Electoral bonds: Lack of promised transparency makes channel for political funding vulnerable to unholy politico-corporate nexus

There seems to be a clear conviction among opposition political parties that electoral bonds are a legalised channel for black money. Following a report that appeared on HuffPost they have openly mounted an attack on the Narendra Modi government calling this instrument “bribery bonds” and legalised tools to destroy the transparency of political funding. Congress leader Rahul Gandhi tweeted “illegal commissions are called Electoral Bonds”.

In “New” India, bribes & illegal commissions are called Electoral Bonds. https://t.co/mYl5OxcVLU

— Rahul Gandhi (@RahulGandhi) November 18, 2019

Gandhi’s party colleague Jairam Ramesh was also not far behind and accused the PMO of “directing murky political donations”.

Through RTI documents, @HuffPostIndia shows Modi PMO opened illegal windows of sale of Electoral Bonds, before critical state polls for BJP.

This is unprecedented! PMO directing murky political donations

Na khaunga, na khane doonga?
Kya hua tera vaada?https://t.co/MHW3rDQ6Oo

— Jairam Ramesh (@Jairam_Ramesh) November 20, 2019

More from Politics

Is Shashi Tharoor’s breakup with Congress inevitable? ‘Naxalism will end in India by March 2026’: Amit Shah at CRPF Raising Day parade

CPM general secretary Sitaram Yechury went on to say “Shame on such standards of political morality”.

Shame on such standards of political morality of this self declared “corruption free government”. Permit cronies to loot public money then legalise rerouting sleaze money to BJP. https://t.co/2gCZW98KPN

— Sitaram Yechury (@SitaramYechury) November 20, 2019

Although these political leaders are crying foul, ironically their parties are also beneficiaries or at least in a position to reap benefits because of the electoral bonds. The stakes are huge. In 12 rounds, political parties have collected about Rs 6,128.7 crore through these bonds since January 2018. A lion’s share of this money has gone to the coffers of the ruling BJP. To begin with, let’s understand what an electoral bond is. Since its inception in the 2017 Union Budget, electoral bonds have been subjected to questions relating to lack of transparency and possible misuse by corporate-political nexus. A donor can purchase these bonds from specified branches of State Bank of India in multiples of Rs 1,000, Rs 1 lakh, Rs 10 lakh or Rs 1 crore and donate it to any registered political party. The party can encash it in its account like a bearer cheque. This instrument is such that it seeks to promote cashless political donations since these bonds can be purchased either through cash or cheque. But, the big negative of this instrument is the anonymity it promises to the political parties and donors. No one knows which hands are exchanging the money at the end of the day.

This anonymity factor in political donations is a problem political observers and analysts have been pointing out for long. There is no way to ascertain the source of money changing hands through electoral bonds, which company is giving money to which political party, what amount and so on. The irony is that electoral bonds, in the first place, were introduced as instruments to improve transparency in political funding from the earlier days of cash donations. However, in the hindsight it appears, the electoral bond scheme has become a legalised channel to facilitate the flow of unaccounted money, with no questions asked by the Income Tax department or enforcement agencies, mainly benefitting the party in power. This wasn’t the idea, to begin with. Former Union finance minister Arun Jaitley too had admitted that opaque nature of electoral bonds is a compromise. Political funding in India is more opaque now than ever before and electoral bonds aren’t the only issue here. In March, 2018, Lok Sabha quietly amended a law to protect political parties from any kind of scrutiny with respect to the foreign funds they may have received since 1976. The law, the Foreign Contribution (Regulation) Act, 2010, that prohibited foreign funding to Indian political parties, was amended to exempt parties from any scrutiny. In effect, no questions will be asked and no answers will be given on such funding, including possible illegal transactions. Even before that, in the 2017 Finance Bill, the Modi government effected two key changes in the rules on political funding: First, it scrapped a ceiling that earlier restricted a corporate entity from donating more than 7.5 percent of its average net profit in the three immediately preceding fiscal years to a political party. Second, the government proposed to cancel an existing rule that required corporate entities to disclose its profit and loss account, the name of the political party to which the funding is made. Both made it easier for political parties to make their election funding more opaque. The irony here is that this government has moved to protect political parties from any scrutiny over political funding at a time when there is greater scrutiny on foreign funds received by NGOs and other organisations. Political parties haven’t just found a way around the scrutiny but they are now above the law with respect to even foreign funding. When the Modi government came to power, one of its biggest promises was to make political funding transparent. Unfortunately, that isn’t quite the case so far. Using the electoral bonds channel, a political party can have a tacit understanding with a particular corporate to return favour (in the form of a policy change or a directive) in exchange of a hefty donation. Interestingly, political donations are the gift of anonymity at a time when the common citizen is forced to enter the Aadhaar maze. From mobile phones to bank accounts, the government is imposing Aadhaar on every layer of social life, where the individual is left with not much choice but to comply with the state’s rule and reveal personal identity. But the same rule is not applicable to political parties. This double standard doesn’t augur well in a democracy. The government must either make changes to the rules concerning electoral bonds to make the instrument transparent or withdraw it altogether. Political parties need to first address the issue of clean money in political funding before they target taxpaying citizens.