The government opened up a controversial route for political funding in 2017, with the introduction of electoral bonds. Their genesis is back in the news, following a two-year effort of an RTI activist to ferret out documents relating to these instruments. Electoral bonds allow a potential donor to fund a chosen political party under the cloak of anonymity, to facilitate which changes were made to relevant sections of the Companies Act. The bonds are to be issued only through State Bank of India, which is aware of the identity of the donor. Given the weak institutional checks and balances in India, this does decidedly tilt the field in favour of the ruling party of the day.
Note that anonymity of the donor applies only from the perspective of the voter, not necessarily from that of the government. This renders the government’s justification of electoral bonds – that the secrecy is necessary to encourage companies to donate without the fear of political retribution – suspect. An analysis of 2017-18 data by the Association of Democratic Reforms has shown that 95% of all the funding through these bonds went to BJP. Another defence is that electoral bonds come through the banking system. Although other parties, especially the regional ones, have also benefited from bonds, the government’s defence is not fully convincing.
The documents obtained through RTI reveal that electoral bonds met with the disapproval of both Reserve Bank of India and Election Commission. They were worried about the implications of the inherent secrecy. There is another insidious danger in the electoral bonds system. Around the time it was introduced the government also amended provisions of Foreign Contribution Regulation Act, creating a pathway for foreign funding of political parties. When juxtaposed with electoral bonds, there is a danger to sovereignty in decision-making.
With significant policy decisions in areas such as telecom ahead, the existing legislative framework raises fears of public policy being captured by anonymous private interests. In this environment, crony capitalism can flourish and even foreign interests anonymously hold sway over policy making. Hopefully, the ongoing Supreme Court hearing on bonds will remedy matters. Better still NDA government should do it on its own, in the larger national interest.
This piece appeared as an editorial opinion in the print edition of The Times of India.