Who’s giving? Who’s getting? Who knows. (Source: BloombergQuint)

Election 2019: Shadowy Political Funding Spikes Sevenfold On Electoral Bonds

Thanks to murky bearer bonds launched by Prime Minister Narendra Modi’s government, anonymous funding for India’s political parties has spiked nearly sevenfold.

Electoral bond sales, since being launched last year, have already crossed Rs 5,000 crore till May 4, replies to a Right To Information query by Mumbai-based activist Manoranjan Roy show. That is significantly higher than the total annual income of national political parties over the last five years.

Political parties in India are notoriously famous for accepting contributions from questionable sources to fund their extravagant rallies and publicity campaigns. In just 2017-18, the top six national parties had received 53 percent of their total income from undisclosed sources. Electoral bonds, which weren’t available till then, will only add to opacity. While details are still not available on which party got the bulk of these funds, Modi’s Bharatiya Janata Party had received nearly all the funds raised in the first tranche in March 2018.

“If corporates and wealthy individuals shift their giving to electoral bonds, it eliminates the tiny sliver of transparency we once had for those who openly disclosed their giving,” Milan Vaishnav, Director and senior fellow at the Carnegie Endowment for International Peace, told BloombergQuint. “While this was a small proportion of donors out of the overall total, even that highly limited form of transparency will go by the wayside.”

Finance Minister Arun Jaitley had announced electoral bonds in last year’s Union Budget saying they were to tackle the menace of black money in political funding. That sparked concerns about how they would open the floodgates for unaccounted money to reach political parties.

The Communist Party of India (Marxist) along with not-for-profit Association for Democratic Reforms moved the Supreme Court earlier this year seeking a stay on electoral bonds. The Election Commission too sided with them, saying that it will only support electoral bonds if the donor’s name is revealed. The apex court refused a stay citing lack of time but ordered all political parties to disclose, in a sealed envelope, the details of all donations and donors to the poll watchdog by May 31.

Yet, the fact that such high amounts of money has been raised shows that the order hasn’t hindered electoral bonds from becoming the preferred mode to give away money to political parties.

“It only confirms what we have been saying from the beginning,” Jagdeep Chhokar, founder of ADR and the former head of Indian Institute of Management-Udaipur, told BloombergQuint. “Unless people know who the donors of a party are, how will they assess if a decision has been taken to help the nation or the corporates itself.”

The Finance Minister had announced electoral bonds saying they will ensure transparency in political funding. At the same time he said they will be like bearer bonds and the identity of the donor will not be disclosed. How do anonymity and transparency go together?
Jagdeep Chhokar, Founder, Association for Democratic Reforms

Financial transparency alongwith internal democracy are the cornerstone of a good clean political party, Chhokar said. But if such “obscene and humongous” amount of money is involved the national interest will get replaced by the interest of big corporates, he added. “In not wanting to be financially transparent, all parties are together.”

Vaishnav agrees that the high costs involved in campaigns are the main source of a “great deal of corruption” in Indian elections. “The whole notion of advertising electoral bonds as a method of improving transparency in elections was a sleight of hand,” he said. “The whole point of electoral bonds is that they are non-transparent; you neither can identify the donor or the recipient.”

They have basically legitimised opacity. I have not seen the use of electoral bonds or similar instruments in other democracies.
Milan Vaishnav, Director, Senior Fellow, Carnegie Endowment for International Peace

Also read: Why Electoral Bonds Are Unconstitutional

Election 2019: Shadowy Political Funding Spikes Sevenfold On Electoral Bonds

A Simple Fix?

While the current structure of electoral bonds incentivises donors to loosen their purse strings, a few tweaks can help fix the gaps.

For starters, Vaishnav said that the government could mandate that all political givings are managed digitally and must be disclosed. It can also end cash donations completely.

“Second, it could require that the accounts of political parties are screened by a third-party auditor, rather than a party’s own handpicked accountant,” he said. “Third, the Election Commission requires much tougher authorities to sanction those who do violate disclosure requirements. Right now, the commission often is forced to let violators go with a mere slap on the wrist.”

Chhokar too advocates that the complete details of the donors should be disclosed. But he said the reason why political parties refrain to do that is because as long as the money is not accounted for it can be siphoned off by the political leaders for their personal gains.

If money is unaccounted, it can be siphoned off. This explains why a candidates wealth increases by 2-3 times once they get elected. Our data shows that.
Jagdeep Chhokar, Founder, Association for Democratic Reforms

The only option Chhokar sees is regulation of political parties by law. “But someone needs a very strong desire to do that.”