What’s wrong with electoral bonds

The Government is all set to introduce a scheme offering political bonds as bearer instruments which will conceal the identity of the bond buyers and enable a process of political donations that, it argues, will make funding political parties transparent.

The argument is deeply flawed. Electoral bonds as envisaged here open up yet another route to further the unholy nexus between corporate houses and political parties, which that has been at the root of high level corruption in the country. If the Government was genuinely looking for a solution that it claims has eluded us for 70 years, then this is certainly not it.

Consider a situation: A large corporate, ‘A’, plans to donate a very large sum to a party, ‘B’, in power but wants no attention from regulators, anti- corruption laws or the judiciary. The Government enacts a law that blacks out the identity of the donor ‘A’. Neither ‘A’, the donor, nor ‘B’, the receiver, is required to share details of the so-called donation. The deal done, the Government goes on to dole out largesse to corporate ‘A’, well surpassing the value of the “donation” so received.

This comes within the realm of possibility, indeed probability, with no upper limit set of the donations that can be made by a donor entity.

So even if the bonds are issued by banks, encashable only into the designated accounts of political parties within a strict time limit, the scheme says nothing about the kind of nexus that will drive such donations. Moreover, this is likely to happen in a highly skewed manner, tilting the political playing field and making it worse because the donor-donee arrangement has no transparency but all the fig leaf of a formal transaction under a scheme that “fights” corruption!

It is worth pointing out that in April 2014, the US Supreme Court had struck down the upper limit of political donation. India is now following suit with a worse model: transparency is being given a go-by and the worry is that crony capitalism will be institutionalised.

This is the full implication of what has been proposed in Budget 2018 through the device of electoral bonds. The proposal, inter-alia, says: “... political parties continue to receive most of their funds through anonymous donations which are shown in cash... donors have also expressed reluctance in donating by cheque or other transparent method as it would disclose their identity and entail adverse consequences...”

It is true that businesses and their associations and federations do not want the donors named but then the transparency of a system cannot be achieved when donations have no upper limits and names of groups making the payment are blacked out. Why are the donors shying away from maintaining transparency? Why should the State kneel down before them? And, what are the “adverse consequences” that the finance minister alludes to?

Unless these reasonable questions are answered, the scheme of bonds will not serve its purpose of cleansing our political system and will in fact trample upon the free and fair election process that is a basic feature of India’s Constitution.

Politicians abhor transparency. It requires a split second, not 70 years, to enforce transparency in political funding: ban cash altogether and disclose all sources. If such a simple decision has not been taken in 70 years, then who is responsible but the political establishment, which, of course, has been for the large part, the Congress. The only message we can draw is that political will is singularly lacking to cleanse the system.

Politicians in power today love to forget that one day they would have to sit in opposition and non-transparency would continue to haunt them. The Congress probably never imagined a situation like today, with the BJP in overwhelming control. No political party in Parliamentary elections has ever scored even 50 per cent of votes. In 1957, Pandit Jawaharlal Nehru’s Congress won 47.8 per cent votes. In 1984, the Rajiv Gandhi’s Congress won 48.6 per cent votes, the highest so far. Narendra Modi’s NDA in 2014 bagged 38.5 per cent votes. All political parties must, therefore, in their own interest, join hands to enforce hundred per cent transparency in political funding. Every voter must have a right to know the source of political funding of each party.

A government spokesman has gone to the extent of saying that “we don’t need to know who paid how much to which political party”. But in our scenario, the Government and the ruling political party are not very different. Further, the corporate donor cannot be prohibited from reporting the donation informally to the doneeparty.

Even if any such prohibition is imposed under the law, such a law cannot be enforced. Invariably, the donee would get to know who a large corporate donor is. Herein lies the rub: the larger the donation, the deeper the “bond”. So the entire electoral system is sought to be kept in the dark about a merry transaction the doner and donee know all about and this is presented to the nation as a route to transparency. Seen in this light, the electoral bonds give rise to a new source of political corruption in India.

The issue, therefore, is not cash versus cheque, but the insidious corporate-politico nexus. Even clean money can be (mis)used to induce this unclean nexus; a bribe given with clean money cannot legitimise the bribe. The politico-corporate nexus is an issue pertaining to the Grundnorm of India’s political/constitutional system. This cannot be hijacked through the subterfuge of the electoral bond.

The writer is former Additional Solicitor General of India. Via The Billion Press