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How are Electoral Bonds a threat to Democracy

By Maj Gen Anil Verma (Retd) | PUBLISHED: 08, Feb 2024, 13:18 pm IST | UPDATED: 08, Feb 2024, 13:25 pm IST

How are Electoral Bonds a threat to Democracy

the hearing of the electoral bonds PIL of ADR by the Constitution bench of Supreme Court in the beginning of November 2023, much has been said and written about electoral bonds and I daresay you haven't heard the last of it because the judgment has been reserved by the Supreme Court. Why it has become an important topic for discussion is because it has a direct bearing on the polity, political parties, the people, democracy and the government.

For the uninitiated, it would suffice to know that electoral bonds are bearer bonds (like a promissory note) which individuals, corporations, companies can purchase from the State Bank of India and deposit in the bank account of the political party to whom they wish to donate the amount. Electoral Bonds (EBs) are sold in the denominations of Rs. 1000, 10,000, 1 lakh, 10 lakh and 1 crore. Once every quarter during the year for 10 to 15 days, the window is open for the sale of EBs and they have a life of 15 days for redemption by the political party, failing which the unredeemed amount is deposited in the Prime Minister's relief fund. The most important feature of EBs is that the donors enjoys complete anonymity and of course the donation is fully tax exempt for the donor and the receiving political party.

Since the introduction of the scheme in January 2018, till now Rs 14,940 crore worth of electoral bonds have been sold by the SBI. 94% of the EBs (by amount) sold are in the denomination of Rs 1 crore and 5% are in the denomination of Rs10 lakh. This indicates that the buyers/ donors are corporates and big companies and not the common man. Among national parties, 75% of the total electoral bonds donated have gone to BJP, 13.5% to Indian National Congress, 11% to TMC and 1% to NCP.

ADR filed a PIL against electoral bonds in the Supreme Court in September 2017 and asked for scrapping of the electoral bond scheme due to the following reasons:

a) Anonymity of the donors was not acceptable as the citizen and common voter has the right to know which person/company or business house is donating to the political parties.

b) The electoral bond scheme was passed as a money bill in the Lok Sabha bypassing the Rajya Sabha.

c) The RBI Act, the Income Tax Act, the RPA Act, 1951, the Companies Act, all of these were amended to facilitate enactment of the electoral bond scheme against the advice of the Election Commission of India, the Reserve Bank of India and the Civil Society. Some of the primary objections against the scheme were that it would lead to crony capitalism, dubious funds could be donated through shell companies, black money could be converted to white and even foreign entities could donate and influence the political discourse of the Indian polity.

d) It would skew the level playing field in favour of the ruling parties at the Centre or State level.

e) Removal of the corporate donations limit of 7.5% of profits would lead to unlimited funds being available to political parties.

Negative impact of money power in our political system and elections is evident from the manifestation of horse trading of MLAs in various states like Madhya Pradesh, Karnataka and Maharashtra where duly elected governments were dislodged in the recent past. A humongous amount of money is spent by political parties on freebies and doles to the voters during election time, which is illegal and a corrupt practice. As on 20-11-2023, in the ongoing five state elections in Madhya Pradesh, Rajasthan, Chhattisgarh, Mizoram and Telangana, the Election Commission of India has seized Rs 1760 crore worth of cash, drugs, liquors, precious metals etc. This is seven times more than the seizures during the last assembly elections in these five states in 2018.

During the last general elections in 2019, Rs. 55-60,000 crores were spent as per data shared by the Centre for Media Studies. This was equal or more than the amount spent in the last US presidential elections. Agreed that our population is 4 times the size of USA population, but as per the IMF, while the GDP of India was $3.39 trillion USD, the USA GDP in 2022 was 25.46 trillion USD (7.5 times).

The moot question is, can India afford such expensive elections? Though there is a ceiling on the amount a candidate can spend, (Rs 28-40 lakhs for State assembly elections and Rs 75-95 lakhs for general elections), there is no ceiling on the amount that a party can spend! It is also common knowledge that though in the expenses report submitted to the ECI, 99% candidates declare average expenditure of 60 to 65% of the authorized limit. But in reality, the amount spent by each candidate ranges from Rs10 to 15 crore, bulk of which is black money or cash. Hence, a candidate who has invested some amount, once elected, recovers 5 to 10 times that amount. This further spirals the prevailing corruption which ultimately adversely affects governance. When the candidates with money and muscle power are elected, it leads to corruption on a large scale. Quid-pro-quo arrangements with the donors results in crony capitalism as Governments gives contract to favourites and there is no level playing field.

Politicians and bureaucracy nexus results in delays, poor infrastructure, slow growth and development, inflation and unemployment. If we study the various parameters which show the health of the economy and social factors, it reveals the dark underbelly of politics. The figures of unemployment, percentage of people below poverty line, corruption index, hunger index, malnutrition, lack of health and educational facilities are quite discouraging. Lot of work is also taking place to improve these figures, but things will move faster once the political system mired in corruption is cleaned up.

As we head towards the 2024 general elections, we have a political system lacking accountability, inner party democracy and transparency. We live in a fractured society, divisive politics, stifling of opposing views of any type by the government, be it the media, the civil society, activists or opposition political parties. In a democracy, the four pillars are independent of each other and have to provide checks and balances for the state and society to run like a well -oiled machine for the welfare of the people. However, if there is a systematic breakdown of important institutions like the ECI, CAG, judiciary and the media, then there exists an existential threat to the democracy. The fear of arrests, raids and incarceration makes people fall in line.

That is why the electoral bond case is extremely important for the electoral and political system of our country. The Supreme Court has heard both sides and reserved the judgment. During the hearings, the Solicitor General representing the government is on record making a bizarre statement that the common man has no right to know the source of funding or names of the donors donating to the political party.

In a functional and participatory democracy, it is the constitutional right of the citizen to know. Let us hope that the Supreme Court upholds the right and strikes down the opaque electoral bond scheme which is euphemistically called transparent by the government.

-    By Maj Gen Anil Verma (Retd), Head of Association for Democratic Reforms
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