In response to the petition filed by Communist Party of India (Marxist) General Secretary Sitaram Yechury before the Supreme Court with regards to the electoral bonds, the BJP-led central government said in an affidavit that the decision to issue electoral bonds would promote transparency in funding and donations received by political parties.

Interestingly, the BJP was the biggest beneficiary of the electoral bond scheme launched by the government in 2017-18, bagging 94.5% of the bonds worth a little over Rs 210 crore. The BJP’s audit and income tax reports submitted to the Election Commission of India (ECI) list voluntary contribution of “Rs 210,00,02,000 through electoral bonds”, Economic Times review of the party’s annual audit report for 2017-18 shows.

Electoral reforms activists, former chief election commissioners, and constitutional experts have slammed this move for obfuscating transparency rather than enhancing it. It would make political funding, especially by corporations, more opaque as neither the donors nor the parties have to reveal who donated what to which party. That itself violates the constitutional principle of free and fair elections.

Spending on the election ending May 23 is set to rise 40 per cent to 500 billion rupees ($7 billion), according to the New Delhi-based Centre for Media Studies. “It won’t be an exaggeration to say that our elections will never be the same again,” said N. Bhaskara Rao, the group’s chairman, who has advised previous Indian governments. “What is this if not the auctioning of our democracy to the highest-paying corporation?” he said.

 What are electoral bonds

Anyone can buy an electoral bond at the government-owned State Bank of India in denominations ranging from 1,000 rupees to 10 million rupees ($14 to $140,000). Afterwards, they are delivered to a political party, which can exchange them for cash. They don’t carry the name of the donor and are exempt from tax. SBI is the only bank that is authorised to issue such bonds.

As per the provisions of the scheme, electoral bonds may be purchased by a person, who is a citizen of India or entities incorporated or established in India, including foreign companies. A person can buy electoral bonds, either singly or jointly, with other individuals.

Electoral bonds are available for a period of 10 days each in the months of January, April, July and October, with an additional period of 30 days specified by the central government in the year of general elections.

The bonds can be purchased only after making payment through KYC-compliant account. They can be encashed by an eligible political party only through a designated bank account with the authorised bank.

An electoral bond is valid for 15 days from the date of issue. No payment would be made to any payee political party if the bond is deposited after the expiry of the validity period. The bond deposited by any eligible political party into its account would be credited on the same day.

Any party that is registered under section 29A of the Representation of the People Act, 1951, and has secured not less than 1% of the votes polled in the last election of the Lok Sabha or legislative assembly will be eligible to receive electoral bonds.

No opposition to overhaul

“India’s campaign finance overhaul began in 2017, when parliament approved an amendment that made it easier for companies to donate to campaigns, including removing a cap on corporate donations (the maximum used to be 7.5 per cent of a company’s average net profits over three years). Now new firms can also donate to political parties, opening the door for shell companies to be set up expressly for the purpose,” TNIE reported.

Requirements for companies to disclose how much they donated and to which party were also eliminated.

The changes were introduced in parliament via a money bill, a measure that only needs to be passed by the lower house controlled by Modi’s ruling coalition and not the opposition-led upper house.

A similar tactic was used to pass with little debate rules that changed the definition of a foreign company. Previously, all subsidiaries of international entities were treated as overseas donors and not allowed to make political contributions. Now if a foreign firm has a stake of less than 50 per cent in a company operating in India, that unit can fund Indian elections.

While several lawmakers protested the moves, analysts said the amendments will benefit both Modi’s Bharatiya Janata Party as well as the main opposition Congress party. It was said that nobody from the opposition spoke up because they too could gain if they came to power.

Experts unanimously slam move

This wide leeway to corporates have drawn the ire of Jagdeep Chhokar, founder-member of the Delhi-based civil rights organisation Association of Democratic Reforms and a long-time crusader for electoral reforms. It was because of his petition in the PIL against Finance Bill unduly favouring corporations in political funding, that the Supreme Court issued a notice to the central government and Election Commission.

Chhokhar insisted that the government at the Centre is “hoodwinking the public and electorate”, because although political parties would have to show the amount of political funding in their balance sheet, they do not have to disclose to which party they have donated, Newsclick reported.

If the donation is made to the ruling government, the electorate would have no way of knowing the extent of crony capitalism because the party in power would obviously “reward” major and significant donors with government contracts, licenses and tenders. Moreover, the government in power would get detailed information on which the corporation has donated what amount, and can thus arm twist those who have funded its rivals more, he said in the report.

S.Y. Quraishi, a former chief election commissioner echoed Chhokhar in the report. He agreed about the apprehension of potential arm twisting by the powers-that-be. He said that the electoral bonds are the exact antithesis of transparency. The bonds will ensure the anonymity of donors, but “also kill whatever little transparency that exists now.” He further said, “The removal of the ceiling of 7.5% of a company’s profits that could be donated has compounded the problem. Very soon we will see companies spending all their profits on politics alone and control governments. So far, all donations above Rs 20,000 are disclosed by political parties to the Election Commission. In future, no one will know which corporation donated how much and to which party. And the inevitable quid pro quo will never be apparent.”

Nasim Zaidi, ex-chief election commissioner who retired in July last year has also voiced his misgivings about the government not consulting the EC before introducing electoral bonds though that was mandated by law, and also stated that because of electoral bonds, corporations would never file the donations they made to political parties, thereby trampling on the people’s fundamental right to know.

Legal scholar Gautam Bhatia has explained why these bonds are a threat to democracy, while Suhrith Parthasarathy, a lawyer practising in the Madras High Court, has detailed how they reward corruption, the report said.

The mounting criticism is apparent and the bonds are under immense scrutiny considering the nearing Lok Sabha elections. Will it be the country’s democracy that sizzles on this political serving hot plate?