Politics & Statistics of Electoral Bonds (EBs): Perceptions vs Facts

Introduction of EBs for Political Funding

Modi Govt after coming to power in 2014, initiated several schemes to either eliminate or at least reduce the quantum of corruptions in political funding. Prior to Modi govt there were opaque funding ever since independence, largely donated by the corporate houses, mostly in exchange for favours in return by the ruling party. Transactions were both in paper money (cheques, drafts) and cash & kinds. The former had a trail but the latter mostly untraceable stash money. Political parties could conveniently swallow large sums broken into multiples of Rs 20k to escape mandatory disclosures. Modi govt tried to put a brake on corruptions in political fundings by introducing Electoral Bonds (EBs) issued by limited branches of the State Bank of India (SBI) in their Union Budget 2017-18. Although buyers of EBs had to put their KYC compliant IDs, bonds per se didn’t carry the name of the buyer or payee for public. The Scheme was notified on 02 Jan 2018, allowing EBs in multiples of Rs 1,000, Rs 10,000, Rs 1 lakh, Rs 10 lakh, and Rs 1 crore — to political parties of their choice, having obtained votes >1% in their last elections, to be redeemed within 15 days of validity else, deposited by the authorised bank in to the Prime Minister Relief Fund (PMRF).

Pros & Cons of EBs

It was a marked improvement over the prevalent practices of political funding that Congress party of India had enjoyed for decades both at the union and the states. However, based on own experience of corruptions in funding, there were some concerns that Congress-led opposition parties had sounded during the parliamentary debate on this EB money bill. They expressed three major concerns and approached the Supreme Court to strike down the act. The main concerns were:-

• The corporates/companies could be coerced to donate.
• Anonymity of EBs had potential for money laundering.
• The ruling parties having powers of returning favours, could benefit the most.

Money laundering thru’ EBs were feared. In fact, on paper, the number of political parties multiplied after EB scheme was adopted. The numbers of political parties proliferated from 1112 in 2010 to 2858 in 2023, many feared as decoys/shell companies committing financial impropriety. Further, the concerns expressed above compelled Congress party along with its accomplices like ADR & Communists petition in the Supreme Court (SC) of India to scrap the scheme altogether. However, SC didn’t agree but gave an interim relief before 2019 LS election, mandating the political parties to disclose total electoral funding on the Election Commission website for the public to know. Thereafter, their repeated petitions compelled the SC to list the case to be heard by a 5-bench SC judges in Oct-Dec 2023 that pronounced its verdict in Feb 2024 that EBs were unconstitutional, violated RTI act, stopped any further issue and that all details of EBs be submitted by the SBI to ECI to publish on their website. The total amount of money received by major political parties are shown in the chart below.

Oppositions Funded Proportionately, yet Sulking

The strengths of representations of the MPs in 2014 and 2019 Lok Sabha elections are shown below.

If we compare the percentage share of the EBs by various political parties as per the strength of their MPs in 2014 and 2019 parliaments, funding of BJP and Cong looks quite identical as shown above. Comparing statistically, at a glance, it looks that EB donation per MP for BJP and Congress in the 2014 and 2019 Lok Sabha has been almost identical, recieving Rs 11.6 Cr and Rs 11.7 Cr respectively. On that account, smaller political parties like DMK, BJD, AITC and BRS received much higher donations per MP at Rs 26.8, 24.2, 19.5 and 19.2 Cr respectively. Opposition political parties don’t want to accept this bitter fact. While INDI-alliance questions the huge total sum of EBs received by BJP, they don’t want to look at the comparative figure as shown in table below. If they fear there was coercion by the ruling BJP, why are almost double donation to DMK per head for their representation? It is very clear that INDI-Alliance are happily playing partisan politics on donations through EBs by blaming ruling BJP.

When such disproportionate share of political funding existed prior to Modi govt, hardly anyone raised an eyebrow. However, after the major opposition political parties made an unholy alliance of the corrupts named I.N.D.I.A, the noise of political and electoral funding has been resonating on almost all major platforms incl the toolkit handles of major opposition political parties like Congress, TMC, DMK and AAP.

Transparency and lacunae in EBs

Even though EB was a vast improvement in having transparency in political funding, it surely had lacunae. So, after stopping EBs what next? Go back to previous govt practices full of loopholes of corruptions & money laundering or improve the current practice of EBs by amending the legislation? Going back to the old practices will favour all corrupt political parties…BUT…that will be against the ethos of Modi govt trying for transparency in political funding and elections.

The Apex Court surely would have examined the case of EBs within the narrow perspectives of Indian Constitution which is mum on clarity of political fundings. However, as all humans are fallible, so are their creations. Constitution of a nation is also one such creation by a select group of individuals who drafted, reviewed, and made it the guiding principles for all future legislations. It will be wrong to doubt the intents of PM Nehru under whom the Constitution of India was drafted, debated and adopted. At least Ambedkar was not happy in finalizing it under pressure from some quarters of powers. It undoubtedly had some lacunae that needed numerous amendments from time to time. Many learned citizens also feel that the Constitution drafted in the 1040s, may not meet the aspirations and expectations of New India of 21st century. Basic tenets of fundamental principles of our constitutions were possibly borrowed from the initial UDHR of the primitive UN which have already undergone amendments and not many nations are happy with it. However, the issue of political and electoral funding escaped attention of the committee whether inadvertently or deliberately, Congress party under Nehru would have surely known it.

