Electoral funds and electoral politics are interdependent and share a close relationship with one another, and as a result, have been the topic of much speculation and concern, especially in India. Political funds aid political parties and hence governance and decision-making but influence the kind of policy deliberation in a large, implicit, and yet deeply understood way.
Prior to 2017, the system in place called for the declaration and mention of donors and the details of their donations to parties. Should the amount exceed Rs.20,000, there should be a clear mention of this donation in the financial statements and accounts of the donors and, hence, a paper trail for the knowledge and awareness of the general public. Despite enjoying income tax exemptions, political parties escape thorough financial scrutiny. They merely provide a superficial annual financial statement, approved by a selectively chosen auditor, to the Election Commission. Candidates, though obligated to detail campaign expenses, often fall short of transparency.
In 2014, when the BJP came to power with an effective majority for the first time, one of the promises with which they came into office was to bring more transparency to the political funding project of parties in the country. The Electoral Bond Scheme was one of the policies brought in with the Finance Act of 2017 as an amendment to the pre-existing RBI Act, alongside the budget of the year 2017-18, under the leadership of then Finance Minister Arun Jaitley. The purpose of this scheme was to increase transparency with the way of party funding. In this system, parties and donors enter into a relationship by way of exchanging bonds.
These bonds, which serve a purpose similar to currency in this transaction, are of varying denominations that range from Rs 1000 to Rs 1 crore. Donors decide an amount to donate and buy bonds having that worth from the authorized banking body (SBI). There then lies a 15-day window in which they must hand the bonds to the party of their choice, and the parties must encash that amount, which will be subsequently utilized for their funding purposes. The Finance Bill of 2017 comprised a number of amendments and alterations; the amount of open cash that could be lent to parties was reduced from 20,000 to 2,000Rs. Earlier, there existed a cap to the amount that could be donated (corporate donations). This was 7.5% of the average profits of the organization of the last three successive years; this was done away with, and now donors had no limit to the size of their donations. Wishing to maintain the trust and anonymity of the donors, “it dropped the requirement that companies disclose details of their political giving. Instead of issuing a thorough inventory of political donations in their annual statement of accounts, firms would only have to divulge an aggregate figure”(Vaishnav 2019).
The Electoral Bond Scheme has come under much scrutiny and criticism since its passing, with a plea filed on behalf of two NGOs, Common Cause and The Association of Democratic Reforms (ADR) in the Supreme Court in 2017. The SC only heard the case in 2019, a few months before the General Elections. Having grasped the vitality of the case, incorporated it in its cases of priority but delayed the hearings to after the General Elections wherein they advocated the use of the electoral funds ironically (Anjali Bhardwaj) and have, as recently as April 2020, issued a stay on the plea to stop the use of Electoral Bonds until further notice. The concerns with the Electoral Bond Scheme point to much larger ramifications for society and hence need to be understood carefully.
Lack of transparency and accountability: Scraping the 7.5% of average profits for three years can very well enable the emergence of shell companies created for the purpose of funding political parties, as their history and financial statements are not being given much importance or value when donations are ongoing. The taxpayer’s money is also being utilized in the SBI’s mediating role of the bonds, but citizens are unaware where the money is going, who all are involved, and ultimately, they are paying to have a style of governance and party functioning that lies more coherently with the corporate and affluent class.
Blatant disregard of the suggestions and advice of the EC-RBI-Opposition Parties: The investigative series done by Nitin Sethi gives considerable detail about the sheer callousness with which the Finance ministry dealt with suggestions and criticisms with the fundamental intent and wordings of the scheme, more than merely procedural concerns. Typically, such robust resistance from the RBI would warrant a pause in any administration's actions. Typically, the government revises laws only after engaging in formal consultations with relevant ministries and government entities affected by the proposed changes or those with a vested interest in the matter. However, regarding electoral bonds, the upper echelons of the Modi government had already determined their course of action (Sethi).
One of the most important institutions of democracy in our country, the Supreme Court isn’t faring much better either and has significantly lost its earlier prestige for being the powerful upholder of the Constitution. After having asked for the parties receiving bonds to share the detailed information of the same with the court via the EC, has stayed the plea for now. The hearing took place on the 31st of October of this year by A five-judge bench comprising Chief Justice DY Chandrachud and Justices Sanjiv Khanna, BR Gavai, JB Pardiwala, and Manoj Misra. Chief Justice Chandrachud stated that, at this point, the court would not request the State Bank of India to disclose the identities of donors. He emphasized that the current focus is not on the identities but rather on understanding the extent or amount of the contributions.
To safeguard India's democracy, it is imperative to prioritize the equality of citizens in financing elections. The government should promptly prohibit all corporate donations, including electoral bonds. With a rejuvenated civil society, taking refuge in bureaucratic, mindless jargon, appealing only to certain sections and debilitating democratic institutions through the mechanism of populism, will be questioned blatantly and won’t thrive or even survive much longer, and that is the need right now.
Picture Credits: business Standard
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