Electoral bonds have been a subject of considerable debate and scrutiny in the realm of political financing in India. Established as a means for corporations and individuals to contribute funds to political parties, Electoral Trusts serve as intermediaries in this process. However, the regulatory framework surrounding Electoral Trusts has undergone significant evolution over the years, with the introduction of the Electoral Trusts Scheme in 2013 marking a pivotal moment in transparency and accountability.
Prior to the implementation of the Electoral Trusts Scheme in 2013, the landscape lacked stringent regulations regarding the sourcing and dispersal of funds through Electoral Trusts. This regulatory gap prompted the Election Commission of India (ECI) to advocate for greater transparency, leading to the issuance of guidelines for the submission of contribution reports by Electoral Trusts on June 6, 2014. These guidelines aimed to address the opacity surrounding the origins and allocation of funds routed through Electoral Trusts.
Under the provisions of the Electoral Trusts Scheme, 2013, companies seeking approval as Electoral Trusts are required to adhere to specific eligibility criteria and procedural requirements laid down by the Central government. Moreover, only companies registered under section 25 of the Companies Act, 1956, are eligible to apply for approval as Electoral Trusts.
The intertwining of money and politics in India has undergone a significant evolution over the decades, marked by distinct phases shaping the landscape of electoral funding. Understanding this journey is pivotal in comprehending the context surrounding the introduction of electoral bonds, a watershed moment in India’s electoral financing framework.
Phase One: 1947-1986
The inception of post-independence India saw the emergence of a political environment where corruption permeated the system, notably influenced by the tenure of Prime Minister Indira Gandhi. During this period, political funding relied heavily on undisclosed contributions, fostering a culture of opacity in financial dealings within the political realm. The absence of robust regulatory mechanisms facilitated the unchecked proliferation of black money, thereby perpetuating a system rife with malpractices.
Phase Two: 1990-2003
Amid burgeoning calls for reform, the landscape witnessed tentative steps towards addressing the nexus between money and politics. This phase was characterised by sporadic attempts at legislative interventions aimed at instilling transparency and accountability in electoral financing. However, the efficacy of these measures remained constrained by systemic loopholes and inadequate enforcement mechanisms, rendering them largely ineffective in curbing illicit financial inflows into the political arena.
Phase Three: 2003-2017
The subsequent period witnessed successive governments, both under the NDA and UPA coalitions, endeavouring to enact legislative frameworks to regulate electoral funding. Despite the introduction of several laws ostensibly aimed at curbing the influence of black money in politics, their implementation proved inadequate, failing to stem the tide of clandestine contributions that continued to permeate the electoral process.
Phase Four: 2017-Present
A paradigm shift in the approach to electoral funding materialized with the advent of electoral bonds in 2017, spearheaded by former Finance Minister Arun Jaitley and Prime Minister Narendra Modi. This marked a seminal moment in India’s electoral financing landscape, heralding a departure from conventional modes of funding towards a more structured and ostensibly transparent framework.
However, the transition to a more transparent regime under the Electoral Trusts Scheme has left a void regarding the disclosure of financial information pertaining to Electoral Trusts established before its inception. Notably, six such Electoral Trusts – General Electoral Trust, Electoral Trust, Harmony Electoral Trust, Corporate Electoral Trust, Bharti Electoral Trust, and Satya Electoral Trust – operated prior to the implementation of the scheme and thus remain exempt from its regulations. Consequently, details regarding the donors to these pre-existing Electoral Trusts remain undisclosed, highlighting a significant gap in transparency.
As per data provided by the Information and Broadcasting Ministry, the Central government allocated a substantial sum of ₹3,020 crore towards advertisements spanning the fiscal years from 2018-19 to 2022-23. Notably, this expenditure witnessed a notable fluctuation, surging to ₹1,179 crore during the election year of 2018-19, while plummeting to ₹408 crore in the subsequent fiscal year of 2022-23. It’s worth highlighting that with the impending general elections slated for April-May 2023, this expenditure is anticipated to ascend once more.
The regulatory framework governing government advertisements was delineated by the Supreme Court through its directives in May 2015 and March 2016, aiming to ensure transparency and accountability in such expenditures.
However, the electoral bond system, introduced ostensibly to foster transparency in political funding, has been mired in controversy. The recent disclosures made by certain political entities to the Election Commission, following a 2019 Supreme Court order, have shed some light on the opaque nature of electoral bond donations.
Interestingly, while voluntary disclosures have primarily emanated from opposition parties and a select few allies of the Bharatiya Janata Party (BJP), the largest beneficiary of electoral bonds, the BJP itself has refrained from divulging the identities of its donors.
A deeper dive into the financial dynamics reveals that Prudent Electoral Trust, a significant player in the electoral bond landscape, channelled a staggering 72% of its funds, amounting to over Rs 2,200 crore, towards the BJP. This analysis, as reported by Reuters, underscores the glaring disparity in contributions, with the BJP receiving nearly ten times more than its counterpart, the Congress.
Understanding Electoral Bonds
At its core, an electoral bond is a financial instrument facilitating political donations. To acquire one, a donor must visit designated State Bank of India (SBI) branches, adhere to specific denominations ranging from Rs 1,000 to Rs 1 crore, undergo Know Your Customer (KYC) verification, and subsequently receive the bond, ensuring bearer anonymity.
Judicial Oversight: The Road to Verdict
The judicial journey surrounding electoral bonds began with interim measures, notably on April 12, 2019, when then Chief Justice of India, Ranjan Gogoi, paved the way for potential transparency by allowing political parties to voluntarily disclose donor lists. However, subsequent attempts by various entities to challenge the scheme’s legality were met with repeated denials by the Supreme Court until October 16, 2023, when a bench led by Chief Justice Chandrachud elevated the matter to a five-judge panel.
Landmark Verdict: Unconstitutionality Revealed
On February 15, 2024, the Supreme Court delivered a unanimous verdict, declaring the electoral bond scheme unconstitutional. Citing violations of the right to freedom of expression enshrined in the Indian Constitution, the court underscored the significance of transparency in political funding, essential for informed voter decision-making.
Repercussions and Revelations
In the aftermath of the verdict, the State Bank of India was tasked with divulging electoral bond data to the Election Commission by March 6, 2024. Subsequent revelations unveiled a partial donor list from 2019 to 2024, albeit marred by two critical omissions: missing data from the scheme’s inception in 2018 and a lack of unique alphanumeric codes necessary for donor-party linkage.
Alphanumeric Conundrum: Codes and Contradictions
While SBI and government officials previously denied the existence of unique alphanumeric codes, investigative efforts contradicted these assertions. A forensic examination revealed the presence of such codes, challenging official claims and raising questions about the integrity of the electoral bond system.
The Supreme Court’s verdict on electoral bonds marks a significant milestone in the quest for transparency and accountability in political financing. However, challenges persist, underscoring the need for continued scrutiny and reform to uphold democratic principles and informed voter decision-making.
(Reporting and written by Malvika Choudhary, malvika.choudhary@timesinternet.in)