Judicial Activism in Striking Down EBs?

India has experienced “Judicial Activism or overreach” from time to time on topics of interest raised by a party in order to serve own viewpoints. Unfortunately, the (blindfolded) courts of law hears only the arguments/opinions of the HiFi lawyers arguing the case, taking advantages of the numerous technical loopholes in ~75 yr old constitution. There are instances of numerous judicial activisms, not all of which are beneficial for the citizen or the democracy. 

The first Judicial activism was under Mrs Indira Gandhi when her legislation of striking down “Privy Purse” was annulled. There were several cases of judicial overreach under her incl her immunity from accountability post emergency through an act of legislation. These were followed by many other decisions of the apex court incl Maneka Gandhi’s passport case. 

The current Judicial Activism on the validity of EBs under CJI Chandrachud (Jr) shifted the focus of Indian politics and media alike towards it for nearly a month now despite numerous other ‘breaking news’ in the nation. Some of the past judicial activisms are enumerated in the text box below.

The culmination of the activism was with publishing of the details of all bonds on the website of Election Commission of India.

Secrecy around Political Funding

Lawmakers of India have kept the voters in dark of their political and electoral fundings right from independence. Congress enjoyed the unlimited opaque funding from donors both from India and abroad, thru’ both fair and unfair means for decades, for over 60 yrs of their rule to be precise. These grey fundings have been both at Center and State govt levels. The donations in most cases could have been linked to undue favours in return. Thanks to Modi govt which thought of a mechanism of curbing the largely opaque electoral funding through “Electoral Bonds (EBs)” thru’ an act of legislation in the parliament. The details of the EBs are retrievable at the press of button with all details of transactions with traceability.

We must acknowledge that various political parties receiving the EBs are fully legitimate through an act of parliament. It is other matter though that it might have been purchased and donated by individuals or companies x, y, z some of whom may be tainted. It is but natural that ruling parties have been the recipients of the major chunk as before. India has long witnessed the monopoly of ruling Congress party, both at Centre and states, receiving major chunks of political funding mostly through black money cash that had no traceability. Those days, other political parties had very few donors but could do nothing but to sulk. This trend must be inherent in the current EB system too, with some of the corporates either coerced to donate or expecting favours in return. Who will know it better than Congress who has enjoyed it the most? Today, there are many regional parties ruling several states believed to be enjoying these unfair means of funding. This must be curbed, but how? Before the EBs came in force, none knew the sources of majority of the donors, nor did the anti-corruption bureau actively monitored the favours rendered in return.

Political opportunism and Blame game

Right from the time SC declared the EBs unconstitutional, the opposition political parties have gone ‘Whang Ho’ in blaming the govt of the day. They have forgotten that they too were party in the framing of this act in 2017. All political parties had acknowledged that funding thru’ EBs were game changer in rooting out money laundering by the political parties. It is other matter though that after SC struck it down, the same parties are blaming the govt of the day. In the initial days, there were no control on the tongue in calling the governing parties as corrupt fully knowing that Modi govt at Centre has been spotless on the issue of corruption in their 10 yrs of rule. It is a political milestone no other political parties could achieve in the 75 yrs of independence. However, there are shreds of allegations of coercing some corporates for donations. The easy example is the AAP-led corrupt INDI-Alliance blaming BJP of receiving Rs 4.5 Cr of EBs within few days of Aurobindo Pharma director SC Nair was jailed. This appears a novice political statement. All must know that before ED arrests anyone, there is a silent but coordinated work of the ED for several weeks if not months. It seems ridiculous that SC Nair could have been trapped and coerced by the ED in an apparent few days.

In a Nutshell

In a vast democracy like India, political and electoral funding is necessary for the political parties to be able to participate in elections. Public funding thru’ taxpayer’s money is not feasible for the numerous political parties numbering near three thousand. It will have the number of prospective candidates running for LS elections in tens of thousands. Hence, they must look for funding thru’ own means. These means in past were opaque, untraceable, promoting financial corruptions that was apparently corrected by Modi govt in 2018 by bringing in Electoral Bond act. Congress party and their toolkit made most noise blaming BJP govt receiving major chunk although statistically, both received identical donations per MP.

The CJI, while striking down the act, should have either suggested amendments to rectify the lacunae in the EBs or given directions for a better transparency and legitimacy. The current act of the CJI seems more of a judicial activism than anything else. None the less, it is the responsibility of the govt of the day to find a better alternative. An all-party meeting could be a starting point although no concrete step could be expected as most of the political parties are family-based and corrupt to the core, greedy for own benefit than for the nation. Multi-party Indian democracy can’t trend the 2-party American way of elections. At the same time, many of the voters expecting money from the candidates (such as those in Tamil Nādu) have not yet matured, encouraging electoral corruption. Further, political parties such as AAP has brought a practice of offering freebies to the voters. All these ills are regressive and bad for the nation.