I once overheard a golf caddy remark that a shot was poor, yet the result was good. However, this adage does not hold true with regards to the Electoral Bonds (EB) Scheme . While the government’s intentions were noble in aiming to permit election financing through legitimate funds, initial data extracted from SBI contradicts these good intentions.
Why was the data forced out? The Association of Democratic Reforms (ADR) petitioned the Supreme Court in 2017, seeking a declaration that the EB scheme was unconstitutional. On February 15, 2024, the court granted their prayer and nullified all laws enacted to support the scheme. In addition, it directed SBI to furnish data on buyers and beneficiaries for public dissemination by Election Commission of India on its website. Interestingly, just days before the deadline for submission of information, SBI sought an extension of 108 days from the Supreme Court – a request that defies comprehension in this digital age. The SC reprimanded SBI sharply and within two days they provided incomplete information that revealed how undemocratic and unconstitutional this scheme was through ongoing analysis.
The Finance Minister endeavoured to refute the perception that the government employed the Enforcement Directorate (ED) and Income Tax (IT) departments to coerce funds, stating that “perhaps the ED conducted visits to companies subsequent to their donations.” However, her query of “do I make sense” yielded an evident negative response. If indeed her statement held veracity, data could have been proffered by the FM instead of posing hypothetical questions. To date, no instance has surfaced where said departments pursued funds post-receipt.
The Home Minister raised a pertinent issue regarding election financing in the past, highlighting two key points: firstly, that it was typically conducted in cash and secondly, that the majority of funds were retained by the receiving politician with only a small portion being allocated to their party. Given its cash nature, there was no formal record-keeping. In contrast, EB’s contribution constituted white money which went directly towards party funds – an approach which undoubtedly represents a more effective solution than the traditional cash system. However, this raises the question as to how one should universally fund elections; while this new method may have addressed concerns surrounding black money to some extent, it remains just as opaque as before.
Dr Palanivel Thiagarajan, the current Minister of Information Technology and Digital Services of Tamil Nadu, has addressed the core issue in a video clip that has gone viral. The issue at the heart of what is wrong with the scheme of Electoral Bonds as currently issued is the fact that it is opaque. Opaque to everyone, except the government of the day, they know who is giving what to whom. This is unfair to all stake holders except the government. He makes the point that democracy is tied to free market/capitalism. He says it is a tendency of free markets and capitalists to get so big that they can subvert governance to their benefit. Money is a tool used to subvert governance. In order to prevent that and ensure a level playing field, we need to have to have accountability, transparency and strong institutions that can effectively withstand these economic powers from taking control of the government, he further quotes ex-RBI Governor’s book, saving “Capitalism from Capitalists”. For those of us in Goa, we can see this playing out on the banks of the Mandovi where casinos rule the roost. In short, the current EB scheme is opaque and has seemingly institutionalised quid pro quo both at State and Central levels.
Upon the revelation of even partial data, numerous inquiries arose. It is imperative that these be taken into account when devising any future system for funding elections or, to put it plainly, eradicating corruption from electoral financing.
The former finance minister, Arun Jaitley, emphasised that free and equitable elections cannot be achieved without transparency in political funding. The absence of such funding would result in the continuation of existing practices, including cash payments and sporadic cheque transactions subject to approval by the Election Commission for tax deductions exceeding Rs 20,000. This process can be cumbersome. In a recent example, a politician collected crores on her birthday claiming that each of her supporters gifted Rs 2,000 without necessitating receipts or PAN cards; an argument against such claims would prove futile.
Although the EB scheme utilised legitimate funds, certain transactions have raised doubts due to SBI’s withholding of identification numbers. Without this information, it is impossible to match donors with recipients; however, there appears to be a quid pro quo arrangement in place and many donors have contributed significantly more than their net profit. Until SBI’s recent disclosures, these donations remained hidden within public companies’ financial records. According to reliable sources, there is a clearly defined and transparent method for disclosing EB contributions which are recorded under ‘Donations’ since they are tax exempt and auditors cannot conceal disclosure. Highlighting these contributions separately for EB is unnecessary so shareholders may look but not see. Thus, loopholes persist that render the cure no better than the disease itself.
Elections employing the ABC (Alcohol, Briyani and Cash) method render it financially burdensome for candidates to compete against one another. Consequently, they seek backing from their respective parties or coerce reluctant supporters into providing monetary contributions. The former Chief Election Commissioner, S Y Quarishi, has proposed an alternative solution: offering political parties Rs 100 per vote obtained. While this amount may be increased as necessary, if there were to be approximately 65 crore votes cast in the upcoming election, a total of Rs 6,500 crores would need to be disbursed to these political entities. This funding could come graciously from public coffers without any corrupt practices or undue pressure; however, it would necessitate a complete ban on corporate donations which are frequently accused of promoting crony capitalism. Who will bear the cost of this expenditure should corporations no longer contribute?
Perhaps proposing a hybrid approach is viable, given the demonstrated inclination of corporations to surpass their financial constraints. One potential resolution could entail introducing a political levy on large corporations, set at 5% every five years towards an electoral endowment. The entirety of this fund would then be equitably apportioned based on the number of votes garnered by each party in the previous general election. Concurrently, transactions involving cash, particularly deposits exceeding Rs 2,000 should be discouraged while PM Modi’s digital vision ought to be promoted. These measures would ensure adequate funding for elections without creating any long-term fiscal commitments beyond that purpose. Furthermore, with the possibility of ‘one nation one election’, we will have transparently funded elections held once every five years using legitimate means exclusively; cash shall not reign supreme. Jai Hind!
(The author prefers to write rather than chat in a balcao)
