Electoral Bonds, A Thing of the Past

By: Damini Mehta

In 2021-22, the BJP received Rs 1,034 crore or 58 per cent of total donations via electoral bonds. In the same year, Congress received a much higher share of its total donations through electoral bonds, nearing Rs 236 crore or 68 percent. Apart from understanding where this funding is going, it is equally important to known where it is coming from.

57% of the total donations received by political parties through electoral bonds since the inception of the scheme has gone to the BJP. This amounts to Rs 6,566 crores of Rs. 11,986 crores. This was distantly followed by the Congress at Rs 1,123 crores or 9%, Trinamool Congress (TMC) at Rs. 1,093 crores and Odisha’s Biju Janata Dal or BJD at Rs. 774 crores. 

The ruling party at the center is known to corner the lion’s share of electoral funding irrespective of the party and the mechanism. This was the case during the early Congress years till 1967 and the United Progressive Alliance (UPA) 1 and 2 terms led by the Congress from 2004 to 2014. The rise of the BJP since 2014 under incumbent Prime Minister Narendra Modi tilted the scales in favor of the saffron party. However, opposition parties have been using electoral bonds for funding too. TMC, which has time and again attacked the Modi government over issues related to electoral bonds, received 99.4 percent, or Rs 325 crore, of its total donations worth Rs 327 crore through electoral bonds. DMK, currently ruling Tamil Nadu in alliance with the Congress, received more than 99 percent of its Rs 186 crore worth of donations in the form of electoral bonds too. 

In 2021-22, the BJP received Rs 1,034 crore or 58 per cent of total donations via electoral bonds. In the same year, Congress received a much higher share of its total donations through electoral bonds, nearing Rs 236 crore or 68 percent. Apart from understanding where this funding is going, it is equally important to know where it is coming from. 

The 15th February Supreme Court ruling declared the electoral bond scheme unconstitutional apart from ordering the release of the source and destination of the electoral bond money since 2018. One can say that the recent judgment lifts the political veil on electoral funding and will shed better light on where this money to each party is coming from. 

Prior to the launch of the electoral bond scheme, political parties could receive funding in cash or kind and any donation larger than ₹20,000 had to be disclosed. The system was not known to promote transparency in poll funding, with a majority of the donations cleverly done below the ₹20,000 threshold. This argument was used to introduce the Electoral Bond scheme. Under the scheme, anyone interested in donating to a political party could purchase electoral bonds through the State Bank of India. The Bonds were transferable and did not disclose the name of the donor. Owing to this, while one could disclose the destination of total funding through the bonds, who donated that money remained hidden under the political veil.

While the general public and opposition parties cannot access the data on sources of funding, the ruling party can indirectly access the data through SBI, a state bank. This skewed information asymmetry in favor of the ruling party government. More importantly, in a democratic set up that is supposed to thrive on transparency and access to information, free and fair elections can hardly be known when it is difficult to know who is funding whom. 

The SC judgment reinstated another law quashed through the amendments done to introduce electoral bonds. The amendment removed the 10% limit on corporate funding to political parties and allowed for endless funding up to 100% of the profiles earned. It also removed the condition under which a political party was no longer required to disclose the funding it received through electoral bonds thereby shielding it from income tax provisions.  

According to many, the decision of the SC quashing the electoral bond scheme was long overdue. It is a welcome change but marks a reversal to the old ways of electoral funding riddled with secrecy and flow of black money. Given the huge flow of money in Indian elections, well beyond the legal limit, a comprehensive reform in the funding structure which maintains the transparency of donors and receivers and allows citizens to make an informed choice is much needed as the country steps into the next phase.