Forbes India 15th Anniversary Special

DLF, MKJ Enterprises feature prominently in electoral bond list

Most real estate donors are those with large township-like business park projects

Samar Srivastava
Published: Mar 28, 2024 02:34:45 PM IST
Updated: Mar 28, 2024 03:20:02 PM IST

Mindspace Business Parks, Madhapur, HyderabadMindspace Business Parks, Madhapur, Hyderabad
The list of individuals and companies donating via electoral bonds has got many to question why they would do so. In some cases, it is alleged to have been quid pro quo for permissions granted or prosecutions not pursued or policy changes.

But the case of real estate, industry watchers argue, is a little more complex. This is on account of the fact that the industry remains very local. Builders rarely transcend state boundaries and even with cities, they have their zones earmarked through a gentleman’s agreement. When they venture across states, it is usually through tying up with a local partner who acts as their eyes and ears on the ground. National players mostly lend their brand.

The Rs631 crore donated by well-known developers DLF, K Raheja Corp, Prestige, Omkar and Keystone (Rustomjee), among others, pales in comparison to the nearly Rs1,232 crore donated by the top donor Megha Engineering. Industry watchers point to the fact that while these businesses need help to get going, the nature of their interactions with the authorities is different.

First, at the land stage, permissions are mostly on account of the change in the use of the land. Developers aggregate parcels and then apply for them to be designated for non-agricultural use. Here, the local unit of the ruling party plays a strong role and these deals are usually done with the locally elected strongman. Often, he or she brooks no interference from the party.

Next comes the building permissions. These are usually done through the local municipal corporation and here, money changes hands in cash. They are also other favours to be granted—like say a discounted flat to the local corporate, MLA or MP. Here too developers prefer to deal at the local level.

Mindspace Business Parks, Madhapur, Hyderabad

Donations to parties usually come in when there are larger projects involved. “Most of the donors are the ones who have large township-like projects running or under construction. Here there are a lot of permissions required on a continuous basis,” says Vishal Bhargava, a real estate columnist. Take, for instance, K Raheja Corp, which donated Rs18 crore to the Bharat Rashtra Samithi (BRS), the erstwhile ruling party of Telangana. The company runs the Mindspace office and industrial park in Hyderabad and would need to constantly interact with the local government. Still, the total amount given by K Raheja across three companies—K Raheja, Anbee Constructions and Inorbit Malls—was a mere Rs56 crore.

Another large real estate donor is Kolkata-based MKJ Enterprises run by Mahendra Kumar Japan, a first-generation entrepreneur. The family also runs Keventer, a leading dairy and FMCG company in east India. Across four companies, Jalan donated Rs171 crore to the BJP, Rs150 crore to the Congress and Rs65 crore to the Trinamool Congress. Those who know him say his connections with the authorities mean he never has a problem getting building permits from the Kolkata Municipal Corporation. Tata Realty tied up with the Group when it built 88 East, an uber luxury building in Kolkata.

The list of parties receiving money showed a clear trend in favour of those who occupy power at business centres. The BJP received the bulk of donations at Rs314 crore, but the Congress—that is in power in Karnataka, Telangana, Punjab and Himachal Pradesh—got Rs98.1 crore. The Shiv Sena (which controls the Brihanmumbai Municipal Corporation) and BRS got Rs87.3 and Rs90 crore respectively. This probably explains why local body elections are now as keenly fought as state and national elections.