In January 2017, a month before then Finance Minister Arun Jaitley proposed the electoral bonds scheme in his speech presenting the 2017-18 Union Budget, the total number of political parties registered with the Election Commission of India (ECI) stood at around 1,800. As of March 1, 2021, this number has increased to 2,704.

If it took 65 years of the democratic process — from 1951-52 to 2017 — for India to get about 1,800 political parties, it took barely four years for it registers an additional 900.

The reason for this glut of new parties, says election watchdog Association for Democratic Reforms (ADR), “definitely points the needle of suspicion towards the government’s controversial electoral bonds and unlimited and anonymous corporate donations.”

The ADR says that “a vast majority of these parties will never contest elections”. It believes these parties “may be involved in money laundering activities or may simply be using their status to turn black money into white”, which has ramifications for India’s national security and sovereignty.

For this reason and several others, in its petition to the Supreme Court on March 9, the ADR sought a stay on the sale of the electoral bonds for the current round of assembly polls to four states and a union territory. It argued that the sale of these bonds “would further increase illegal and illicit funding of political parties through shell companies”.

The Supreme Court refused to put a stay on the current phase of the sale of the electoral bonds, scheduled from April 1 to 10.

Raising Concerns

But it isn’t just the ADR that has raised concerns about the scheme. The ECIthe Reserve Bank of India, the Ministry of Law and Justice and MPs have also in the past expressed concerns about the opacity of the electoral bonds scheme leading to increased black money circulation, money laundering, cross-border counterfeiting and forgery.

After the electoral bonds scheme was notified in 2018, a total of 12,924 electoral bonds worth Rs 6,534.78 crore have been sold in 15 phases between March 2018 to January 2021. The sale of these bonds peaked in the run up to the Lok Sabha polls of 2019, and 55.43 percent of the total value of electoral bonds were purchased in March and April 2019.

According to the ADR, data from FY 2017-18 and 2018-19 reveals that political parties received Rs 2,760.2 crore from electoral bonds. Rs 1,660.89 crore or 60.17 percent of this was received by a single party, which is the ruling political party, the Bharatiya Janata Party (BJP).

No Level Playing Field

According to the annual audit report of the BJP submitted with the ECI, the party had received Rs 210 crore-worth contribution in the form of electoral bonds for FY 2017-18, which was 95 percent of these bonds purchased that year. In FY 2018-19, the BJP received Rs 1,450 crore worth electoral bonds, and Congress came a distant second with Rs 383 crore.

The anonymity promised by the electoral bond has made it the most popular mode of donations to political parties. More than 52 percent of the total income of national parties and 53.83 percent of the total income of regional parties analysed by ADR for FY 2018-19 came from donations received through electoral bonds.

However, as the data by the ADR has revealed, a majority of the bonds were received by a single party and a huge proportion of these bonds were purchased and redeemed (by parties) during the time of elections. This, as critics of the scheme have argued, weakens any prospect of a level playing field between political parties, particularly during the time of elections.

Right To Know

The law does not require political parties to mention the names and addresses of those contributing by way of electoral bonds. This infringes with the citizen’s fundamental ‘Right to Know’, and make the political class even more unanswerable and unaccountable.

Ironically, while information about the identity of the donors is kept away from the citizens, it is accessible to the government of the day. The government can access the details of donor/s by demanding the data from the State Bank of India, which is authorised to sell these bonds.

Given the opacity of the scheme, there can be no guarantee against political parties receiving funds from foreign sources, even foreign government-owned companies.

Safeguards Needed

Critics of the scheme demand that it should be scrapped. If not, at least safeguards should be inserted to ensure transparency, including political parties disclosing the identity of the donors under the Right to Information Act.

The ECI should also make a list of all political parties eligible for receiving donations under the scheme, and political parties that do not take part in any election and continue to receive donations through electoral bonds should be de-listed.

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