Electoral Bonds: Scourge of Democracy

Electoral Bonds: Scourge of Democracy

Sarkari Secrets

Venkatesh Nayak.

Sir Sean Connery, who made James Bond -- the arch nemesis of Ian Fleming’s villainous characters hankering for world power -- a household name, died peacefully in his sleep last month. Far away, in India, another “Bond” has taken birth already and has become the scourge not of Dr Evil but of our electoral democracy. The name’s “bond”, “electoral bond” (EB): sold through State Bank of India (SBI) to any buyer, four times a year, for donating any amount of money to a political party without revealing the amount or the donor’s identity to the people of India. Initial fears that EBs are a way for rich individuals and corporates to channel large amounts of money to political parties, especially the ruling party, are being proven true.

Data supplied by SBI to veteran RTI activist Commodore (retd) Lokesh Batra shows that of the more than Rs 282 crore worth of EBs sold during the 14th season, just before Bihar went to polls, the single EB of Rs 1,000 denomination that was sold remained unclaimed by the political party that received it. Who cares for a Rs 1,000 donation when there are EBs of Rs 1 crore and more that form the bulk of the donations! The small change goes into the PM’s National Relief Fund. The “little man” need only press the EVM button once in five years; he can keep his money. Electoral politics has truly become the business of the rich and the powerful.

Touted by the late Finance Minister Arun Jaitley in 2017 as a ‘reform’ measure to make political party funding more ‘transparent’ than before, EBs were actually meant to do just the opposite. Ironically, nothing in the EB Scheme or the three laws amended to float it -- namely the Reserve Bank of India Act, the Income Tax Act, and the Representation of the People Act (RPA) -- actually requires the SBI to keep the identity of the donor and the recipient party secret. In fact, political parties are mentioning the quantum of donations received in the form of EBs in their annual audited statement of accounts to the Election Commission of India (ECI). The only thing no one is telling the people of India is, who is giving these hundreds of crores to the political parties, especially the BJP, the ruling party and the biggest beneficiary by far?

Keeping the identity of EB donors secret is legitimised by other laws governing the business of banks. Under these laws, SBI holds the KYC details of donors in confidence. Of course, the government can access it as and when required under the pretext of law enforcement.

While there is a strong case for maintaining the confidentiality of dealings between customers and their banks, the sale and redemption of EBs are not banking transactions but transactions between donors and political parties. SBI is only a facilitator, forced into that role by the government.

Ironically, the RPA continues to require disclosure of the identity of donors who give Rs 20,000 or more to political parties in cash, or by way of bank draft or electronic transfer. Political parties are duty-bound to declare their names, bank account details and PAN numbers to the ECI every year. The ECI publishes them on its website. In all these conventional modes of donating, too, SBI and other banks play a role, but the excuse of banking secrecy is not used to hide donor identity. But when money is channelled to political parties via electoral bonds – which is as good as cash – the details of who is giving and who is taking suddenly becomes a sarkari secret!

A fourth law, namely the Companies Act, was also amended in 2017 to remove the 7.5% cap imposed on corporates on donating their profits to political parties. They are also no longer required to inform even their own Boards or shareholders which political party they threw the company’s money at. EBs can be used to deliver it in a “sealed cover” as it were!

After analysing donations data that the ECI displayed on its website last year, this author showed how opaque EBs have edged out transparent modes of political funding. Many a watcher of political financing has rightly said, electoral bonds are a fraud perpetrated on the people of India.

Nevertheless, RTI activists are doing what they know best -- demanding information about the sale and redemption of EBs every season. Cases relating to SBI’s denial of such information are coming up for hearing one by one. Will the CIC bond with the best, i.e., transparency, or side with the worst, namely, opacity? That remains to be seen.