ARE ELECTORAL BONDS A THREAT TO DEMOCRACY?

Author- Sakshi Komal Dubey*

Editor- Manishikha Mondal

The Finance Bill, 2017, for transparency in electoral funding introduced electoral bonds, and the same was notified in the Electoral Bonds Scheme 2018 [1]. An electoral bond is a bearer Banking Instrument to be used for funding eligible Political Parties. A qualified Political Party is the one registered under Section 29A of the Representation of the People Act, 1951 and who has secured not less than 1% of the votes polled in the last General Election to the House of the People or the Legislative Assembly.

So, what is the controversy around it?

FEATURES

The purpose of introducing electoral bonds was to ensure that all the donations made to a party would be accounted for in the balance sheets without exposing the donor details to the public. In addition, according to the government, electoral bonds will keep a check on the usage of black money for the funding of elections. Previously, donors used to donate via cash [2]. Electoral Bonds may be purchased by an Indian citizen or incorporation or establishment in India.

Section 2(31) of Income Tax Act, 1961 defines "person" as (i) an individual; (ii) a Hindu undivided family; (iii) a company; (iv) a firm; (v) an association of persons or a body of individuals, whether incorporated or not; (vi) every artificial juridical person, not falling within any of the preceding sub-clauses; and (vii) any agency, office or branch owned or controlled by such person. Thus, a person with a KYC-compliant account can purchase the bonds and donate them to any party or individual of choice.

The bonds are to be issued by the Designated Branches of SBI in the denomination of Rs. 1000, Rs. 10,000, Rs. 1,00,000, Rs.10,00,000 and Rs. 1,00,00,000. The bonds are available for purchase by any person for ten days each in every quarter, i.e., in January, April, July, and October, as specified by the Central Government. The central government also specifies an additional period of 30 days in general elections to the Lok Sabha. The Electoral Bonds are valid for fifteen calendar days from the date of issue. If the Electoral Bond is deposited after the expiry of the validity period, no payment is made to any payee Political Party.

However, the PMO compelled the SBI to open three unique windows in March, April, and May 2018 during the Karnataka assembly elections [3]. Furthermore, the present government amended the Representation Act, 1951, the Income Tax Act, 1961, and the Companies Act, 2013 under the name of "money bill" to shun Rajya Sabha, allowing anonymous donors to donate without any cap [4].

THREAT

Since its introduction, the electoral bonds have been dominating the medium of funding for political parties in India; it proves a threat because:

Right to Know:

The Hon'ble Supreme Court has time and again upheld the principle of "right to know" and the Right to Information as a living epitome. However, even after leaving the matter unheard for three years, the Court did not give a concrete decision, even though it is unequivocally related to Article 19, i.e., Right to Freedom of Expression. The essential requirement in a democracy is when a citizen casts his vote, he must have complete information about the candidate and the party representing him for five long years. This is because the associations and objectives of a party can be derived from donors of the party. But by keeping the citizens aloof from this fact, the scheme violates the fundamental principle on which the Constitution is immobile.

Time is proof that money is the most excellent motivator that can skew the odds in one's favor. Since no one is aware of the source of the donations, the parties can use it blatantly without any hindrances or restrictions. Therefore, an increase in the influx of money filling the party's coffers, wrongly influencing politics, has to be limited. No one ever is friend or foe in politics; it is a transaction or quid pro quo.

The rules and regulations of the electoral bond give a biased preference to the ruling party over other parties. We can understand this by a finding to procure which parties submitted their audit reports and income tax reports to the Election Commission. Through the check, it was found that Bhartiya Janata Party has been the biggest beneficiary of electoral bonds, garnering 94.5% of the bonds. Association for Democratic Reforms, which also filed an application seeking a stay on electoral bonds, reveal the same in their findings [5].

The bonds might even act as a haven for money laundering since the amendments of 2017 in the Companies Act removed the limit on political contributions by a company which was earlier 7.5 percent of its average net profit of the previous three years [6].

Asymmetrical Anonymity:

The government's insinuation that the purpose of bringing electoral bonds into existence was curbing the flow of black money falls short in pragmatism as to how the donor's anonymity is related to the prevention of black money. As the scheme does not restrict any foreign donations, it is plausible that even shell companies can donate to manipulate. This way, the electoral bond scheme increases institutional corruption instead of decreasing it. Moreover, in its design and functioning, it allows for unlimited anonymous corporate donations.

