Electoral Bonds: Why source of political parties' funds can't be secret

When it was announced in 2018, it was cited as the best way to make political funding more transparent. Five years later, the Supreme Court is hearing petitions on how it has skewed political funding in favour of certain parties, and reduced transparency and public accountability.The court’s decision will decide whether the contentious scheme will stay for the 2024 national elections in the present form. But the head of one of the organisations challenging the scheme says even one major tweak to the system can change how transparent it is.Retired Major General Anil Verma is head of the Association for Democratic Reforms (ADR), which is a petitioner in the case and has been tracking political party funding for over a decade. Speaking on the The Times of India podcast, he explains why the electoral bond scheme in its current form shouldn’t standEdited excerpts:Has it ended other opaque forms of political funding?All the other systems being used earlier are still there. These are primarily direct donations made by an individual, company, trust or group. The donations come in the form of:CashOnline donationsChequesHandi collections or sale of coupons, which many national parties doEarlier, nearly 75% of donations came from unknown sources. We [ADR] include electoral bonds in the unknown sources component, and even now, political parties get 60-65% of their funding in this form. Only if the donation is above Rs 20,000 or more, it has to be declared. !function(){"use strict";window.addEventListener("message",(function(a){if(void 0!==a.data["datawrapper-height"]){var e=document.querySelectorAll("iframe");for(var t in a.data["datawrapper-height"])for(var r=0;r What’s the one big change in political party funding since electoral bonds came in?There are around 15 electoral trusts in the country and anybody – institution, individual or company – can donate to these trusts. Nearly 99% of that donation is supposed to be transferred to the political party for which it is meant.These trusts disclose everything: The mode of donation, the donor, which bank, etc.The amount which used to be transferred to electoral trusts has reduced drastically since electoral bonds were introduced. Why would corporates want details disclosed in the electoral trust system, when they can get away without doing it in the electoral bond system? !function(){"use strict";window.addEventListener("message",(function(a){if(void 0!==a.data["datawrapper-height"]){var e=document.querySelectorAll("iframe");for(var t in a.data["datawrapper-height"])for(var r=0;r What makes the electoral bond system so opaque?The government says electoral bonds are bought in banks, and so the buyer’s details are known. However, the identity of the donor is not known to anyone other than the State Bank of India (SBI), and the central government.The SBI says details of donors are confidential. The Central Information Commission (CIC) in 2020 dismissed an appeal seeking donor details saying it interfered with the privacy of donors. The decision is contrary to the CIC’s earlier decisions which said political parties are public authorities.In 2021, the Supreme Court ordered data on electoral bonds to be given to the Election Commission. What’s happened since then?The Election Commission has the data on donations, but I don’t think they have information on the donors.There has been a bit of reluctance on the part of the Supreme Court to hear this case because it is very sensitive. Thousands of crores of rupees in donations are involved. All the parties are involved and are recipients of funds. I think that is why the Supreme Court is also treading very carefully.When the political parties submitted everything in a sealed cover to the Election Commission, it all went into a deep freeze.Isn’t it enough if the central government and SBI know who the donors are? Why should common citizens know?Ironically, the printing of these bonds, and the commission for facilitating the sale and purchase of the bonds, is paid for by taxpayers. Given that people's money is being used to benefit political parties, it raises the question whether political parties are answerable, or accountable, to the people.Our stand is that citizens have a right to know where political parties are raising funds from, and to ensure that parties are not using the scheme just to fill their coffers. Public interest should outweigh the claims preventing such crucial information from being accessible.It needs to be emphasised that political parties are operating in the public domain. Transparency in their working and financial operations, is essential for citizens to exercise an independent and informed choice. The argument made by the Attorney General – that the public doesn't have the right to know – doesn't hold much water.The main thing is to reveal who the donors are. These bonds are sold in various denominations, but the bulk of donations are in the Rs one crore denomination. It is very obvious that corporates are doing this.If we want our policies and systems to be made by some corporations, who have a quid pro quo arrangement with political parties, then that is how democracy will run. But is that really the way we want things to go? At least, we [ADR] don't think so.Which parties typically benefit from political funding?Our assessment shows whichever party is likely to win an election gets more funding from corporates.If you analyse the electoral trust scheme, you will find that some of the trusts donate to both the major parties, that is mostly to the Bharatiya Janata Party (BJP), and to a lesser extent, to the Congress. That’s because the BJP is in power, but if tomorrow some other party wins the election, corporates will start donating more to them. !function(){"use strict";window.addEventListener("message",(function(a){if(void 0!==a.data["datawrapper-height"]){var e=document.querySelectorAll("iframe");for(var t in a.data["datawrapper-height"])for(var r=0;r Some Opposition parties may say they are opposed to the electoral bond scheme, but they are all receiving funds from electoral bonds. Even regional parties are receiving substantial amounts. So there is a bit of duplicity and hypocrisy.Among the regional parties, Trinanool Congress (TMC) got the highest amount from electoral bonds. Others like YSR Congress and Telugu Desam Party (TDP) in Andhra Pradesh, Dravida Munnetra Kazhagam (DMK) in Tamil Nadu and Biju Janata Dal (BJD) have also got funds through electoral bonds.Does this difference in funding make political contests more unequal?The stark difference in the share of donations coming to national parties, reflects poorly on the level-playing field and fairness. The inequity that we observe is not marginal, but significant enough to pose a threat to the ideals of democracy.This also discourages meritorious candidates, especially those from the marginalised groups and women, who may be short on resources.This extent of difference between parties was not there earlier and is increasing by the year.Is there a better system possible?Personally, I feel even if the identity of the donors is disclosed in this [electoral bond] system, it will make a huge difference.There is no ideal system of political funding, but this electoral bond scheme is a unique thing, which isn’t there in any other country.What happens if the Supreme Court retains the electoral bond scheme in present form?Our biggest worry is that we do not know the source of funding. We have also been saying that there is a need to have a ceiling on the expenditure by the political parties.I understand that our gross domestic product (GDP) is increasing and we are developing, but I wonder, is it really required that we spend more money than what the US spends in its presidential elections?There is a spending ceiling for candidates, under which they cannot spend over Rs 40 lakh in a state poll and Rs 75 lakh in the general elections. But for political parties, there is no ceiling and the bulk of the expenditure is done by political parties.Even candidates, we know they spend 10 times more than the limit, but in their official statement they say they never spent more than 50-60%. Atal Bihari Vajpayee once said that all lawmakers start their career with a lie. That lie is the expenditure statement.