Anonymous political donations harming India’s democratic system
By Nantoo Banerjee
Increasing secret business donations to political parties to help fight state and general elections threaten to harm India’s democratic system. The practice protects the anonymity of contributors. If France, one of the world’s most vibrant democracies, can ban political donations by business corporations, why do political parties in India need to raise election funds from undisclosed business barons? Business funding of political parties in India is increasing by leaps and bounds. Introduced by the government in 2018 as part of the finance bill in Lok Sabha, the electoral bonds are allowing business corporations to anonymously donate large sums of money to political parties, mostly those in power in both the states and the Centre.
The electoral bonds allow Indian citizens or a body incorporated in India to purchase bonds, enabling anonymous donations to political parties. It may not be wrong to suggest a quid pro quo factor is strongly linked with such anonymous political donations. The essence of democracy is its people-oriented nature. Unfortunately, political parties in India keep the people in the dark about the sources of their election funds. The existing law needs to be amended to make political donations transparent.
Almost all major democracies in the world have laws on financial transparency in political life. India, the world’s largest democracy following a multi-political party system, is different. The country’s political parties fight shy of disclosing the details of their sources of funds in support of their vigorous election campaigns. Few will disagree that the anonymous funding of political parties before national or state elections is against the democratic ethos. In India, actual spending by leading political parties and their candidates during the elections are believed to be far in excess of the ceilings prescribed by the Election Commission. Cash plays the king in democratic India’s state and national elections, mocking the concept of financial transparency in political life. It challenges one of the key ethics of democracy that is to ensure free and fair elections.
The electoral bond system has vastly increased business funding of political parties. Introduced by the government in 2018 as part of the finance bill in Lok Sabha, the electoral bonds are allowing business corporations to anonymously donate large amounts to political parties, mostly those in power in the states and at the Centre. For instance, the Bharatiya Janata Party, ruling at the Centre and also in a number of states, received about three-fourths, or 76 percent of the electoral bonds sold in 2019-20. The Election Commission data showed that the Congress party got just around nine percent of the electoral bonds, worth a total of Rs.3,355 crore, sold in 2019-20. Interestingly, over 96 percent of West Bengal Chief Minister Mamata Banerjee-led Trinamool Congress (TMC’s) income came from electoral bonds in 2021-22, revealed the party’s audited annual report. It said out of the TMC’s total income of Rs. 545.74 crore in 2021-22, as much as Rs.528.14 crore came from electoral bonds. It also said that only Rs.14.36 crore came from fees/subscriptions/collections from primary party members. The TMC showed an income of only Rs.42 crore from electoral bonds in 2020-21.
Now that the validity of the present form of electoral bonds has been challenged before the Supreme Court of India, the apex court prima facie perceived certain shortcomings in the scheme’s transparency. The five-member Supreme Court bench, headed by Chief Justice D Y Chandrachud, felt that the current system has created an “information black hole.” The bench stated that the problem with the electoral bond scheme was the selective confidentiality to the donor’s name and the political party to whom the contribution was made. “The other problem is that a donor may not necessarily be the purchaser of the electoral bond as a corporate donating a huge sum can ask a large number of people to buy electoral bonds by paying a premium over the cost price, then aggregate it to give it to political parties. This does not rule out the play of black money,” the bench observed.
It is feared that in its current form, the electoral bonds may be utilised by the country’s business barons to establish a strong grip over the government’s economic policies at both the Centre and state levels. The elected government’s pro-poor initiatives are mostly limited to doles — cash or in kind such as free rations. While the political parties and the rich continue to manipulate each other to build and protect the system to their advantage. Going by the Oxfam report, India’s top one percent owned more than 40.5 percent of the country’s total wealth in 2021, highlighting the large disparity in wealth distribution in the country.
The report said over 40 percent of the wealth created in India between 2012 and 2021 had gone just to one percent of the population while only three percent had trickled down to the bottom 50 percent. The democracy and the political system continue to favour the rich and help ruling party satraps and their followers amass money. The ongoing selective CBI and ED raids on the assets of political leaders and their henchmen provide a glimpse of the faulty democratic system increasingly promoting financial corruption. This also explains why transparency in electoral funding is important for the proper functioning of the democratic system. In fact, electoral bonds pose a threat to Indian democracy.
In France, the Law on Financial Transparency in Political Life, 1988, as amended in 2011, 2013, 2015 and 2016, and the Electoral Code regulate the financing of political parties. They provide comprehensive limits on the private income of political parties. The law bans donations from business corporations, foreign entities, trade unions and anonymous donors. There are also limits on how much political parties and candidates can receive. In Germany, corporate donations to political parties are banned but not on donations from trade unions.
According to a University of Warwick study of donations to political parties in the UK over the last 20 years, political donations have almost trebled over the period, rising from £41 million in 2001 to £101 million in 2019. Individual giving has also risen substantially, with 60 percent of donations in 2019 coming from private individuals. The Federal Election Commission in the US maintains a database of individuals who have made contributions to federally registered political committees. If the developed democratic countries are so concerned about the financial transparency in political life, must India stay aloof in the matter? Anonymous election donations in India are encouraging crony capitalism, fostering close and mutually advantageous relationships between business barons and political rulers at the cost of the poor, who vote parties to power. (IPA Service)