued the bonds, to release buyers’ details. Specifics are set for release by March 15.