ARUN Jaitley, who was the Finance Minister in the Narendra Modi-led NDA government (2014-19), had pushed through the electoral bond scheme because he was keen that political funding should be formalised and regulated. He was aware that the scheme did not resolve all the issues related to political funding, and also that the scheme itself had limitations. But he thought that it was better to make a beginning somewhere rather than wait for a perfect solution. He offered the scheme as the first, and not the final, step to tackle the problem of dubious electoral funding. But the scheme was tilted right from the beginning in favour of the BJP in two ways. First, the identity of the person or corporation making the donation through the bond would remain anonymous, known only to the bank and the recipient of the donation. Secondly, the ceiling of 7.5 per cent on donations from corporations’ profits was removed. It has been argued that these provisions benefited all political parties, and not the BJP alone.
The scheme turned out to be BJP-friendly because the party is known to be supported by the middle class — the salary earners or the salariat — instead of the working-class wage-earners, and it was also seen as being market-friendly or corporate-friendly. In terms of political rhetoric, the BJP was not anti-middle class nor anti-big money. Of course, over the last nine years, Prime Minister Modi has adopted the Congress and Communist parties’ pro-poor rhetoric. This has partly alienated a good chunk of the middle class and the corporates. But that did not seem to harm its fund inflows through the electoral bond scheme. Figures show that the BJP has been the largest recipient of donations or contributions through electoral bonds. The reason could be that since the introduction of the scheme, the BJP has been the ruling party at the Centre.
It is also the case that electoral bonds are not the only way in which parties receive donations. The bonds accounted for only 56 per cent of the total donations — Rs 9,188.35 crore out of Rs 16.437 crore between 2016-17 and 2021-22. Even if the identity of the donors remains hidden behind the bonds, the money received by the parties is on the books. And it can be argued that if all political funding is to be made through the bond route, the money trail will become more apparent. The scheme itself is not being questioned, but what is being sought is to increase transparency by making public the identity of those buying the electoral bonds.
The Supreme Court has asked the Election Commission of India to submit the latest details of the funding. Can it insist in its judgment, which has been reserved, that the names of those making a donation to a political party through electoral bonds be made public? This would require an amendment to the existing law. The scheme was unveiled through the Finance Act, 2017, with amendments to the Income Tax Act, the RBI Act and the Representation of the People Act. Can the court say that the electoral bond scheme, with its intent of making political funding transparent, would imply disclosing the names of the buyers of the electoral bonds? The court will have to show that this is implied in the law as it exists now.
The government has argued that it is imperative to protect the privacy of the buyer of the bonds, and the petitioners have equally convincingly contended that giving donations to a political party falls in the public domain and public interest demands that the names be made public. The court cannot introduce a new element into the existing provision. It can opine that this falls in the realm of legislation, and therefore the legislature should take the initiative to make the scheme more transparent. The court can only interpret the law. And it would not be possible for the court to strike down the scheme as such because it does not violate any existing law or the Constitution.
The issue then leads to the larger question of political funding. One of the solutions offered was state funding of the parties to fight elections. Though the main aim of the political parties is to fight elections, they function before, after and between elections, and they need money for that. So, political funding would include covering the expenses of setting up a political party and running it, and being ready to fight elections. The Election Commission limits the election expenditure of the contestants. And this does not include the money spent by the parties on elections. If the limit is extended to the party as well, it could improve things somewhat.
Electoral bonds remain an imperfect measure because they do not restrict the amount that can be donated through the scheme. It is a problem that can be settled in a courtroom. What is needed is a wider and open debate. All political parties would have to abide by the norms on spending, both for running their organisational affairs and contesting the elections. There has to be an element of sincerity on the part of the political players. It is a tall order at the best of times. But it cannot be left unaddressed because it is a thorny problem.
The electoral bond scheme has not curbed money power in elections in any way, and the figures for donations through the bonds shows that enormous amounts of money are flowing into the kitty of political parties. The party with the largest share enjoys an advantage. The candidate and the party with more money can reach out to people more effectively. In a democracy, the people can reject a rich candidate and a rich political party. Therein lies the hope of improving the system. Meanwhile, tweaking of the norms, rules and laws should continue. And it is Parliament more than the courts that should be involved in fine-tuning the electoral laws.
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