Opinion S Y Quraishi on electoral bonds: No going back to square one

The issue is of great significance as it directly relates to the core element of elections, namely political financing, which profoundly influences the character and integrity of our democracy. As the former Finance Minister, the late Arun Jaitley, in his budget speech of 2017, said, free and fair elections are not possible without transparency of political funding.

While the Court must be commended for a landmark judgment, it is important that we steer clear of easy triumphalism. The intervention of the SC, though belated, indeed averted a catastrophe, yet it has not resolved the fundamental issue of transparent political financing. Many critics say we are back to square one. Therefore, it is indispensable that we confront this issue head-on and think of alternatives that can improve the life of Indian democracy.

But first, are we back to square one? Not exactly. The fact is that the judgment has declared the law unconstitutional, and all the concomitant amendments to different laws like the Companies Act, IT Act, RP Act etc have also gone.

It is true that, before 2018, political funding was largely opaque, 70 per cent of all donations were in cash. But all donations of over Rs 20,000 were reported to the EC on whose verification they were entitled to income tax rebate. After the introduction of electoral bonds, there was a total shroud of secrecy about the donors and recipients. And of course, the suspected quid pro quo.

What’s the way forward? What mechanisms can be put in place to ensure that opaque political financing, which is the mother of all corruption, becomes totally transparent?

Corruption in elections has been a subject of debate for decades. Many parliamentarians have offered different solutions. The last serious attempt was made as far back as 1999, when the Indrajit Gupta committee recommended partial public funding of political parties, subject to internal democracy within them. Since inner party democracy has remained a pipe dream, the reform could not take off.

State funding of elections is often mentioned as a solution, to which I don’t subscribe, as it is impossible to keep tabs on the money spent in elections. It will also lead to the rise of non-serious candidates, who will find it tempting to make some quick bucks at public expense. What I have been suggesting is the funding of political parties, not elections, based on their electoral performance.

I have suggested Rs 100 for every vote a party garners. We can suggest a higher figure. In the forthcoming general elections, suppose 65 crore votes are cast, we would need Rs 6,500 crore to pay political parties for the votes they get. Will this be enough? But if they get this money from the state exchequer by cheque gracefully, without corruption and arm-twisting of “donors”, it will do tremendous good to their reputation. This proposal would imply a total ban on collection from corporates, which is at the root of allegations of crony capitalism. Besides, their accounts must be subject to audit by independent auditors from a panel suggested by the EC or CAG, and not by the in-house auditors of political parties who only do a whitewash job. Since the number of votes cannot be fudged, reimbursement based on this metric would ensure accuracy and transparency.

Another question is: Why should the public bear the cost of funding political parties? The straightforward answer is: Honesty and transparency in governance, a goal well worth the small investment. If some find this idea unacceptable, let there be a small cess. Even one paisa per litre of petrol can fund the entire democratic process quite liberally.

Electoral trusts have been offered as another solution. In fact, there already exist 18 such trusts, but these also suffer from lack of transparency. The latest Reuters report has exposed serious issues. According to Milan Vaishnav, a scholar on the subject, “Trusts provide (just) one layer of separation between firms and parties”. Another expert has called it a “semi fig leaf”.

I feel the most viable solution is to establish a National Election Fund. Corporates and other private entities could be solicited to donate to this fund with income tax concessions already available for political donations. That would take away the alleged fear of the corporates of harassment from rival parties (read ruling parties). Incidentally, for 70 years they have been donating without any reprisal, which seems to be a new phenomenon — real or imaginary.

According to a study in 2012 titled ‘Political Finance Regulations Around the World’ conducted by the International Institute for Democracy and Electoral Assistance, an official inter-country organisation in Stockholm of which India is a founding member, out of 180 countries analysed, 71 nations provide state funds to political parties based on the number of votes they secure. This system was prevalent in 86 per cent of European countries, 71 per cent in Africa, 63 per cent in the Americas, and 58 per cent in Asia. There appears no reason why it cannot work in India. There may be some possible questions on the operational details, like funding of new parties, independents, etc, which can surely be discussed.

While the post-mortem of the bonds goes on, let the debate now shift to the way forward.

The writer is former Chief Election Commissioner of India and author of ‘India’s Experiment with Democracy — the Life of a Nation through its Elections’