Editor,
In a historical decision the Supreme Court has set aside the electoral bond scheme which was started in.2018 treating the scheme as unconstitutional and which goes against the democratic values as well as against the Right to Information Act. The apex court deemed the scheme opaque and highlighted the need for transparent political funding. The same views were expressed ab-initio by RBI and all the criticism and apprehensions about the Electoral Bonds scheme that have been voiced have been validated by the Supreme Court. In a democracy, elections provide a level playing field for both voters and political parties and every vote counts equally. To keep this field on an even keel, parties must be transparent about candidates, policy and funding, thereby enabling voters to make a sound choice. If this standard operating procedure is tampered with, democracy weakens and becomes a parlour game.
By striking down the Electoral Bonds scheme as unconstitutional, the Supreme Court has delivered a victory to the people of India on a core principle of electoral democracy — that the voter has the right to, and should, know who is funding political parties and their election machinery In a democracy, people have the right to know who makes contributions to which political parties because parties function in the public realm. They form governments and frame public policies. Even when they are in the Opposition, they represent public opinion and influence policy.
The apex court has held the scheme, under which individuals and companies can purchase bonds issued by the State Bank of India and donate them to parties of their choice in total anonymity and without limit to be violative of the Right to Information and hence ultra vires of Article 19(1) (a) of the Constitution. Whereas previously limit was imposed which was 7.5 percent of average of 3 years profit, under this scheme even loss making firms can contribute up to any limit. which is unacceptable as it could translate to influence over policy-making and hence violative of the principles of free and fair elections. The Court also struck down the amendments to the Representation of the Peoples’ Act, the Companies Act and the Income Tax Act brought in to facilitate operation of the scheme
As per the Court order the SBI has to disclose the details of the bonds sales, including details of the purchaser (individual or company) and the beneficiary party, from April 2019, to the Election Commission of India by March 6. The Election Commission has to publish this information on its website by March 13 so that the public has an idea of the nature of the deals the scheme facilitated.
It may be recalled that the BJP got Rs 10,122 crores, nearly 60 percent of the 16,437.63 crores collected through the electoral bonds between 2018 and 2022 as per the election data. The Congress, the principal Opposition party was at a distant second position with Rs 1,547 crores. Here it is also noteworthy that communist parties such as CPI and CPM did not purchase any such electoral bonds as they were against this scheme from its very inception.
This judgement marks a significant development in the ongoing debate over transparency in political funding in India. I applaud the four petitioners including the NGO- Association for Democratic Reforms (ADR), Congress leader Jaya Thakur and the Communist Party of India (Marxist) for having taken the initiative to file a vital and important petition in the Apex Court for “We the people of India”.
In addition to striking down the electoral bonds. scheme, the Court also made crucial observations regarding Section 182 of the Companies Act and the issue of political contributions by companies. Section 182 of the Companies Act, 2013 allows Indian companies to make financial contributions to political parties under specific conditions. These conditions necessitate that such contributions be authorised by the company’s Board of Directors, not be made in cash, and be transparently disclosed in the Company’s Profit and Loss (P&L) account. However, through the 2017 Finance Act, certain key changes were introduced which includes the removal of the previous cap on the amount that companies can donate to political parties, set at 7.5 percent of the average profits of the preceding three fiscal years. Additionally, the requirement for companies to disclose the names of the political parties to which contributions were made in their P&L accounts was also eliminated.
It is a fact that the scheme and the logic on which it was based were flawed from its very inception as was pointed out by the RBI as well as by the Law Ministry. Also it was introduced in the Lok Sabha as a money bill so that it need not go to the Rajya Sabha for wider discussion where Opposition parties had more members. The Government’s obvious plea was that it would introduce transparency in political funding as the bonds are issued and encashed through the banking system. It also defended the anonymity clause saying its absence would attract retribution to entities by political parties, but both arguments are specious. It’s a welcome idea that political parties get funds from the public, corporates included, in a transparent way. This would be a legitimate means of insulating them from the demands of quid pro quo, a sure recipe for corruption but that argument went up in smoke when the scheme ensured total anonymity to both the purchaser and the beneficiary party.
Only a banking channel was introduced to facilitate what is otherwise an act of bribery. Huge corporate donations in the form of electoral bonds to the ruling party have denied a level-playing field for all political parties and given it more resources to fight elections. Now that the country’s top court has ordered to make the details of the transactions hitherto made under the now-annulled opaque scheme, public, we will come to know who has funded whom and how much and judge it for ourselves.
As the court pointed out, transparency in political funding cannot be achieved by granting absolute exemptions. Though the scheme offers anonymity, this would be meant only for the public and the Opposition since the party in power will have an option to get information on the purchasers and beneficiaries of the bonds and retribution always remains a possibility. Electoral bonds have therefore proved to be a cure that is worse than the disease. All it did was to legalise corruption. Worse, it had a direct impact on the fairness of the electoral process, the cornerstone of democracy. As the chief justice of India pointed out in his judgment, information about the funding of political parties is essential for the effective exercise of the vote.
It is expected that the government must now draw lessons from the aborted attempt and sit with people who are interested in the furtherance of democracy to design better and transparent ways of political funding. There are better models available across the democratic world, including in the United States where transparent, limited funding to political parties is legal. Such principles can be adopted in our country too provided there is a strong determination to pursue transparent electoral funding.
Yours etc.,
Yash Pal Ralhan,
Via emai
