Electoral Bonds: Supreme Court’s Latest Order Another Letdown

In light of the Supreme Court’s recent order dismissing stay applications against the sale of electoral bonds in April, PRAKASH KARAT writes about how the order, seen in the light of the apex court’s delay in deciding petitions challenging the legality of electoral bonds for over three years, is yet another betrayal of the principle of transparency in political funding.

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On March 26, The Supreme Court declined to stay the issuance of a fresh tranche of electoral bonds from April 1 to 10. The Association for Democratic Reforms (ADR), an NGO, had filed an urgent plea before the apex court for withholding the issue of bonds meant for the four state assembly elections.

The Court’s rationale for its decision is that the scheme has operated for the past three years without impediments and certain safeguards have been put in place.

These are unconvincing reasons. The primary opposition to the scheme is that it is an opaque way of funding political parties, and is in-built to favour the ruling party. As far as the purported safeguards in place are concerned, the only safeguard that the Court refers to is its 2019 order in which it asked political parties to give details of the electoral bonds they had received in a sealed envelope to the Election Commission. This order pertained only to the particular tranche issued at that time, and no follow-up action was taken.

Petitions languishing for over three years

The fundamental problem is that the judiciary is yet to dispose of petitions that challenged the electoral bonds scheme in 2018. The writ petitions challenging the bonds were filed by two NGOs – ADR and Common Cause, and the Communist Party of India (Marxist).

The Court’s rationale for its decision is that the scheme has operated for the past three years without impediments and certain safeguards have been put in place. These are unconvincing reasons.

Sitting on these petitions, and merely stating that the scheme has been operational for three years without legal impediments, is to de facto legitimise the electoral bond scheme – a pernicious system of political funding which is not transparent, and facilitates corporate funding as a quid pro quo for favours done by the ruling party. Neither the donor is obliged to disclose the identity of the recipient of the money through bonds nor is the recipient party obliged to reveal the source of the donation – serving as a perfect conduit for kickbacks and illegal money to flow. Shell companies can be theoretically set up to divert illicit money to a party legally through electoral bonds.

BJP has overwhelmingly benefited from electoral bonds

According to responses to applications filed under the Right To Information Act, so far the State Bank of India has issued 14 phases of electoral bonds since February 2018. A total of 12,773 bonds were issued till the end of 2020, of which 12,632 bonds worth Rs. 6,472 crores were encashed. The first tranche was issued in February 2018 worth Rs. 222 crores worth of bonds. Of these, 94.5 per cent, i.e., over Rs. 210 crore went to the Bharatiya Janta Party (BJP), as was clear from the BJP’s audited accounts submitted to the Election Commission. In all subsequent tranches, the BJP has received over 90 percent worth of the bonds each time.

The fact that these donations are from corporates or high net worth individuals is clear from the fact that 92.12 percent of the bonds issued so far were of denomination of  Rs. 1 crore or above.

Sitting on these petitions, and merely stating that the scheme has been operational for three years without legal impediments, is to de facto legitimise the electoral bond scheme – a pernicious system of political funding which is not transparent, and facilitates corporate funding as a quid pro quo for favours done by the ruling party.

Easing entry of big business money into politics

Along with the bonds scheme, the Modi government has amended the relevant laws to enable MNCs operating in India to donate funds as Indian companies, rather than as foreign contributions. Further, the limit of 7.5 percent of the average profits of three years of a company that could be given as a political donation was also done away with.

This has opened the floodgates for money from foreign companies and unchecked amounts from Indian companies to be donated to the ruling party. Given the authoritarian nature of the Modi government, most companies would not risk funding opposition parties. Though these bonds are anonymous as far as the public is concerned, the government can easily find out who is getting the bonds as they are being routed through a government-owned bank.

The April tranche of bonds will contribute to the BJP funds for the assembly elections, particularly those in West Bengal. So far, after Mumbai, the largest number of bonds were issued in Kolkata which, after Mumbai and Delhi, is the third-richest city in South Asia.

The government’s claim that the bond scheme is encouraging white money and doing away with black money in elections is also spurious. Obviously, huge amounts of black money sourced from business interests are still a major part of election funding. The BJP, through bonds, is only monopolising the legal funding by corporates and the super-rich, while raising huge amounts of undeclared money from the same sources. The electoral bond scheme is, thus, valuable for the ruling party to formalise its nexus with big business.

So far the State Bank of India has a total of 12,773 bonds till the end of 2020, of which 12,632 bonds worth Rs 6,472 crores were encashed. The first tranche was issued in February 2018 worth Rs 222 crores worth of bonds. Of these, 94.5 percent, i.e., over Rs 210 crore went to the Bharatiya Janta Party (BJP. In all subsequent tranches, the BJP has received over 90 percent worth of the bonds each time.

The Supreme Court has been derelict in its duty by not taking up the case on electoral bonds for three long years – just as its failure to decide the petitions challenging the annulment of Article 370 and the dismantling of the state of Jammu and Kashmir. This trend of judicial evasion has become marked from the tenure of CJI Ranjan Gogoi.

The Supreme Court has the responsibility of ensuring transparency in political funding and stopping the perversion of democracy through unaccountable and secret sources of money. The sooner it addresses the issue, the better it is for democracy in India. (IPA Service)

(Prakash Karat is a senior CPI(M) leader. The views expressed are personal.)

The article was originally published in The Leaflet.