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Electoral Bonds: The curse of Indian democracy | Podumentary

Why are electoral bonds continuing to damage Indian democracy even after it was red-flagged by the Election Commission of India? Here is the latest episode of our Podumentary!

By The Probe
New Update

When the government of India introduced the electoral bonds, it claimed they would bring transparency to political party funding. But the bonds have just done the opposite. It compromised electoral transparency and has made political party funding murky in the world’s largest democracy. Why are electoral bonds continuing to damage Indian democracy even after it was red-flagged by the Election Commission of India? Hear this Podumentary out!


Commodore Lokesh Batra (retd)

RTI activist

Jagdeep S Chhokar

Founder & Trustee 

Association for Democratic Reforms (ADR)

Poonam Agarwal

Freelance Development Researcher, BBC

Editor Investigations, The Quint

SY Quraishi

Former Chief Election Commissioner of India

Ullekh NP 

Executive Editor

Produced below are the abridged version of the transcripts of our Podumentary (audio documentary) titled: Electoral Bonds: The curse of Indian democracy

When the government of India introduced the electoral bonds, it claimed they would bring transparency to political party funding. But the bonds have just done the opposite. It compromised electoral transparency and made political party funding murky in the world's largest democracy.

Former Chief Election Commissioner of India SY Quraishi says it is unfortunate that the bonds continue to damage India's democracy even after it was red-flagged by the Election Commission. "This was introduced through the Union Budget of 2017. When the Finance Minister started talking about it, it sounded like music to our ears. His first sentence was that without transparency of political funding, free and fair elections are not possible. That was something we had been saying. So, we were very delighted when he said that. In his second sentence, he said that we have failed to achieve transparency in the last seventy years. This was also a statement of fact, and this also gladdened our hearts. Then what he revealed demolished everything he had said before. He said that the donations made to political parties would not be known to anybody. So, whatever transparency existed was killed in one stroke. The Election Commission itself raised a red flag about it in very strong terms, and it went up to the Supreme Court, and it's a pity that the Supreme Court did not find it an important enough issue of national concern to take it up for five years."

The electoral bonds scheme allows individuals and corporations to purchase electoral bonds from the State Bank of India, which can then be provided to political parties. The bonds are bearer instruments, and the political parties must deposit them in the SBI to redeem them. The bond is valid for a period of 15 days from the day of its purchase. However, the names of the donors will remain anonymous.

Ullekh NP, Executive Editor of Open Magazine, says that the electoral bonds give an unfair advantage to the party in power. "Usually, it's a party that's in power that always gets more funds. In the olden days, the Congress got a majority of the funds and the High Command, which comprises mainly the Nehru-Gandhi family, became extremely powerful because of their access to these funds, especially from corporations. And then we hoped that the era of very opaque funding to political parties was over with the introduction of the electoral bonds. But what we envisaged was not what happened. Through the EBs, we ended up reinforcing the mafia. Whoever buys electoral bonds enjoys a tax break. You don't have to pay tax for that amount, and this is an incentive for anyone who makes a political contribution. The problem is that the public doesn't know who funded the political parties. So, we don't get to know whose interests are being protected by who."

According to the State Bank of India data, donations to political parties through electoral bonds have already crossed the Rs 10,000 crore mark in the 21st sale of electoral bonds conducted between July 1 and 10.

Electoral bonds distort democracy and affect free and fair elections, says Jagdeep S Chhokar, Founder and Trustee of the Association for Democratic Reforms. "Even today, around 70 per cent of the bonds that are donated go to the party in power at the centre. The party in power has access to the information of who has got the bonds and is able to stop or very significantly reduce the funding to opposition parties, thereby distorting the level playing field. When the party which is in power has all the information, it has every possible means of influencing the possible donors; therefore, other parties don't stand a chance. This itself is a gross distortion of democracy."

Several organisations, including the Association for Democratic Reforms, have been advocating for the disclosure of the details of the bond donors. RTI activist and retired Commodore Lokesh Batra has been tracking the sale of electoral bonds since its introduction. The replies received through his RTI petitions have thrown more light on the extent of funding received by political parties in the country through the EB scheme.

"I had filed RTIs starting from the Election Commission of India to the Ministry of Law to different departments in the Ministry of Finance. Initially, in their letter of 26 May 2017, the Ministry of Law clearly mentioned it was a retrograde step which would create a shell company and add to the corruption. Even the day before the announcement in Parliament, they decided that they should be asking RBI's views also. In the process of bringing electoral bonds, every law meant for conducting free and fair elections was changed, including the RBI Act was diluted. The RBI said that this is not the correct way of doing it. The Election Commission said it would bring in corruption. That was their first reaction. However, it was stated on the file that since the speech is already finalised, let's go ahead with the announcement. When you go through the files, you will realise that even the Ministry of Law was against it."

The Election Commission of India recently wrote to the government seeking restrictions on cash donations to political parties. According to Batra, the government has been making exceptions to its own rules on electoral bonds and making the process even more opaque. "The eligible period is fifteen calendar days from the date you purchase the electoral bond. That means if you buy on the 10th of the month, you can encash it till the 24th of that month. But, we came across in a file that once, two ten-ten crores worth of electoral bonds were not encashed in time. So, promptly, the State Bank of India wrote to the Ministry of Finance, Department of Economic Affairs, that the electoral bondholders worth ten crores plus ten crores have approached the Delhi branch to encash them, but the period is over. So, the government says, okay, this is an exception. In this particular case, 15 calendar days means days excluding Saturday and Sunday. A one-time exception was made. So, things have gone to that extent. So, the question is, why would the government give a concession for 20 crores, even when it is against the government's own notification?"

Poonam Agarwal, Freelance Development Researcher with the BBC and Editor Investigations with The Quint, says that electoral bonds can be used to funnel black money into political parties by corporate houses that want to curry favours from the government. The EB scheme is nothing but the institutionalisation and legalisation of political corruption. "There were multiple communications which were made by different departments like Election Commission of India, the Ministry of Finance, as well as concerns were raised by the SBI because a company... a corporate company can very well set up a shell company just to root their black money and make donations to the political parties. So, the first claim of the government that it will weed out black money does not stand,” says Agarwal.

According to SY Quraishi, the solution is very simple. While the donors want secrecy, the people of the country want transparency. In a democracy, the will of the people is supreme. He says that in the spirit of democracy and free and fair elections, it is high time the donor's details are made public.

It's been more than five years since electoral bonds were introduced in India. Since then, some of the country's most important institutions, like the Election Commission of India, the Reserve Bank of India, and the State Bank of India, amongst others, have raised questions about the opacity of the scheme. Ullekh notes that it is time the people of the country are told who is funding the political parties in the world's largest democracy. "We hope there is a greater level of transparency in electoral bonds. You know, it's just as simple as disclosing how much money has been spent on buying electoral bonds by a particular corporate entity and who has this corporate entity donated more to. A huge sum of money goes to the ruling party, but we don't know anything more than that, but we need to know in the interest of democracy."