Introduction
The decision of the Supreme Court of India scrapping the electoral bond scheme was certainly one that caused unrest. The scheme was held unconstitutional and seen as a peril to democracy. While one has to completely respect and abide by the verdict of the apex court; the question now is what’s next in the arena of financing political parties and is a fundamental one to address. Is it really any better to go back to financing schemes that existed before the introduction of electoral bonds? Before we delve into this aspect, it is necessary to establish the basic principles and objectives of the introduction of electoral bonds and the conditions that existed before the introduction of such a scheme.
Why the scheme was introduced and its objective
The Union Budget of 2017 led by the BJP government introduced a money bill for establishing the electoral bond scheme. Electoral bonds are a form of a promissory note that act as a means to make a donation to any political party which is registered under Section 29A of the Representation of People Act, 1951 and has polled at least one per cent of the votes in the last general elections or state Assembly elections. These bonds can be purchased by any Indian citizen or corporation incorporated in India, either singly or jointly. Such persons are required of an authorised bank account and must fulfill all the KYC norms. There is no cap on the number of bonds one can purchase.
Since there were contentions on the flow of illegal cash into the political system feeding corruption, bonds can only be purchased digitally or through cheques from selected banks of the SBI authorised for this purpose. Bonds are purchased in the favor of political parties. They can be encashed by an eligible political party through a bank account. The bonds are valid for 15 calendar days from the date of issue. On demand within the 15-day limit, the cash shall be credited to the account of an eligible political party on the same day. The money that is not recovered within 15 days will be transferred to the PM Relief Fund.
The present government which also introduced electoral bonds claims its intention behind the introduction of the electoral bonds is to rectify the effects of corruption and black money in political funding. The Government of India notified the Scheme of Electoral Bonds to cleanse the system of political funding in the country.
Elections, Political Funding and Businesses: An old linkage
The political climate of India is vast. One in every six people on Earth who are of voting age resides in India. Apart from being the most populous democracy in the world, there are also several parties that contest in elections which contributes to extraordinary competitiveness. In this backdrop, naturally, the role of funds in campaigning becomes crucial. With an increase in the size of the economy, electorate and competition, the role of money in politics became of paramount significance.
It was stated in the Press Information Bureau that the government’s expenditure on an elector has gone up manifold, twenty times from the first general elections to the 15th general elections. In the first election, the government had spent Rs 0.60 on an elector whereas it went on spending Rs 12 in the 2009 general elections. Considering expenditure in absolute terms, Rs 10.45 crore was spent in 1951-52 whereas Rs 846.67 crore was the amount the government spent for the 2009 general elections.
The widespread politics and the vast quantum of money made the regulation of political financing hard. Former Chief Election Commissioner, N Gopalaswamy, understanding the situation commented that “the Election Commission, which was able to control the muscle power in elections, utterly failed to do so in the case of the money power.”
This dire situation can be considered as that which attributed to the need for some kind of regularity in political financing. Under the previous scheme, if the donor wanted to donate an amount less than Rs 20,000, they could donate it in cash and it was not obligatory for the donor to disclose their identity; hence would be bracketed as funding from “unknown sources”. The identity must be revealed if the amount exceeds Rs 20,000. It is significant to note that there were escalating contributions below the denomination of Rs 20,000 over the years.
According to the Association for Democratic Reforms, the total income of political parties in India between 2004-05 and 2014-15 was Rs 11,367 crore and 69 per cent of income from donations below Rs 20,000 given to political parties amounting to Rs 7,833 crore came from unknown sources. Only 16 per cent of their total income was from known donors.
Taking cognisance of the same, the BJP government in 2017 claimed its objective of reforming electoral funding and introduced the scheme. The scheme does come with certain aspects of monitoring. Firstly, it ensures that only authorised and legitimate bank account holders can fund political parties. It rejects cash deposits with the intention to restrain the flow of black and illicit money in political funds. Further, political parties are required to disclose the funds received through electoral bonds in their financial statements. This allows a framework that enables greater scrutiny of political finances. However, the electoral bonds secured the identity of the buyers and purchasers. This non-disclosure caused turbulence among the populace, raising obvious issues of transparency and fairness.
Anonymity was also a contention before introducing an electoral scheme for cash deposits below Rs 20,000. However, here the government pleaded a strong reasoning as to why the anonymity of individuals should be secured. As a matter of prudence, it is known that political parties hold pervasive power to intervene and affect the circumstances. It was stated that donors are likely to face retribution from other political parties and disclosure of identities will only cause unnecessary apprehensions and victimisation by political parties. The Electoral Bond Scheme maintains the confidentiality of donors and thereby incentivizes them to contribute clean money to political parties. It enables a person to make political choices without the fear of victimisation or retaliation which is the essence of political freedom.
Conclusion
As much as the justification that calls for the privacy of buyers stands, there are certainly problems revolving around anonymity that create concern in the populace. However, this need not necessarily undo the initial spark that brought in electoral bonds – the necessity of ensuring clean political financing and promoting genuine funding. There must be some degree of regularity. While the downsides of non-disclosure in electoral bonds scheme must be recognised, the older system certainly lacks the technical facilities to accommodate the present-day vastness of political finance and money movement. The aim with respect to handling black money in political funding is not to devise a scheme of perfect but rather that which strives for improvement in regularity. If not perfection, the goal must always be improvement.
A prevalent feature of electoral bonds different from the previous political financing is that large amounts of black money which was infused as donations came down to a reasonable extent; as the scheme brought uprightness by allowing only genuine bank account holders to purchase the bonds for donation in means other than cash. Finally, while this scheme has been held unconstitutional and is being criticised for lack of transparency among other issues; we as a nation with a young, better informed and dynamic population shouldn’t let things go back to pre-2017.
Let’s hope the present-day government which is seen as the most favoured likely choice in the 2024 elections and one that is bold in decision-making and has brought in multiple revolutionary schemes and laws comes up with something that is both fair and stands the legal test.
Anant Merathia is a corporate litigator and author of “Defaulter’s Paradise Lost”. He can be found on ‘X’ @anant_merathia. Views expressed in the above piece are personal and solely that of the author. They do not necessarily reflect News18’s views.
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