Responding to a petition filed by the Communist Party of India (Marxist), Association for Democratic Reforms and Common Cause, a three judge bench of the Supreme Court, headed by Chief Justice S. A. Bobde, declined to grant a stay on the electoral bonds scheme. The Court gave the Central Government and the Election Commission two weeks’ time to file a reply to the petitions.
The Electoral Bonds Scheme was approved in the Finance Bill 2017 and notified on 2nd January 2018. Under this scheme, any person or company can purchase electoral bonds from select branches of the State Bank of India. Such bonds can be purchased four times a year — in January, April, July and October. Electoral bonds are valid for 15 days after their purchase. The purchaser of the bond can donate it to any registered political party which has secured not less than 1 per cent of the votes in the previous Lok Sabha elections. The party receiving the donation has to deposit it in an account with the State Bank of India.
In the two years since the scheme became operational, elections to the Lok Sabha has taken place, as well as several state assembly elections. Until October 2019, over Rs 6,000 crores worth of electoral bonds were sold. The largest number of such bonds, amounting to as much as Rs 4,444 crore, were sold during the campaign for the 2019 Lok Sabha elections.
Electoral bonds are available in denominations of Rs 1,000, Rs 10,000, Rs 1 lakh, Rs 10 lakh, and Rs 1 crore. Till October 2019, a total of 12,313 electoral bonds of various denominations were sold. Of this, 5,624 bonds were in denomination of Rs 1 crore and 4,877 bonds were in the Rs 10 lakh denomination. Together, over 86 per cent of the electoral bonds sold by the SBI were of the 10 lakh and 1 crore denomination.
In terms of value, electoral bonds with the highest denomination of Rupees 1 crore form 91.76 per cent of the total value of bonds sold. The value of Rs 10 lakh denominations amounts to 7.95 per cent. These two denominations together accounted for 99.7 per cent of the bonds purchased. In comparison, the value of bonds of Rs one lakh amounted to only 0.27 per cent of the total value of bonds purchased.
It is not known yet as to which party got how much money through electoral bonds in 2018-2019. This period covers several phases of the General Elections to Lok Sabha. It is likely to be fully known in October 2020, when the BJP and Congress Party are expected to submit their accounts. Parties which have already submitted their accounts, including Biju Janata Dal, YSR Congress and Telengana Rashriya Samiti, which won the Assembly elections in Odisha, Andhra Pradesh and Telengana respectively, have declared about Rs. 600 crore as receipts from electoral bonds during 2018-19. It would seem that over 80 per cent of the value of all the electoral bonds sold so far must have gone to BJP and Congress Party.
When this scheme was introduced, the then Finance Minister Arun Jaitley claimed that it was a reform that would clean up electoral financing by reducing unaccounted cash donations to political parties. However, available facts suggest that funding of electoral campaigns by Indian and foreign capitalists have only increased as a result of this reform. It is easier now for foreign companies to donate money to the electoral campaign of Indian parties, because they no longer need to accumulate hoards of rupee notes in order to do so.
The 2019 General Elections were one of the costliest elections of any country till now. According to the Centre for Media Studies, between Rs 55,000-60,000 crores were spent in these elections. This is nearly twice the amount estimated to have been spent in the 2014 General Elections. As before, the bulk of this money was spent by the BJP and the Congress. Not only has the funding by Indian and foreign capitalist monopoles of the election campaigns of their favourite parties greatly increased, the bulk of it is through the old method of unaccounted cash donations.
The petitions challenging the Electoral Bond Scheme have contended, among other things, that foreign multinational companies have channeled funds through shell companies, to influence Indian electoral outcomes. They have also pointed out that as in the case of cash donations, both the source and the recipient of funds donated through electoral bonds are hidden from public view. They have pointed to the objections raised by the Reserve Bank and the Election Commission to this scheme. In their internal notes to the Finance Ministry, both RBI and EC had voiced concerns about this scheme being used to funnel unaccounted money. Investigative reports suggest that the Finance Ministry has used its powers to favour the BJP. This is also being used by the petitioners to challenge the scheme.
The main problem with election funding is that Indian and foreign capitalist monopolies play a decisive role in determining the outcome of elections. Only parties which are favoured by the big money power of such monopoly capitalists have any chance of winning a majority of seats and forming the government. Once in power, they implement the agenda of the capitalist monopolies.
The Electoral Bonds Scheme is a reform which is aimed at making it easy and convenient for capitalist monopolies to influence electoral outcomes.
What is needed is the exact opposite. We need reforms aimed at eliminating the role of money power in influencing election results. The State must finance the electoral process. No candidate, political party, or any private entity must be permitted to spend money on election campaigns.
There is also need for major reforms in the process of selecting candidates for elections. The right to select candidates must be taken out of the hands of political parties and vested in the electorate of each constituency. All selected candidates must be given equal opportunity to put forward their views before the electorate.
The electorate must not hand over all powers to those elected once elections are over. It must retain the main power. This includes the power to demand rendering of periodic accounts by the elected representative, and the right to recall a representative whose work is unsatisfactory. People must have the right to initiate legislation. They must be able to exercise these powers through an elected Constituency Committee in each constituency. Only then will the elected legislative body be accountable to those who elected them.
Instead of political parties ruling in the name of people, the role of political parties must be to enable the people to govern themselves.
The capitalist class is interested only in such reforms that serve the continuation of the present system where big money power dominates the political process. The Electoral Bonds Scheme is one such reform.