Author: Ayush Shukla, Savitribai Phule Pune University
Introduction- From Indian Prime Minister Narendra Modi’s ruling Bharatiya Janata Party to the opposition Trinamool Congress, all major political parties in the country have been recipients of the donations through so-called electoral bonds-funds that activists contend come with a clear tinge of coercion and quid pro quo. In recent times, the chain of unfolding controversies has unraveled how these bonds may have facilitated dubious transactions between businesses and political entities, thus raising questions about the transparency and integrity of India’s electoral system.
A No-End Chain of Controversies
On November 10, 2022, India’s Enforcement Directorate arrested Hyderabad-based businessman P. Sarath Chandra Reddy on charges of a liquor scam in New Delhi. The very next five days later Aurobindo Pharma-a company of which Reddy is a director-purchased electoral bonds worth Rs. 50 million-about $600,000.
These bonds, introduced by Modi’s government in 2017, were meant to be a secretive way for individuals and businesses to donate to political parties. Hitherto considered “unconstitutional” by the Supreme Court of India, not before such bonds had already facilitated an array of shady deals.
All bonds of Aurobindo Pharma were issued to the BJP, which encashed them on November 21, 2022. In a dramatic twist, Reddy turned an approver in June 2023. By November 2023, Aurobindo Pharma had donated another 250 million rupees (approximately $3 million) to the BJP through electoral bonds.
Revelations from SBI’s Data Dump
These came out from a massive set of data released by the State Bank of India-operated electoral bond scheme. The Supreme Court, after months of relentless hearings, ordered the release of all related information, thus forcing this data dump.
These exposures have raised an alarm among transparency activists. An investigation into the data, which was made public by India’s Election Commission, shows that many private companies under investigation by law enforcement agencies routed tens of millions of dollars through electoral bonds to various political parties. The timing of these donations often coincided with favorable government actions or praise from current ministers.
Concerns of Quid Pro Quo and Extortion
These revelations have heightened fears of a quid-pro-quo system—where companies and political parties engage in corrupt transactions—as 960 million voters in India head to a crucial national election. The new data contains unique serial numbers for each bond, thus allowing for more lucid identification of the donors and recipients in light of strict monitoring by the Supreme Court.
The data also reveal that all the top ten corporate donors, from pharmaceuticals to construction, were under investigation by central law enforcement agencies in recent years and chiefly donated to the BJP. Put together, these companies gave the party over 13 billion rupees (approximately $15.5 million).
Responses and Criticisms
Zafar Islam, a BJP national spokesperson, denies any wrongdoing and says the party’s high number of donations is a reflection of its parliamentary strength and electoral success: “We have the most members in parliament and elected members in several state assemblies.” “It’s unfair to question the legitimacy of these donations.”
While the BJP was the biggest beneficiary of electoral bond donations, having received a total of 60 billion rupees, approximately $720 million, in seven years, other political parties, including several regional ones, received significant funding. It then emerged that many donors were granted lucrative contracts with the government either prior to or after their donations, inviting suspicion of outright extortion or corruption.
Anjali Bhardwaj, co-convener of the National Campaign for People’s Right to Information, refers to disquieting trends. “Companies receiving huge government contracts either prior or post making donations to ruling parties indicate a trend of extortion or corruption,” she says. “This raises serious questions about the integrity of the electoral bond system.”
A Lottery King’s Gamble: The Complex World of Electoral Bonds
The labyrinthine World of Electoral Bonds By Santiago Martin Future Gaming and Hotel Services Private Limited, under the leadership of ‘Lottery King’ Santiago Martin, is the biggest purchaser of electoral bonds in India. Martin from Andamans and Nicobar, built his lottery empire across India and the neighbouring countries. But despite phenomenal rise, the group has been investigated on several occasions for allegations for money laundering, fraud, and misappropriation.
