The Supreme Court ruling the electoral bonds as unconstitutional has opened the Pandora’s box of election financing. The State Bank of India exacerbated it by seeking time till end June, before the March deadline set by court. With elections approaching in May, and their relevance for Indian survival as a liberal democracy, a look at election financing globally deserves attention.
The 38-member Organisation for Economic Cooperation and Development (OECD), created in 1962, issued a report on election financing in democracies in 2016. Predominantly developed western powers are members, except Japan, Republic of Korea and Israel from Asia. It observed that “Finance is a necessary component of the democratic process”. It explained that finance both enables the expression of political support and feeds competition in elections. But it warned that “money may be a means for powerful narrow interests to exercise undue influence”, thereby negating public interest. Funding rules, it added, must ensure a level playing-field for all. This it concluded is only possible, if there is “far more efficient and independent oversight and enforcement”.
The Indian Finance Bill, 2017 introduced electoral bonds legislation as a money bill. This constitutional humbuggery bypassed proper parliamentary scrutiny. Now each successive revelation regarding its highly flawed nature contradicts the Narendra Modi government’s consistent refrain that the law was a model of transparency and black money’s antidote. Despite the Supreme Court’s clear instructions the State Bank of India dragged its feet on releasing full information regarding bond purchasers, their secret alphanumeric numbering and encashment by political parties. The top four recipients of bonds are the BJP (₹6,986.5 crore); Trinamool Congress (₹1,397 crore); Congress (₹1,334 crore) and Bharat Rashtra Samithi (1,322 crore). While parties like DMK revealed details of donors, BJP and Congress suffered amnesia, pleading they failed to note particulars of larger donors. The Samajwadi Party shared details of donors of smaller sums but claimed that ten bonds of ₹1 crore each were received by post without any name. But now that the Supreme Court is ordering SBI to reveal the secret alphanumeric number of each bond, intrepid analysts will uncover what the parties fear being disclosed.
From information revealed so far following conclusions emerge. One, because the alphanumeric number enabled an audit trail the SBI, and by extension the union government, could know the details of donors to opposition parties. The Enforcement Directorate (ED) and Income Tax (IT) raids on some of these entities need examining to determine whether the intention was to vindictively punish or merely practice even-handed tax enforcement.
Two, whether companies that bought bonds after being raided or on receiving tax notices ended up contributing to BJP’s electoral war chest. The quid pro quo if established could constitute criminal extortion through misusing the union government’s enforcement powers. This has the potential to peel off the teflon coating of the BJP government.
Three, the regional parties which received massive electoral funds from companies needing state’s goodwill to bag business deals also face the “quid pro quo” charge. BJP has continued unabashedly to argue that the electoral bonds scheme was well intentioned and meant to cleanse election funding. Thus if BJP forms the government again they may claim that the mandate endorses the electoral bonds scheme. A party that talks of a “Congress mukt” India is unlikely to devise a balanced scheme.
The French election financing scheme holds some lessons. Their campaign finance legislation originated in 1988, after decades of corruption charges in election funding. Although candidate funding rules have been amended multiple times, party funding legislation has been more stable. State funds 60-70% of the parties’ income via direct or indirect public funding. There are three significant considerations to note. First, money’s role in election outcomes and electoral expenses has been limited. The BJP by legitimising untraceable and unlimited corporate donations did the reverse. It cornered the highest amount of bonds and made elections a contest in profligacy. Second, no candidate must be dependent on a generous donor. The donations from a natural person were capped and from legal persons forbidden. Electoral Bonds, on the other hand, allowed unlimited corporate donations. Finally, a Commission, independent of government, now monitors election expenditure and the state reimburses the electoral expenses of candidates and parties getting a minimum vote.
France had 500 odd political parties, half of which get expenses reimbursed. In 2009, the presidential party received €34 million while the main opposition party got €23 million. In 2007 the French state paid €415 million for presidential and legislative elections. According to the Centre for Media Studies in the 2019 national election ₹60,000 crores were spent, double the amount in the 2014 election.
The Supreme Court has nailed the problem. Will the BJP learn from their gross mistake in diverging from the OECD advice and the French practice? The Opposition must make election finance reform a major issue, underscoring BJP’s flawed vision.
