ELECTORAL BONDS – SCRAPPED BY SUPREME COURT

Electoral Bonds were floated in January 2018 and were scrapped by the apex court on the 15th February 2024, after they were in existence for 6 long years. 

Electoral Bonds were the idea and plan of Late First Finance Minister of Modi Government Mr. Arun Jaitley to make election fundings transparent and clean to the extent possible.

Electoral bonds are like promissory notes – but neither the purchasers nor the beneficiaries – (political parties) identities would be disclosed in the bonds, but these details will be available with the bank issuing such bonds. Only State Bank of India was authorised to issue the bonds through their selective Branches. Electoral Bonds were issued in 5 series of values  ₹ 1,000, ₹ 10,000,         ₹ 1 lac, ₹ 10 lacs  & ₹ 1 crore denominations.

The stanches of bonds will be available for purchase for 10 days only in the month of January, April, July, and October with an additional time-frame of 30 days in the year of General Elections for Lok Sabha. No cash purchase was permitted and only through cheques or digital modes after fulfilling KYC norms to buy these bonds.

Further, these electoral bonds should be redeemed within 15 days of issuance and if the bonds are not redeemed within the stipulated dead line by the political parties, the bonds amounts will be remitted to the Prime Minister Relief Fund.

Government said that the implementation of a restricted time-frame and a significantly brief period of maturity for electoral bonds reduces the likelihood of any potential misuse. The acquisition of these bonds by donors will be duly recorded in their financial statements, thereby reflecting the donations made. 

Further, government added that the introduction of electoral bonds will encourage donors to opt for the banking channel as a means of contributing, with their personal information being captured by the authorized issuing entity. Consequently, this measure will guarantee transparency, accountability, and serve as a significant stride towards electoral reform. But the apex Court was not ready to accept the Government’s pleas.

Even Reserve Bank of India had their own reservations in implementing this scheme of Electoral Bonds on the ground that the electoral bond scheme was susceptible to illicit financial activities, lack of transparency and possible exploitation. It was said that the government overlooked the RBI concerns and went ahead with its announcement during Budget Session in Parliament on 1 February 2017.

Even the Election Commission of India that the black money would be used in the purchase of electoral bonds and that there can be a possibility of shell companies' accounts to serve to facilitate contributions for favourable political parties.

A five-judge Bench headed by Chief Justice of India D Y Chandrachud had scrapped the electoral bonds scheme and declared that the issues of electoral bonds are unconstitutional and manifestly arbitrary. Chief Justice of India DY Chandrachud in his note of the judgement said that the absolute non-disclosure of the source of political funding through electoral bonds promoted corruption, and a culture of quid pro quo with the ruling party to introduce a policy change or for bagging a license. The scheme and the amendments authorised “unrestrained influence of corporates in the electoral process”. In the present electoral bonds, no big corporate players like Adani, Ambani, Tata etc. were involved.

 

  The Supreme Court was not prepared to accept the Union Government’s argument that the anonymity of political donors afforded by electoral bonds incentivised financial contributions through banking channels.

At the time of scrapping of Electoral Bonds Scheme, the position of its scheme is as under:

1.      Total value of Electoral Bonds purchased (Phase-I to Phase –XXX) from State Bank of India was about  £ 16,518 crore.

2.      Total of 18,299 electoral bonds equivalent to a monetary value of ₹9,857 crore, were successfully transacted during the period spanning from March 2018 to April 2022.

3.      Party wise encashments of electoral bonds – Period From April 2019 to January 2024:

1)      BJP –   ₹ 6,000 crore

2)      Trinamool Congress –   ₹ 2,000 crore

3)      Congress -  ₹  1,400 crore ect.

(Out of total of  ₹ 10,000 crore, BJP  ₹ 6,000 crore and other parties ₹  4,000 crore) 

Let me take the avatar of R K Laxman Common Man for some time and look into the above data, details, information, judgements etc. for rational understanding and review.

Election and Money are inseparable and political parties cannot face elections without the vital force called money. Contributions from party members and sympathizers will be minimal and the political parties depend mostly upon the donations from corporates, firms, companies etc. Such donations are normally made in cash, as they are not willing to make the public to know their party affiliations in spite of the restrictions of donation by cash to ₹ 2,000/-.

The Supreme Court in the present electoral bonds case opined that the contributions from individuals as a mark of their political beliefs could not be equated with donations by corporates for favors. These observations sound strange, as even many companies were floated by persons holding ministerial and other positions of power.  Even many companies were owned and run by the Ministers, MPs, MLAs of political parties and hence contributions from such companies to the political parties that they belong could be equated as their mark of political beliefs.

Even if 100% Clean Funding of Political Parties could not be achieved with the electoral bonds, but, 100% transparency in funding through electoral bonds were achieved, as all funds – whether white or black – were accounted for and had come to circulation.

 

In Electoral Bonds, there may be rooms for improvement but to scrap them on the plea of ‘no transparency’ was far fetched.  It is really a pity that there is no alternative scheme mooted in the place of electoral bonds.

Even if the electoral bonds tackle the black money menace in the election expenses to some extent, they should be allowed to play its role till some other effective mechanism is found.

One interesting fact emerged in this scrapping of electoral bonds was that Future Gaming and Hotel Services PR, owned by lottery tycoon Santiago Martin, emerged as the single largest donor to political parties during the period and that the firm donated Rs 1,368 crore through electoral bonds, according to data released by the State Bank of India. Such leads become valuable inputs to proceed against such companies indulging in black money market network.

In earlier time, the Supreme Court had terribly mishandled the agitating farmers leading to scrapping of 3 farms laws by Modi Government.  The Agricultural Committee formed by SC to investigate the Farm Laws had later submitted their findings wherein they had stated that 3 farms laws are very much beneficials to the farmers and that their scrapping was unfortunate.

I am afraid that the same trend may happen to the scrapping of electoral bonds. Menace of Black Money and Corruption in all levels should be fought tooth and nail- small or big or even with semblance of flaws – that could be tackled with the experiences gained.

Every constitutional body with interest of nation in their hearts should find a lasting solution to this menace of Black Money and Corruption with due consultations with the Government at the Centre.

Even one honest step towards that goal should be welcome and be implemented.