Between October 2020 and January 2024, Future Gaming purchased bonds worth 13.68 billion rupees ($163 million). The lion’s share of over 5.4 billion rupees ($64.8 million) went to the Trinamool Congress, or TMC-government of West Bengal, one of the few states where lotteries are legal. Suspicions arose after several persons associated with the TMC received big prizes between December 2021 and August 2022. Thereafter, fraud allegations began to fly thick and fast from the BJP opposition party. The TMC maintains there is no wrongdoing on its part, saying that normal raids by enforcement agencies in West Bengal would have brought out, if any, the purported wrongdoings that had taken place.
Future Gaming had also given almost Rs 5 billion (US$60 million) to DMK in Tamil Nadu. While the lottery business was banned two decades ago, it is still operational in the illegal markets of Tamil Nadu. Meanwhile, donations to DMK surged only after the party came into power in May 2021. DMK has not publicly responded to these issues.
Future Gaming donated a total of 1 billion rupees ($13.3 million) to the BJP in October 2021 and January 2022. Yet the donations didn’t inoculate the company from scrutiny: In April this year, the financial crime agency seized its assets and raided multiple premises – a pattern that has persisted. Future Gaming has not commented on its donation practices.
The BJP says the fact that contributions by Future Gaming remained under investigation shows that there’s no linkage between corporate contributions and law enforcement action. Critics like Bhardwaj are instead asking for an impartial investigation into making all electoral bond transactions transparent.
The other interesting case is of the DLF group that once thrived on Congress support but had switched to the BJP camp. Formed in 1946 by Kushal Pal Singh, DLF developed Gurgaon as one of the key towns across the country. Singh’s biography describes patronage extended by late Congress leader Rajiv Gandhi. That had created much controversy in 2012 when bureaucrat-ruled Congress-ruled Haryana cancelled a deal on a land deal between DLF and Robert Vadra, son-in-law of the Gandhi family. The row then had become a BJP campaign issue, accusing the Gandhi family of corruption.
These allegations notwithstanding, a 2023 court judgement ruled there were no irregularities in the deal. Between October 2019 and November 2022 DLF bought electoral bonds worth 1.7 billion rupees ($20.4 mln), all of which went to the BJP. DLF has made no public statement regarding its donation policy. Transparency activists now want the government to order an independent investigation into these donations and bring accountability into both political parties and corporate donors. “The bonds have legitimized corruption done hitherto in the dark of night and allowed businesses to purchase policy decisions,” said activist Saurav Das.
Similarly, the fortunes of MEIL-the major construction firm-have grown in direct proportion to its political donations. MEIL began purchasing bonds in 201 electoral bonds in 2019, and by January this year it had donated Rs 12 billion ($144 million), including Rs 6.7 billion ($80.4 million) to the BJP, thus becoming the latter’s largest donor.
MEIL’s big contracts were a giant irrigation project in Telangana; these were directly in correlation with its political gifts. All the same, the company continued to give to the BJP even after probes into tax evasion continued. As the political winds shifted in Telangana, MEIL shifted its donation pattern, giving close to 1 billion rupees ($13.3 million) to the Congress in the 2023 state election. The Congress won in December 2023, but MEIL has not commented on its changed support.
The Congress, too, as in the case of the BJP, says it does not allow donations to influence decisions. Explaining such donations, a senior Congress leader said, “The reason is simple: good governance record of our party and the electorally most viable Opposition.” This is seen by critics as an outcome of how the electoral bond scheme has facilitated corporate influence on politics.
Less known IFB Agro Limited of Kolkata, too, came under the scanner. IFB Agro-after a violent attack on its facility in 2020-started buying electoral bonds in what it described as “instructions from the government,” which was seen as a reference to the TMC. It gave TMC 420 million rupees ($5 million) and smaller sums to others. It has not responded to allegations of coercion.
Saket Gokhale of the TMC said, rather pointedly, that IFB Agro might have made those statements under duress from the Centre. Of course, he has not furnished any specific evidence to prove his claim. The critics say the entire electoral bond scheme allows major corporate influence of political parties and makes a case for more transparency and accountability in political funding.
