Author: Jagruti Yadav, a student at Sharda University Greater Noida
ABSTRACT
15th February, 2024 was the day when India in its true sense got released from the shingles of unconstitutional and public corruption. In this article we will talk about, allegedly, the biggest scam in India, i.e. the Electoral Bond Scam. This article underlines the meaning of the electoral bond scheme, how it shaped the Indian political system including the political funding and what were the consequences of the donations made through this scheme and how this turned into a controversy. The objective of this article is to make the citizens of India aware about the shady game of politics that happens maybe behind their back. Also it will reveal about the actual data and how the seemingly free and fair elections are not so fair. This article will critically analyze the electoral bond scheme by mentioning all of its factors ranging from the merits to the demerits and from the objectives to the effects. This scheme is said to be probably the biggest scam in the whole world.
INTRODUCTION
Interestingly, this anonymous electoral bond scheme was crabbed and declared unconstitutional by the Supreme Court of India on 15th February, 2024 after being in motion for a period of six financial years. This landmark judgment parked a major controversy about the political funding in India.
On one side the electoral bonds were being considered as a safe instrument for political donation and to curb black money transactions, the other side this scheme is considered to be the biggest scam in Democratic India. It is even considered to be a legal instrument of extortion in India. Apparently, this was a scam which was done by legal means and astonishingly by the government of India itself.
WHAT WERE ELECTORAL BONDS?
Electoral Bonds were introduced in the union budget of the financial year 2017-18 by our then Finance Minister Arun Jaitley with the objective of making the funding mechanism of the political parties transparent and clear.
Apparently, India is very much known for its black money transactions and this black money was being used by the corporations as an instrument to make political donations. This donation might be called evil by many people regardless if its done in black or white because the main objective of this donation is to get biased and non-justified benefits from their recipient. If the electoral bonds purchase was open to the public then the opposition or the supporters of the party which are against my recipient will start backlashing me. This is why this scheme was a way to increase the anonymity of the donor’s identity.
But with the reality being that business and political funding always work hand in hand, the donations should be legitimate. Undoubtedly, business and politics are the two interdependent pillars of the market. And business institutions donating money to their favorite political party is not new. Maybe with the objective to get unfair favors from them and to get benefits from the policies introduced or promised by the political parties.
If this happens openly then the customers of your business who are against the party for which I donated money, might start boycotting your products from the market and there is a risk of some local politicians to come and threaten us. In a worse situation, if I have a public listed company then my stocks will come crashing down.
In this scenario, we will not stop donating money to our favorite party, rather, to prevent our company from becoming a failure, we will start donating in the form of unidentified and untraceable cash. In this way, nobody would know that we donated the money and still our favorite party could win. When hundreds of such companies start donating thousands and crores of rupees to their favorite parties in cash, black money starts to circulate in the market and eventually the Indian economy gets affected.
There are three disadvantages to openly admitting to political parties:
- The reputation of the donors is tainted which leads in loss of brand value.
- It might lead to stock dumping and the investors could lose confidence.
- Black money stars getting circulated in the form of cash for political funding.
Keeping these factors in mind, in 2017-18, Electoral Bond Scheme came in the picture to ensure that political parties could get the funding from the corporations through a legitimate digital transaction and at the same time the companies only have to declare that they have bought electoral bonds, without the need to disclose which party they donated to.
Electoral bonds are quite similar to coupons or gift cards and they have five major attributes:
- Any person or company can buy these bonds.
- These bonds are issued in multiples of thousand, ten thousand, one lakh, and 1 crore rupees.
- There is no limit or restriction as to how many of these bonds can be bought.
- Only those parties which have secured a minimum of 1% of votes in the previous election can encash these bonds.
- These bonds could be bought only at authorized SBI branches with cheque or digital payment only. There is no scope of cash transactions here.
When a person or business buys a bond of worth Rs.X for Y party then this party can use this bond as a coupon and redeem Rs.X from the bank within 15 days. And if they don’t redeem it then this money will get transferred to the PM Relief Fund which could be used by party Y for campaigning purposes.
This is how the Electoral Bonds work.