A six-part investigative series "#PaisaPolitics" based on the documents retrieved by RTI transparency activist Lokesh Batra and by journalist Nitin Sethi revealed that the present government ignored the objections leveled by the Reserve Bank of India and additionally deceived the Election Commission about the vital features of the scheme [7].

"The road to power is paved with hypocrisy and casualties." If the present government is removed from power, how certain is that the next government will not exploit their position in an identical manner. Since the State Bank of India is the operating authority of the bonds that itself is a government body, the ruling party can find out who donates how much and to which party, but other parties are kept oblivious. It is also possible that the ruling party which controls the operating authority being in power can manipulate the funds without the opposition's knowledge. This creates asymmetrical anonymity, which calls for the revelation of the donor's identity as these are constitutional objections.

The government draws its authenticity from elections, and it is the mandate of the people through elections that assigns power to the government to make policy decisions. Therefore, it should be of utmost priority to keep the process of this very mandate away from any malpractices. It must be watched with vigilance as the beginning of the method might rig the following procedure. "The electoral legitimacy of government will be questionable if the electoral process becomes questionable" [8].

CONCLUSION

This brings us to knock on the Apex Court's door, where the right to know helped a part of the right to freedom of expression. However, since the government is not willing to regulate the process, the Courts being the cardinal body that also holds the power to issue a decree and direct. Therefore, it is expected from them to rescue the citizen and their choice. Furthermore, it is a violation of the basic structure of the Constitution from whose fundamentals the Court derives its power.

In its 2019 order, the Hon'ble Supreme Court asked political parties to submit details of all the donations received via electoral bonds to the Election Commission in a sealed cover. The Jharkhand Mukti Morcha made the first positive step towards this direction, wherein the party voluntarily disclosed its donations for FY 2019-2020 [9]. Proponents of free and fair elections call for transparency and public knowledge of the contributors and compulsory to file a report with the Election Commission over disclosure of donors and amount. However, even the Election Commission has focused on the red flags and contended that the electoral bond scheme "will harm transparency in political party financing and would make it impossible for the constitutional body to ascertain whether donations have complied with the statutory framework."

Now, one can hope that the Court will take cognizance of the matter and adjudicate it and prevent further distortions and retain public trust.

REFERENCE

1. FAQs for Electoral Bond Scheme 2018, State Bank of India, https://www.onlinesbi.com/documents/27022018_2032_FAQ_Final.pdf.

2. Electoral Bonds, Members Reference Service Larrdis, Lok Sabha Secretariat New Delhi, http://164.100.47.193/Refinput/New_Reference_Notes/English/27072020_141527_102120474.pdf.

3. Milan Vaishnav, Electoral Bonds: The Safeguards of Indian Democracy are Crumbling, HUFFPOST, www.huffpost.com/archive/in/entry/electoral-bonds-rti-documents-bjp-narendra-modi_in_5ddb5f47e4b0913e6f6ea94d?guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&guce_referrer_sig=AQAAAEb-u8A5LIiSo-rFYStySQX_KgePsQiLo2CNoMNavMfRUvmM4tIDTqfuWHn0Bk7aEWMrINlGMU5PoBiwd1oa6htPkDsAT5B2fHrp4mTv1HAvOEGyI0BtxPh4jeXmpxRCmL9NfTyD1wvqNDZ9bgEKAZL_NmmCTUBQnlMgyOABwpJj.

4. Anjali Bhardwaj & Amrita Johri, Ensuring trust in the electoral process, THE HINDU (Mar. 09, 2021, 00: 15), https://www.thehindu.com/opinion/op-ed/ensuring-trust-in-the-electoral-process/article34022063.ece.

5. Supra 3

6. Supra 4

7. Supra 3

8. Gautam Bhatia, Here is why the electoral bonds scheme must go, THE HINDU (Mar. 26, 2021, 00:02 AM), https://www.thehindu.com/opinion/lead/here-is-why-the-electoral-bonds-scheme-must-go/article34163851.ece.

9. JMM first party to declare the name of electoral bonds donor, THE HINDU (Apr. 20, 2021, 00:20 AM), https://www.thehindu.com/news/national/other-states/jmm-first-party-to-declare-name-of-electoral-bonds-donor/article34361929.ece.

*The Author is a 1st Year law student at Vivekananda Institute of Professional Studies.

Disclaimer: The opinions and views in this article are personal and independent opinions of the author. VAIDHA doesn't hold any liability arising out of this article.