Could the unlimited, unregulated and anonymous funding of political parties by big corporates be legalised? Could the inherent capacity of the ruling party at the Centre or in the states to get a major share of it be legitimised by law? An ordinary citizen may not readily agree to such a course. Yet, this was done by way of the electoral bond system (EBS) in India, introduced as a money bill during the budget session in 2017-18.
It was implemented after rejecting the objections from the Reserve Bank of India and the Election Commission. To facilitate corporate funding for political parties, five major statutes were amended: the Reserve Bank of India Act, Representation of the People Act, Income Tax Act, Companies Act, and Foreign Contribution Regulation Act.
In Union of India v. Association for Democratic Reforms (2002), the Supreme Court said that the details of candidates, including her assets, educational qualifications and criminal antecedents, if any, should be made known to voters. If the right to know these individual details is recognised by our legal system, there is no reason for political parties and corporates which fund them to get protection from the public gaze. An informed citizenry forms the foundation for an electoral democracy.
The challenge against the EBS was heard by a constitution bench of the Supreme Court recently and the case was reserved for judgement. The Centre justified the EBS by contending that it will bring in transparency and accountability, adding that voters do not have a fundamental right to know everything about electoral donations. It justified the present system by relying on the principles of confidentiality and privacy.
An electoral bond is a bearer instrument. It can be purchased from notified branches of the State Bank of India. If one wants to anonymously contribute money to political parties in India, he or she could do so through these bonds. The details of the donor and donee or the amount transacted will not be disclosed to the public. As expected, a major chunk of the donors comprises corporates.
Elections in India have become a big business and the voter is reduced to a tool in the hands of capitalists. In 2019, for the Lok Sabha poll, about ₹60,000 crore was spent—the highest in the whole world. The Association for Democratic Reforms in its report says that 24,012 electoral bonds with a value of over ₹13,791 crore were sold between March 2018 and July 2023.
The BJP got ₹5,272 crore from these bonds while all other national parties together obtained about ₹1,784 crore between 2016-17 and 2021-22. The Congress received ₹952 crore during this period. While the BJP got 57 per cent of the total value of the bonds, the Congress got 10 per cent.
In the realm of political funding, the earlier cash-and-carry system and under-the-table donations clearly lacked transparency and accountability. The erstwhile legal requirement to declare the identity of donors who pay more than ₹20,000 to political parties was flouted more often, and the big money was transferred unlawfully. The EBS was supposed to replace this “suitcase culture”. In effect, however, it so happened that electoral bonds were not in lieu of, but in addition to, transfers by cash.
Let us ask some fundamental questions. When huge donations are made by corporates, what are the checks against the policies and laws being framed to suit the interests of such corporates but not public interests? How can people know about the nature of the nexus between political parties and corporates? When details of political parties and their sponsors for the election with hidden agendas are not made known to the voters, will the system be transparent? When the government and the State Bank of India alone know the details of the contributions—not even the opposition parties or the public—how do we check the possible victimisation of those who chose to donate to the opposition at the Centre or states? When tax evasion and money laundering are legitimised by way of electoral bonds, what will the plight of the country’s rule of law be?
B R Ambedkar had a sense of optimism when he said that in India, we shall have one person-one vote and thereby, political equality. He was sceptical about social and economic equality. But economic inequality impacts political equality in multiple and subtle ways.
‘Winnability’ is the basis of corporate funding. But corporate funding often determines winnability as well. Poorer parties or independents cannot compete with richer parties, and this essentially sabotages the essence of representative democracy and dilutes the idea of one person-one vote.
To save democracy from the clutches of the super-rich, we should resort to public funding of election campaigns and expenses. International IDEA, an intergovernmental organisation which advocates for democracy across the globe, found that out of the 175 countries surveyed, in 60 there is regular public funding for political parties. In 51 countries there is such funding “regularly as well as in relation to electoral campaigns”. In 13 other countries, public funding is limited to campaigns only. Only in 47 countries, there is no practice of public funding at all, and India is one among them.
Though successive governments have done everything to discredit the idea of socialism in the preamble to the Constitution, it remains a formidable and effective tool to assert political equality, a basic feature of the Constitution. Legitimising electoral bonds, which enable corporations to hijack the country’s democracy, is antithetical to the constitutional value of socialism.
Socialism, as a notion, is manifest in different ways in the equality clauses under Part III and the directive principles under Part IV of the Constitution. The EBS is very often corruption and black money in disguise and on many occasions is also legalised quid pro quo. Therefore, electoral bonds pose not merely the legal questions about informational rights and parliamentary procedures, but also the fundamental question of political equality.
Kaleeswaram Raj
Lawyer, Supreme Court of India
(Views are personal.)