Documents accessed by transparency activist Commodore Lokesh Batra (retd) and published by HuffPost recently in a series called #PaisaPolitics, has renewed the contentious debate on electoral bonds. The revelations show the objections of the Reserve Bank of India (RBI) and other institutions like the Election Commission (EC), which have been systematically stone-walled and ignored to bring in a first-in-the-world version of opaque political funding.
In January 2017, just before the electoral bearer bonds were unveiled, the RBI’s opinion was sought by the finance ministry. The RBI’s opposition was quick and unequivocal. It said it would encourage money laundering; and if issued in substantial quantities, will undermine the faith in Indian bank notes.
“The bonds are bearer bonds, and are transferable by delivery. Hence, who finally and actually contributes the bond to the political party will not be known,” the RBI wrote.
RBI IGNORED
However, the government never intended to take RBI’s views seriously. These documents reveal that then revenue secretary Hasmukh Adhia, said the RBI “has not understood the proposed mechanism”. He dismissed the RBI note perfunctorily, saying: “This advice has come quite late at a time when the Finance Bill is already printed.”
Two days later, then finance minister Arun Jaitley on February 1, 2017, as part of his Budget speech, proposed the creation of electoral bonds and the amendment to the RBI Act “to cleanse the system of political funding in India”. Thereafter, the EC too wrote to the Ministry of Law and Justice in May 2017 warning against electoral bonds.
In the May 26 letter, pointing to the amendment in 29C of the Representation of People Act, the EC says: “It is evident from the amendment that has been made, that any donation received by a political party through an electoral bond has been taken out of the ambit of reporting under the Contribution Report under Section 29C...and therefore this is a retrograde step as far as transparency of donations is concerned, and this proviso needs to be withdrawn.”
Despite the EC’s written protests, minister for state of finance, Pon Radhakrishnan, tried to brazen it through in the winter session of Parliament in 2018 claiming that the government had not received “any concerns from Election Commission on the issue of Electoral Bearer Bonds.” A breach of privilege notice later exposed that in fact the minister had been misleading Parliament.
BJP FOR MORE OPACITY
Thus far, electoral bonds worth `6,128 crore have been sold since March 2018, according to data compiled by the Association for Democratic Reforms (ADR). Not surprisingly, of the first tranche worth `222 crore, the BJP cornered 95 per cent, and it won’t surprise anyone if the rest of the bonds went in the same direction.
Electoral bonds are issued in denominations of `1,000, `10,000, `1 lakh, `10 lakh and `1 crore. The State Bank of India (SBI) is the only bank authorised to sell them in 10-day windows, four times a year; except there is another 30 days given in years when there is the Lok Sabha poll. Buyers can donate the bonds to a party that has garnered at least one per cent of votes, and these can then be cashed within 15 days.The central government, before the electoral bond scheme was implemented, also sought responses from political parties.
The ruling party’s pitch, made by BJP’s general secretary Bhupendra Yadav to then finance minister Arun Jaitley in August 2017, amply makes it clear that it stood for greater opacity. In the letter accessed by activist Commodore Lokesh Batra, the party suggested electoral bonds should be issued without any serial number or identification marks so that donors cannot be identified. The BJP also wanted an assurance that political parties will not be held responsible for ensuring that the donor is not a foreign source, which is illegal under the Representation of People Act.
It is well known that funding elections and political parties is not a ‘voluntary’ affair. Corporate groups need fast-track decisions and for government agencies to look the other way. In the vast web of laws and notifications, there are scores of ‘law-breakers’.
Arm-twisting has become a sophisticated affair. Investigative agencies and regulatory bodies, privy to information about wrongdoing, become the grinder to force out funds for elections and to ‘buy’ political loyalty. The obvious advantage is with the party in government. Electoral bonds, far from “cleansing the system of political funding”, as Arun Jaitley had claimed, has in fact legitimised blackmail and created the pathway for conversion of ill-gotten gains into political favours.
Electoral bonds have been challenged in the Supreme Court by ADR and Common Cause. An interim order has directed political parties to submit details of the electoral bonds received by May 15. The EC in an affidavit had reiterated its opposition to the scheme. It is high time the
government put an end to this legitimised corruption.