Electoral Bonds: Transparency or Opacity?

Political Parties in India are the cradle of political thought, social welfare, and public good. However, they are also riddled with corruption, crime, and other illicit activities. Recently, there have been several allegations thrown around regarding how political parties are financed: with specific parties accusing each other of receiving funds from anti-India elements. One would think, that with India’s impressive fundamental rights, especially the Right to Information, it would be fairly easy to get access to that sort of information, as political funding is a pretty public issue. However, this is not the case, because electoral bonds exist.

What are Electoral Bonds?

An electoral bond is a money instrument which can be bought by individuals and companies from the State Bank of India (SBI) in sums of INR 1,000, INR 10,000, INR 1 Lakh, INR 10 Lakh and INR 1 crore. It can then be donated to a political party, which can encash it to receive money. In this way, since there is a middle stage between the donor and the party, the donor can effectively remain anonymous and free from any scrutiny stemming from donating to particular parties.

Electoral Bonds in India

Electoral Bonds in India were first introduced by former Finance Minister Arun Jaitley during the budget session of the Parliament in 2017, in an attempt to make political donations more transparent and to “cleanse the system of political funding in the country.” In other words, it was introduced to regulate corporate donations in politics and to reduce the influence of black money.

Prior to the introduction, corruption in politics was even more rampant than it is today-it can be said that almost none of the money used by political parties was “clean.”

However, electoral bonds arguably failed to achieve the goal of transparency in political funding, for a number of reasons.

The introduction itself was controversial. Its proponents argued that it brought transparency to the system, since all political funding was now through formal banking channels which could be audited by the government. Further, since the identity of the donor remained behind closed doors, it could remain free from consequences in the form of political or government manipulation.

However, the opponents argue that it has failed to achieve its objectives and has instead brought opacity to the system. The identity of donors is not available to the public or the Election Commission, meaning that the legality or morality of the sources remains a big, unanswered question. The RBI has openly criticised electoral bonds because of the possibility to use shell companies (companies that exist just in name and do no business) to carry out political donations.

According to official data, between 2016-17 and 2021-22, the seven national and 24 regional parties received INR 9188.35 crores by way of electoral bonds. The BJP received INR 5272 crores, while the other national parties received INR 1784 crores.

Supreme Court Challenge

The constitutional validity of electoral bonds has been challenged in the Supreme Court on multiple grounds. It has been alleged that electoral bonds allow unlimited political donations, even from foreign companies (which was not allowed earlier), thus making way for systematic political corruption. Another accusation is that it violates the right to “know” of the citizens, guaranteed under the freedom of speech and expression by the Constitution.

The challenges to electoral bonds have been with the Supreme Court since 2017 itself. However, they have come to fruition only much later. Recently, on October 16, a three-judge bench of the Supreme Court referred the matter to a larger bench citing the case’s importance.

The case came forward in front of a five-judge bench including Chief Justice of India (CJI) DY Chandrachud and Justices Sanjiv Khanna, B.R. Gavai, J.B. Pardiwala, and Manoj Misra serving as Associate Judges.

The Supreme Court hearing is underway as of October 31, 2023, and is an active issue.

The CJI and the other judges have asked important questions that the government must respond to, including whether electoral bonds install a “backdoor” for political parties to receive money. Justice Sanjiv Khanna also noted that electoral bonds are only selectively anonymous: the government can furnish information about the donors from the SBI, but the opposition cannot.

My Opinion

Everywhere, the majority of funds go to the ruling party whether it be at the central level, or the state level. The opposition parties rarely get any money through bonds. This is a clear sign of an uneven playing field. If the incumbent government’s funds exceed those of the opposition by 4x, 5x, how can they be expected to compete?

But the CJI, in a statement in the Supreme Court, mentioned a good argument: the anonymity of the donors protects them from political persecution.

On the flip side, the citizens also have a right to know how the people in power, and those competing against them are funded. Is this really feasible? No, because it would greatly limit political donations, or the donors would find other ways to circumvent the system to retain the anonymity.

However, the Election Commission can and should know. It is tasked with maintaining the integrity of elections, and that extends to maintaining the integrity of political parties.

The Election Commission can prevent any malicious intentions behind donations. It can inspect cause-and-effect relationships. It can assess, and then report, if a corporation donates to a party, and then said party makes a policy which directly benefits that corporation.

Otherwise, the integrity of our political system may stand compromised. More than a billion aspirations rest on the Supreme Court’s verdict, and I hope it rules in favour of true transparency.

Note: I have taken the photographs/illustrations from internet. They belong to the author/photographer/designer of the original article/s.