Explained: Why is the electoral bond scheme being opposed by transparency activists?

At the time of its announcement, in Finance Minister Arun Jaitley’s Budget speech in 2017, electoral bonds were understood to be a way for companies to make anonymous donations. However, the fine print of the notification has revealed that even individuals, groups of individuals, NGOs, religious and other trusts are permitted to donate via electoral bonds without disclosing their details.

Why are electoral bonds being so vehemently opposed by transparency activists?

The anonymity provided to donors donating electoral bonds is the point of contention here. Through an amendment to the Finance Act 2017, the Union government has exempted political parties from disclosing donations received through electoral bonds. In other words, they don’t have to disclose details of those contributing by way of electoral bonds in their contribution reports filed mandatorily with the Election Commission every year.

This means the voters will not know which individual, company, or organisation has funded which party, and to what extent. Before the introduction of electoral bonds, political parties had to disclose details of all its donors, who have donated more than Rs 20,000. According to transparency activists, the change infringes the citizen’s ‘Right to Know’ and makes the political class even more unaccountable.

“Moreover, while electoral bonds provide no details to the citizens, the said anonymity does not apply to the government of the day, which can always access the donor details by demanding the data from the State Bank of India (SBI). This implies that the only people in dark about the source of these donations are the taxpayers. It may also be noted that the printing of these bonds & SBI commission for facilitating the sale and purchase of the bonds is paid from the taxpayers’ money by the central government,” the Association of Democratic Reforms (ADR), which has moved the Supreme Court against electoral bonds, had said in a recent statement.

How popular are electoral bonds as a route of donation?

In less than three years of their introduction, by virtue of the anonymity they offer to donors, electoral bonds have become the most popular route of donation. More than half the total income of national parties and the regional parties analysed by ADR for the financial year 2018-19 came from electoral bonds donations.

The Bharatiya Janata Party (BJP) is the biggest beneficiary of this scheme. In the years 2017-18 and 2018-19, political parties received a total of Rs 2,760.20 crore from electoral bonds, of which Rs 1,660.89 cr or 60.17% was received by the BJP alone.

What is the Election Commission’s stand on electoral bonds?

The Election Commission, in its submission to the Standing Committee on Personnel, Public Grievances, Law and Justice in May 2017, had objected to the amendments in the Representation of the People (RP) Act, which exempt political parties from disclosing donations received through electoral bonds. It described the move as a “retrograde step”. In a letter written to the Law Ministry the same month, the Commission had even asked the government to “reconsider” and “modify” the above amendment.

Asking the government to withdraw the new proviso, the EC had written, “In a situation where the contribution received through electoral bonds are not reported, on perusal of the contribution report of political parties, it cannot be ascertained whether the political party has taken any donation in violation of provision under Section 29(b) of the RP Act which prohibits the political parties from taking donations from government companies and foreign sources.”