An Invitation To Corruption?

In order to “cleanse the system of political funding in the country” and in keeping with the government’s desire to move to a cashless economy, electoral bonds scheme was introduced. The scheme, announced during the 2017 Budget, aimed to account the donations made to all major political parties.

Why Electoral Bonds are Necessary?

• The conventional system of political funding is to rely on donations. These donations, big or small, come from a range of sources from political workers, sympathizers, small business people, and even large industrialists. The conventional practice of funding the political system was to take donations in cash and undertake these expenditures in cash. The sources are anonymous or pseudonymous. The quantum of money was never disclosed. The present system ensures unclean money coming from unidentifiable sources.
• Donations made online or through cheques remain an ideal method of donating to political parties. However, these have not become very popular in India since they involve disclosure of the donor’s identity. However, the electoral bond scheme envisages total clean money and substantial transparency coming into the system of political funding. A donor can purchase electoral bonds from a specified bank only by a banking instrument. He would have to disclose in his accounts the number of political bonds that he has purchased. A bond can only be encased in a pre-declared account of a political party.

But the scheme’s failings have become so blindingly obvious, and its consequences so utterly devastating, that criticisms are coming in from a multitude of places like High Court judges, former Election Commissioners, journalists etc.

Drawbacks

• There are many grey areas in this scheme because there is no ceiling on party expenditure and the EC (Election Commission) cannot monitor it. It cannot be sure that what is coming in is not black money as there is a secrecy of the donor.
• Even foreign money can come and even a dying company can give money. So, prima facie it appears the scheme cannot really deliver whatever it was intended to.
• The fact that the scheme allows for complete anonymity of the donor and neither the purchaser of the bond nor the political party receiving the donation is mandated to disclose the donor’s identity. Therefore, not only will say, the shareholders of a corporation be unaware of the company’s contributions, but the voters too will have no idea of how, and through whom, a political party has been funded.
• For instance, the programme removes an existing condition that had prohibited companies from donating anything more than 7.5% of their average net-profit over the previous three years. This now means that even loss-making entities can make unlimited contributions.
• Additionally, the requirement that a corporation ought to have been in existence for at least three years before it could make donations — a system that was meant to stop shell companies from being created with a view purely to syphoning money into politics — has also been removed.
• The scheme also suffers from at least two foundational defects. One, that it was incorporated on the back of a series of amendments made to legislation, including the Representation of the People Act, the Income Tax Act, and the Companies Act, which were introduced in the form of a money bill. And two, that the scheme flouts a number of fundamental rights. The Finance Act, through which these amendments were introduced, therefore did not deal with only those matters contained in Article 110.

Way Forward

• There’s no doubt that the Constitution does not contain an explicitly enforceable right to vote. But implicit in its guarantees of equality and free speech is a right to knowledge and information. Our courts have nearly consistently seen “freedom of voting” as distinct from the right to vote, as a facet of the right to freedom of expression and as an essential condition of political equality. In the absence of complete knowledge about the identities of those funding the various different parties, it’s difficult to conceive how a citizen can meaningfully participate in political and public life.
• The electoral bonds scheme, therefore, suggests two possibilities: one, that the government doesn’t understand the Constitution; or, two, it does, and has expressly set out to transgress it.