Return to Transparency

THE IMMEDIATE SUSPENSE has ended. The venerable State Bank of India (SBI), a Fortune 500 company with a history of over 200 years, was put on the mat by India’s Supreme Court in its hearing on March 11. India’s number one nationalised lender, the issuer of the government’s electoral bond scheme, was directed to furnish information on both the donors and recipients in 24 hours. After dithering for weeks since the apex court declared the bonds unconstitutional in a landmark judgment on February 15, SBI wanted more time, several months more, till June 20 in fact. By then the forthcoming General Election would almost certainly be done and dusted. But the Supreme Court would have none of it; no more procrastination. Thankfully, SBI has managed to comply before the apex court’s deadline of March 12 ended.

Although the court did not insist that SBI also undertake the “matching exercise” to “correlate it [the electoral bond] with the purchaser and the political party,” it is only a matter of time before such investigations will commence, that too, driven by civil society activists and political watchdogs. Why? Because colossal sums of money are involved, with the ruling BJP receiving the bulk of the via-bond donations.

Although the data on the political parties’ annual accounts for the financial year 2023-24 is yet to be published by the Election Commission, between March 2018 and January 2024, the erstwhile electoral bonds mopped up a whopping ₹16,518 crore, most of it going to the major political parties. That is those who wield power, whether at the Centre or the states. Don’t Indian citizens and voters have the right to know who these donors are? Who received the money and how much? The Supreme Court clearly thinks that we do.

The Modi government’s electoral bond scheme, introduced in 2018, though far from perfect, was a step in the right direction. Why? Because it brought in legal and accountable money, paid through proper banking channels, into the electoral funding system. Why, then, did India’s Supreme Court, in a landmark judgment delivered on February 15, strike down the scheme? The five-judge Constitution Bench headed by the Chief Justice of India DY Chandrachud, with a concurring opinion by Justice Sanjiv Khanna, annulled the bonds because they violated Article 19(1)(a) of the Constitution.

The Article invoked guarantees the fundamental right to “Freedom of Expression and Speech” of which the Right to Information (RTI) Act of 2005 is considered an implicit adjunct. It is the cloak of anonymity and opacity that the electoral bonds sanctioned to both donors and recipients that was considered objectionable by the apex court. Though the political parties knew who the donors were, they were not obliged to reveal their identities either to the Election Commission or to the public. As the Chief Justice, in his ruling, observed, “Information about funding of political parties is essential for the effective exercise of the choice of voting.” Consequently, the bench also voided amendments in the Income Tax Act, 1961, and the Representation of the People Act, 1951 based on which anonymous political contributions had been deemed permissible.

We all know how funding elections is one of the biggest challenges in any democracy. The 2024 US presidential elections are scheduled for November. How much will they cost? The last elections in 2020 came with an incredible price tag of $14.4 billion, or ₹1,19,520 crore (shorturl.at/ gwyDI). More than double the last presidential polls held in 2016. This year’s election cycle in the US may end up even exceeding that amount. However, there are a variety of legal and fiduciary checks in place to ensure that election funding, even if not entirely transparent, does meet a high degree of compliance and regulatory requirements. Europe and the UK and not only stricter, but the enforceable spending limits seem ridiculously low when compared to American figures.

Indian elections are reputed to be the most expensive in the world, even costlier than their US counterparts. But this may not be true. There are 543 seats in Lok Sabha. If the average cost per seat of each is a modest ₹10 crore, the amount spent will be over ₹5,000 crore. Actually, leading candidates spend well over that figure. With unaccounted money flowing unchecked through the system, there is no way accurately to estimate the actual amounts spent. An election in a prestigious constituency, say, in Mumbai, Delhi, Bengaluru, or elsewhere, may end up costing as much as ₹50 crore.

We are not even talking about the cost that the state incurs in paying for the lakhs of electoral officers and law enforcement personnel. What about electronic voting machines (EVMs)? They don’t come cheap. ₹1,891.8 crore was initially allotted in the latest budget for EVMs; Finance Minister Nirmala Sitharaman then added another ₹611.27 crore in the Winter Session of Parliament. With close to a billion eligible voters, over 10,000 candidates belonging to over 600 parties and polling spread across over a million (10 lakh) booths, the 2024 general elections will be the most expensive ever. The total cost to the exchequer is estimated to be over ₹5,000 crore. Add to this our estimate of how much the candidates and political parties will spend and the total will exceed a staggering ₹10,000 crore, or over $1.2 billion, at the very least.

The term ‘bond’ was misleading. A bond is a loan, not a donation. Should we infer that those who ‘purchased’ the bonds expected their money to come back to them?

Share this on

But my guestimate, at least half of which is made up of declared government figures, is way below the calculations of NGOs such as the Centre for Media Studies, Delhi. According to their figures, the 2019 General Election cost ₹6 lakh crore or $8 billion at 2019 exchange rates (shorturl. at/crtCR). Mega rallies, giant hoardings and cutouts, and outright giveaways made up a bulk of the expenditure borne by parties, especially with their star candidates jetting around in private planes or choppers, sometimes addressing multiple meetings in a single day.

The Indian numbers, whether ₹10,000 crore or ₹60,000 crore, are no laughing matter. Even if they are half or lower than the US costs. After all, we are a much poorer country per capita. True that a certain degree of give and take between politicians and business houses is inevitable in any system. No wonder India’s richest and biggest conglomerates are known to fund all major political parties. It is like insurance. Regardless of who wins, they continue to enjoy goodwill and leverage. Deals are bound to be struck and returns on investments are expected. In fact, many regard politics as nothing more than a business; several political parties actually resemble family-run corporations, with massive holdings in real estate, media, and other businesses.

But how far can we go? If dealmaking, not the will of the people, is what election results portend, then the very foundation of democracy, the very faith of the people in the electoral process, is at risk. Failure to safeguard it would mean that the republic, with all its resources and the lives of its citizens, is literally for sale, at the mercy of those who can buy favours, direct policy, and profit from the politicians they fund. Clearly, when it comes to transparency, accountability, and integrity in election funding, much more is at stake than just who wins or loses.

When it comes to the electoral bonds, we must not forget that they allowed tax exemptions to the donors. Moreover, as investigative journalists such as Nitin Sethi have established, the actual costs of administering the funds were paid out from the Consolidated Fund of India, which includes all the tax revenues of the land. Ordinary citizens were paying to run a scheme that benefited political parties. In addition, the term “bond” was misleading, even unfortunate. A bond is a loan, not a donation. Should we infer that the underlying unintended meaning was actually true—that those who ‘purchased’ the bonds by paying exorbitant sums of money, expected their money to come back to them with interest compounded?

With the data furnished by SBI, we may eventually find out who gave how much and in return for what. But even if we don’t, the Supreme Court’s verdict on the electoral bonds is welcome. It will ensure that whatever scheme comes next will be much more transparent and less susceptible to abuse. With a better system in place, more people will be encouraged not only to donate but to invest and also participate in the political process.

About The Author

Makarand R Paranjape

Makarand R Paranjape is an author and columnist. Views are personal.

•