Elections are important to Democracy. However, if elections are fought on money power, that would be a mockery of the people’s faith. Conduct of elections are expensive. Hence, politicians have to depend on electoral donations. Research suggests a direct correlation between electoral spending and electoral success. Would then the people funding elections influence how the government functions? In the past, lack of transparency in funding made the elections look suspect. Electoral Trusts introduced by UPA in 2013, created complete opacity in the process of corporate donations to parties. Come 2018, electoral bonds with amendments to Foreign Contribution (Regulation) Act (FCRA), 1976 and Companies Act, 2013 were introduced to promote transparency. That they remained questioned and contentious is a story. American Supreme Court judge Justice Louis Brandeis once said, “We can have democracy in this country, or we can have great wealth concentrated in the hands of a few, but we cannot have both.”
Electoral bonds are similar to promissory notes. They are paid to the bearer on demand. The bonds could be purchased by an Indian citizen or by a company incorporated in India. Political parties registered under Section 29A of the Representation of the People Act, 1951 and if have secured not less than 1% of votes polled in the previous general election, would be eligible to receive such electoral bonds. Further, encashment would only be through a bank account in an authorised bank.
The NGO, Association for Democratic Reforms had filed a PIL in 2017, alleging that such funding to the political parties is not transparent, could also come from foreign and illicit sources, which then may corrupt or even subvert democracy.
After the Supreme Court refused to grant interim stay on the Electoral Bonds Scheme, it sought responses of the Centre and the Election Commission on an interim application filed by the NGO. However, last month it agreed to list for hearing the PIL. That be as it may, electoral bonds were purchased throughout the past few years, sometimes by shell companies, sometimes allegedly for return of favours. Possibly more than Rs 6,500 crore worth of electoral bonds have been sold in the last couple of years. Did the scheme infuse black money into the markets?
Through the electoral bond scheme, Indian and foreign corporates can channel unlimited donations to political parties anonymously. Should then the EC, not ascertain if the donations were received from foreign companies? Will not electoral bonds empower corporates, wealthy and influential individual donors, and foreign entities with political power? Will this not dilute the one voter-one vote theory?
Most electoral bonds purchased in the past, were valued at a crore of rupees or were in multiples of 10 Lakhs of Rupees, though they could be purchased in denominations of Rs 1,000 to Rs 1 crore from the State Bank of India. It has no upper limit. Political parties could then encash the bond within 15 days. The identity of the donor however, remains anonymous. Were certain amendments made to the Finance Act, 2017 and 2016, both passed as money bills enable these donations? Did the Reserve Bank of India and the Election Commission in 2017 not object to such a scheme? Why cannot the names of donors be revealed, since the bank anyway has a record of them? In a way the bank is privy to this information. Does then the Parliament, the Election Commission, the Opposition parties and the general public not have the right to this information? If it were, it would only raise the bar on transparency.
Two important questions seek answers. Do such donations only favour the political party in power, and if only corporates donate to such causes, since they may later stand to gain, maybe getting away with only a wink? Seriously, why should anyone object at all, when all such donations require donors to donate through a verified KYC account with an audit trail?
In the past, the High Court in Delhi, held a couple of national political parties guilty of accepting donations from companies, which though registered in India had foreign companies as controlling shareholders which was illegal at the time. This led to the government amending the FCRA through the annual Finance Bills in 2016 and 2018 which meant the provision is now retrospectively legalised. Further, Section 182 of the Companies Act of 2013 was amended to remove the requirement for declaring disaggregated donations to political parties.
Whereas earlier, only profit-making domestic companies could contribute to political parties, now loss-making companies can also contribute. Even the limit of 7.5% for corporate donations to political parties has been removed which means corporations are free to donate any amount of money and are not liable to declare the recipient of their donations. Did the amendments to the two provisions read in tandem take away transparency too? Will the political parties not be out of the purview of the Right to Information Act too?
Admittedly, electoral bonds may be constitutional. However, should they not be completely real-time and completely disclosed for the sake of transparency and accountability? Should there be no cap on the funds that a party gets as donations? In fact, France, as several other European countries banned all forms of corporate funding and capped individual donations at 6,000 Euros. Should not the Corporates and the political parties exercise moral leadership and voluntarily disclose the identity of recipients and donors? Or is too much to expect in current times? Why cannot we have public funded elections or State funded elections as is done in many countries? Will it not ensure parity in resources between the ruling and the opposition parties?
We have come a long way as a democracy in the past 75 years. As voters, we must be more vigilant and be self-aware. It means, we must reject candidates and parties which violate the spirit of free and fair elections. We must also realise that our votes are not the same if corporates influence policies through hidden donations. Have we ever wondered why at all corporates donate such large amounts of money to political parties when a little charity in the public space would save many from hunger? Political parties may win or they may lose elections. But surely, we as voters will always lose if extraneous considerations influence decision making. Intuitive campaign finance reform may be a way out.