THE PRESENT SCENARIO:
As per a report of the Association of Democratic Reforms a total of 28,030 electoral bonds worth 16,518 crore rupees have been sold from March 2018 to January 2024. When we dug deeper into the papers that have been released by the SBI we understood the following things:
Firstly, the Bhartiya Janta Party (BJP) have emerged as the top beneficiary of the electoral bonds wherein they have encashed bonds worth Rs.6,060.5 crore between April 12, 2019 and January 2024. This figure alone represents the highest among all political parties which is over 47.5% of the total bonds encashed during the period.
Similarly, TMC secured the second spot with 1,609.50 crore rupees which is 12.6% of the total donations. While congress got 1,421.9 crore rupees which is 11. 1% of the total.
SUPREME COURT RULING AGAINT THE SCHEME:
The Supreme Court ruled against this law and deemed these bonds unconstitutional for three main reasons:
Firstly it violated the Right to Information of the Indian citizens. If these large scale donations are being kept away from the citizens then it hinders the Right to Information Act.
Secondly, donor privacy should not be made as a Quid Pro Quo measure. This is a Latin legal maxim which translates to ‘something for something’. The theory is that electoral bonds could be used to get unfair favors from the beneficiaries. For example. If your company gets raided by Enforcement Directorate for money laundering then a political party may blackmail you to make you buy electoral bonds worth any amount. And in exchange for this donation they would let you and your company go and release you from the ED raid. In this way a political party could use extortion to get funding from businesses. According to The Quint, out of the top 30 donors, 14 were raided and faced action by central and state probe agencies. Notably, ED began a money laundering probe against Future Gaming in 2019 but attached movable assets worth 409.92 crore in the case on April 2, 2022. And just five days after that Future Gaming bought electoral bonds worth 100 crore. And just this one company is already among the top five buyers of electoral bonds. The fourth largest buyer of electoral bonds is Haldia Energy who were booked by the CBI in 2020 in a case of alleged corruption. Later it was revealed that Haldia Energy bought bonds worth 377 crore rupees between 2019 and 2024. Although these two events of buying electoral bonds and ED raids are isolated events many people have seen a connection between these two and have alleged the interconnection on Twitter.
Also critics have pointed out that many companies have lower revenue than the amount they have donated through these bonds. For example, Quik Supply chain private limited was the third largest buyer of the electoral bonds worth rupees 410 crore that too just between FY22 and FY24. Interestingly, this is a privates company which was created in the year of 2000 with an authorized share capital of rupees 130.99 crore and a paid-up capital of rupees 129.99 crore which become 261 crore in total. In FY22 the firm’s net profit was only 21.72 crore rupees with a revenue of over 500 crores in the same year. So critics point out interestingly that for this company to have bought electoral bonds worth 360 crores in a single year of FY22 does not look practical.
The third reason for the Supreme Court ruling is that unlimited corporate donations violate free and fair elections. Before 2017 companies could only contribute 7.5 percent of their average net profit over the past three years. But after electoral bonds since companies could donate unlimited amount that too anonymously, it opened up he opportunity of shell companies which could be only used to rotate funds. It was said that these electoral bonds could be used to channel undocumented black money into the political and electoral process of India. Unfortunately our system is not foolproof enough to prevent cash entirely. Also these electoral bonds make it easier for foreign companies to spend money in the form of large transactions in Indian elections and influence our elections. If this information is kept away from the public then it may be possible for a rich to country to pour in billions of dollars and influence the elections in India which is considered to be threat to our democracy.
Critics also point out that big parties and big corporations together can dominate Indian politics as opposed to small parties and small businessmen. So, in a way it is evidently favoring bigger powers over the smaller ones.
CONCLUSION
It is up to the public to decide what is ethical and what is not. In conclusion, the electoral bond scam represents a significant breach of trust in the democratic process, shaking the foundations of transparency and accountability in political funding. The revelations surrounding the misuse of electoral bonds highlight systemic flaws and loopholes that undermine the integrity of electoral financing mechanisms.
The electoral bond scam represents a significant breach of trust in the democratic process, shaking the foundations of transparency and accountability in political funding. The revelations surrounding the misuse of electoral bonds highlight systemic flaws and loopholes that undermine the integrity of electoral financing mechanisms.