FAQs
- What are electoral bonds? How did electoral bonds come into existence?
Electoral bonds are financial instruments introduced by the government of India in 2017 for anonymous donation of political parties by individuals and businesses. Initially, these bonds were presented as a means to promote transparent funding of politics, but they have become controversial, with people believing that there is a lack of accountability and that some of them have been misused for corruption.
- Why do electoral bonds become controversial?
Answer: Electoral bonds are considered to be controversy prone as they make it possible that donors do not have to reveal their identity and that of corporate donations which could then not be traced as influences on particular political choices. According to these activists, such bonds encourage a system of quid pro quo between businesses and political parties, in the sense of making corrupt exchange and receiving governmental action favourable.
- What was the role of Aurobindo Pharma in the electoral bond controversy?
Answer: In the case of Aurobindo Pharma, the CEO P. Sarath Chandra Reddy was arrested over a liquor scam. The company then, within days of his arrest, purchased electoral bonds worth crores and gift donated them to the ruling BJP. All this raised a conjecture of corruption when the company continues donating money even as the director turns approver in the case.
- How has the Supreme Court of India dealt with the issue of electoral bonds?
The Supreme Court of India ordered that details about the electoral bond transactions be made public, forcing a data dump on how companies under law-enforcement scrutiny had donated large sums to political parties. The court’s intervention follows calls for greater transparency and scrutiny of the bond system.
- What issues have been flagged over corporate donations through electoral bonds?
Answer: The critics of corporate donations under electoral bonds in India think that it brought in a quid pro quo system under which companies donate money to specific political parties in pursuit of individual largesse-they donate in the expectation of getting favorable government contracts or much desired legislation. In fact, the data showed that a chunk of those companies investigated by enforcement agencies were its top donors and indicated some improper relationship-seeking between extortion and corruption.
- How would electoral bonds impact on transparency of political funding?
Answer: Electoral bonds significantly reduce transparency in political funding since they allow for anonymous donations. And because of their lack of transparency, it is even hard to tell whether businesses or individuals are taking the parties hostage at ransom for what are called government favors by doing so, and thereby betraying democratic accountability.
- Why are activists demanding an independent probe into electoral bond donations?
Answer: The activists demand an independent probe because the purchase of policy decisions has become legitimate through electoral bonds. Businesses can essentially “buy” policy decisions, and it is “undermining the integrity of the electoral process, and indeed democracy,” they claim.
- How has the BJP contributed to the electoral bond scheme?
Answer: The largest beneficiary of electoral bond donations has been the BJP, with more than 60 billion rupees, or $720 million, flowing into its coffers in the seven years since the system began. In contending that the donations are an indicator of the party’s electoral strength, it ignores the fact that it has received more corporate contributions than other parties and stoked accusations of quid pro quo.
- How do political parties defend large donations made through electoral bonds?
Answer: The BJP and Congress justify large donations on account of election success and governance record. They maintain that donations would be symptomatic of people’s will to have such policies, whereas their critics opine that the bond system encourages corruption since corporate influence determines policy decision.
- What measures are proposed for electoral bonds?
It wants electoral bond reforms from the government to help make the facility more transparent and accountable. They are demanding full disclosure of identities and details of every amount-and, of course, independent investigations into any connection between donations and government favors-in an attempt at preserving the integrity of the process.
Conclusion- The revelations about electoral bonds once again put a stamp on raising concerns over the interface of money and politics. Corporate donations, after all, shape political landscapes and influence a variety of decisions that have really foregrounded the crucial importance of political funding transparency in a healthy democracy. With the new rise of electoral bonds intended to obscure the identities of donors, the appropriate atmosphere may help financial clout shade public interest. It is the duty of all those who care about democracy to support transparent, responsible mechanisms that do not continue eroding people’s trust and really ensure that it is the people’s will that shines through in political campaigns, and not just that of the deepest-pocket partisans.
