SC Declines To Stay Electoral Bonds In Midst Of Polls; These Bonds Exist For Want Of Better Ideas

A Supreme Court bench headed by Chief Justice Ranjan Gogoi has rightly decided not to mess around with the electoral bonds scheme in the middle of a general election process. It declined to stay the issue of more bonds, and instead asked the Finance Ministry to restrict the sale of electoral bonds in April and May to five days instead of the proposed 10.

Details of money received through these bonds till 15 May, along with the names of donors, have to be disclosed by political parties by 31 May to the Election Commission. The order read: “The parties shall share the details of their bank account, name(s) of the donors and the amount received to Election Commission in sealed cover.” This implies that any final verdict in the challenge to electoral bonds will have its impact only in future elections, not the ongoing one.

That the Supreme Court still believes that “sealed covers” preserve secrecy is quaint, for election commissioners, post-retirement, may not be obliged to keep their lips sealed. But we shall let that pass.

No matter how the Supreme Court finally decides in this case – whether donorship of electoral bonds can remain secret or must be disclosed – the reality is that there is no perfect solution.

Electoral bonds allow parties to fund themselves with money that is tax-paid, and that is its main (if not only) merit. Under the scheme, bonds in various denominations are issued by the State Bank of India to donors who can purchase them through cheque or any means with an audit trail. Corporations who buy these bonds can donate them to any party (or parties) of their choice, and the parties can then encash these bonds and credit them to their own official accounts.

The scheme has been designed to maintain the formal anonymity of the donor, which means that the voter does not get to know who is funding which party. This opaque funding process is intended to save the donor from having to face the ire of parties which did not get his or her money. In India’s crony infested system, political parties often do not take kindly to businessmen who fund rival parties. Businesses have a legitimate reason for seeking anonymity as otherwise they could be targeted by parties which did not get their money.

In India’s leaky public space, no such anonymity can be taken for guaranteed, but corporations can at least retain a fig-leaf of deniability on who they gave their money to.

To repeat: the scheme is designed to protect businessmen from a vicarious system where politicians can damage businesses by unleashing the law, or arbitrary decisions, on them. In the US, where businesses can openly contribute to political parties or political action groups that espouse various causes, the law ensures that there is no vendetta against them by the state if it is ruled by a different party. In India, one can never be sure of this.

On the other hand, giving anonymity to donors also runs the risk of hiding a nexus between them and political parties that may give them favours after elections.

In 2017-18, the BJP got over 95 per cent of the Rs 221 crore bought as electoral bonds, showing that business has not been generous enough to other parties. This could be because the BJP has been dominant since 2014 both at the Centre and many states, but one can also suspect that donors are afraid to give cash to rival parties for fear of what the incumbent government can do.

In its present form, the electoral bonds scheme is not the final answer to the challenge of ensuring transparency in political funding. Abandoning it midstream means political donations will again shift to black money routes. But its one strength, the shift to white money funding, is partially negated by the anonymity it offers donors, which means the public cannot know whose money may be talking how loudly with which political party.

In a situation where name disclosure also has consequences for business, there is no neat solution. We have to wait for the day when the law can protect donors from arbitrary actions by politicians and the state before we can have full transparency and adequate disclosures.

Right now, there is no perfect solution on the horizon.