(Illustration: Saurabh Singh)
THE SUPREME COURT on February 15 struck down the scheme of electoral bonds that was introduced in The Finance Act, 2017. The court said the bonds violated the Right to Information under Article 19(1)(a) of the Constitution. Article 19 deals with “fundamental freedoms”. The court also held that the deletion of the proviso to Section 182(1) of the Companies Act permitting unlimited corporate funding is violative of Article 14 of the Constitution which spells equality before the law.
The court also put an immediate stop to the sale of electoral bonds. It also asked the State Bank of India (SBI)—the bank through which these bonds are sold—to give details of all such purchases until April 12, 2019, to the Election Commission of India (ECI) by March 6. SBI has been asked to furnish all information about such bonds, their denomination, and their encashment by political parties. Further, ECI is to publish the information it receives from SBI on its website by March 13. All electoral bonds that are within the validity period of 15 days but are yet to be encashed shall be returned by the political parties in question to the purchaser.
Under the scheme of electoral bonds, individuals or organisations can purchase them and then donate them to a political party of their choice. These parties, in turn, can redeem them after 15 days. There are strict KYC norms for anyone who wants to purchase these bonds. The identity of the buyers is known to SBI, which has a dedicated wing for these transactions.
The grouse of the petitioners, in this case, was that it defeats the purpose of transparency of political funding under the Representation of the People Act, 1951, and the Companies Act. Fears were also expressed that corporate funding “skews” Indian democracy in an adverse manner. The court accepted these and other charges levelled against the electoral bonds scheme.
The trouble is that in the absence of the existing system, political funding is likely to become more opaque instead of transparency being ushered in by the ending of the electoral bonds scheme. The reasons are not far to see. No company would want to donate large sums of money to any political party, and especially be seen doing so openly. This is not because corporate donations are ‘corrupt’ or ‘illegal’ in any manner. A simpler explanation is available: a particular individual or company may simply prefer a particular political party because it thinks its economic ideas and policies are preferable to other parties’. But this explanation is either considered unacceptable or is simply waived away angrily. These donations are not like charity either. Earlier such donations were done in an extremely opaque manner by underhand donations, and many times through corrupt procedures. The history of independent India is replete with such instances. The electoral bonds scheme was an improvement over those irregular means of political donations. The bonds could not be purchased by cash and their purchase required stringent KYC norms.
On this score, the trouble in India is a faux morality that any individual or company trying to influence policy is ipso facto bound to be immoral or illegal. This is also the reason why lobbying—an accepted practice in many mature democracies—is illegal in India. This is the source of corruption and other pernicious influences in policymaking. The danger now is that such practices will return with a vengeance.
Political funding is likely to become more opaque instead of transparency being ushered in by the ending of the electoral bonds scheme. No company would want to openly donate large sums of money to any political party. This is not because corporate donations are ‘corrupt’ or ‘illegal’ in any manner. A simpler explanation is available: a particular individual or company may simply prefer a particular political party because it thinks its economic ideas and policies are preferable to other parties’
The same faux argument has been made about corporate funding for political campaigns. It is a myth that Indian democracy can survive with ‘small donations’ and continue with large-scale political campaigns that characterise Indian politics. It is time that activist lawyers stopped imagining India to be a modern-day Athens where petty cash and small-time chanda would work wonders for transparency. Consider the sums involved in running election campaigns. The 2019 General Election witnessed spending to the tune of ₹55,000-60,000 crore. This kind of money cannot come from ‘state funding’ of elections. You can be sure that this money will not come from charity either. The belief that elections can be funded by benevolent patrons is the stuff of urban legend. Indian democracy is expensive but the assorted ‘associations’ that seek to ‘cleanse’ Indian politics refuse to admit this fact.
On paper, the court’s judgment furthers the notion of “informational democracy” where voters make informed choices based on information about political parties, the candidates in question, and the policy platforms of these parties and candidates. Chief Justice of India DY Chandrachud went on to say, “Information about funding of political parties is essential for the effective exercise of the choice of voting.”
The reality is, of course, a tad more complicated than the textbook Downsian model of democracy (after the political scientist Anthony Downs who first emphasised the importance of information in political choices back in 1957 in the US). The judgment of February 15, far from clarifying and strengthening democracy in India, will actually set it back. The court, it is safe to say, has once again entered the ‘political thicket’ spread for it by a handful of activist lawyers.
The question is how far will the availability of such ‘better’ information affect voter choices? The answer is minimal, of course. Except for a microscopic minority in India’s urban areas—where debates about ‘cronyism’ and businesses influencing political decisions have some visibility—much of India does not care about the sources of political funding. In rural and semi-rural India, what matters are outcomes such as remunerative prices for crops, price of inputs, government jobs, educational opportunities, and issues that affect life chances. Some very corrupt parties and politicians succeed when they can provide these goods, while ‘good’ candidates and parties are unable to even enter legislatures as they can’t do what is necessary in the rough and tumble of Indian politics. It is least likely that funding sources of political parties will have any effect on voters making ‘better’ electoral choices. This is another urban legal legend.
It is not clear what will happen next on the electoral funding front. Elections to Lok Sabha are just months away and this is usually the window when the purchase of bonds is opened. But one thing is clear: just like water finds its way to flow, so will political parties find a way to secure funding. Just that the water will be muddy. It is a travesty that a system that had evolved to prevent many problems that prevailed earlier has been discarded without an alternative in place.
The case was couched in legal and high-sounding constitutional principles. But what upset many people was that a large fraction of the donations under the electoral bonds scheme went to BJP. This, allegedly, robs other political parties of a ‘level-playing field’. This is the core of the actual—but unstated— grievance of those who wanted to outlaw the electoral bonds scheme. It is worth remembering that the nature of Indian politics is such that it is the party in power that garners the maximum resources needed for political campaigns. This was as true of Jawaharlal Nehru’s India as it is today. But such is the power of propaganda that this facet of history is either denied or is buried and the past is painted in golden hues, while the contemporary reality is imagined to be dark.
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