Business Ethics in Political

funding & CSR activities

REPORT ON INDIAN COMPANIES FUNDING IN POLITICAL CAMPAIGNS
AS INVESTMENT AND IN CSR ACTIVITIES AS TAX SAVING TACTICS

Sudhanshu Goyal | IIM Calcutta | January 12, 2015

ABSTRACT
POLITICAL FUNDING
In recent Lok Sabha polls, elections, the tally of electoral trusts set up by companies to
transmit their political funding is on the rise and at least 10 such entities have been filed,
including those by Reliance, Tatas, Mahindras and Birlas. The cartels are being set up under
a novel theoretical account that offers tax benefits for funds run by corporates to political
outfits. The norms require inclusion of the words 'Electoral Trust' in the names. Five of the
10 trusts were registered in the past one month of the election process this year, according to
data from the Corporate Affairs Ministry.
The nexus between business, politics and white collar criminal offense is a phenomenon that
has been seen in many nations across the world. India is no stranger to this actuality as was
observable during the recent revealed 2G and Coalgate scams. Political support, especially
corporate donations, is one of the main causes of cronyism and corruption in the state and
needs urgent reform. In light of this, there has been increasing focus on principles of
transparency and accountability in corporate financing. With the Central Board of Direct
Taxes (CBDT) approving the setting up of an Electoral Trust and the new Companies
Act, 2013 raising corporate donation limits to 7.5 percent of average net profits, the issuance
of corporate donations gains even greater relevance. The pernicious nexus between political
leaders and business houses, more than evident in these times, necessitates a thorough
critique of this dimension of funding India's democracy.
Tata Conglomerate
The Reliance group
The K K Birla group
Agarwal-led Vedanta
Bharti group
MP Birla group
Mahindra Group

Progressive Electoral Trust

People's Electoral Trust
The Samaj Electoral Trust Association
The Janhit Electoral Trust
The Satya Electoral Trust
The Paribartan Electoral Trust
Mahindra Electoral Trust Company

CSR ACTIVITIES
In that respect is developing research in whole fields of ethics and CSR that govern the
activities of a firm and the value systems that underlie their business actions. In my report I
have researched the concepts of Business Ethics and Corporate Social Responsibility with a
perspective that meaningfully CSR should be understood in the context of an overall
paradigm of Business Ethics. I have studied CSR through the fabric of the stakeholder
theory of the firm and posit that CSR as practiced today is a subset of Business Ethics with
other dimensions of an overall ethical framework still uncovered.
THE AIM OF REPORT IS TO DEFINE CURRENT AND IDEAL ETHICS
INVOLVED IN THESE ACTIVITIES BY VARIOUS CORPORATE HOUSES.

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