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  • Akshat Oinam



“We can have democracy in this country, or we can have great wealth concentrated in the hands of a few but we cannot have both”, once said American Supreme Court Justice Louis Brandeis.

Democracy is compromised because of Greed. To quote Dr. S.Y. Quraishi, the 17th Chief Election Commissioner of India, this is an era of “elected autocracies” - and the trend has been most alarmingly so for a long time in India. So much so that in the minds of the voter, “corruption” and “politics” have become analogous terms.

Against this depressing backdrop, the Modi regime introduced a new political funding mechanism, called Electoral Bonds, as an apparent harbinger of a new era of “transparency” and “accountability”. The Finance Bill, 2017 introduced these bonds as interest-free bearer instruments that will be available for purchase from the State Bank of India within a designated window of 10 days in every quarter of the financial year. A bearer instrument that neither carries the name of the buyer nor payee, no ownership information, and the holder of this instrument (i.e. political party) is presumed to be its owner. The scheme allows individuals and domestic companies to present these bonds - issued in multiples of Rs 1,000, Rs 10,000, Rs 1 lakh, Rs 10 lakh, and Rs 1 crore — to political parties of their choice, which have to redeem them within 15 days. A person as an individual can buy bonds either independently, or jointly with other individuals. Remarkably, no limit exists on the number of electoral bonds individuals or corporate entities can purchase. Even more remarkably, the beneficiary political party is not required to reveal the identity of the entity that has given it the bond(s).

The primary argument on which electoral bonds came into existence was to allow common people to fund political parties of their choice easily and to allow economic inclusivity in the electoral process. However, recent statistics reveal a different picture altogether because more than 90% of the bonds have been of the highest denomination (Rs. 1 crore) as recently as 2022 - manifestly out of the financial reach of the common man. Electoral bonds carry unique alphanumeric characters hidden in the top right-hand corner of the bond. It is visible only under ultraviolet light, and invisible to the naked eye. In the affidavit, the Government repeated its earlier claim that the alphanumeric characters were embedded for security reasons. However such arguments have been debunked by several experts. Scores of articles and reports that such a feature exists in the bonds are for the obvious reason that the ruling party wants to keep a concealed track of the donors. This anonymity clause does not apply to the Government of the day, which can always access the donor details by demanding the data from SBI, also a government-owned bank. 

Image credits:India Today

Thus in practice, the only people in the dark about the source of these donations are the Indian public and opposition parties. The finance minister's argument had been that since the bonds have to be purchased using the formal banking system, black money cannot be used to purchase these bonds. It is important to note here that the finance minister himself had stated on multiple occasions that “Black money does not change its colour merely because it is deposited in a bank" in the context of money returning to banks after demonetization in 2017. Apply the finance minister’s logic to himself, and the glaring contradiction becomes obvious. All at the same time, voices of dissent of leading institutions have been systematically made to fall on deaf ears by the executive, making electoral bonds a matter of even greater concern.

For example, in a letter and other communications to the finance minister in 2017, former RBI Governor Urjit Patel couldn’t have been more unambiguous in his concerns. He wrote- “We are concerned that the issue of EBs as bearer instruments in the manner currently contemplated has the possibility of misuse, more particularly through the use of shell companies. This can subject the RBI to a serious reputational risk of facilitating money laundering transactions”. He further added- “Given that the major objective of the EB Scheme is to provide anonymity to persons contributing to political parties, we believe that this can be better achieved if EBs are issued in electronic form (demat form), with the Reserve Bank as the depository, rather than as a physical scrip.” Another major concern raised by the RBI was regarding the threats raised by EBs in SCIP form to national security. It communicated, “EBs in scrip form could also be exposed to the risk of forgery and cross-border counterfeiting besides offering a convenient vehicle for abuse by `aggregators’.” However this and other red flags were shunned; and Subhash Chandra Garg, then secretary of The Department of Economic Affairs, very plainly said: “It has been decided that issuance of such bonds would be in the form of physical bearer bond form only. Your views and suggestions have been duly considered and this is the final decision of the Government.”

Summing up our understanding, electoral bonds in practice appear as a Trojan horse in our electoral process - an entity placed within the system with the apparent goal of benefitting it while effectively doing the opposite. This understanding begs the question as to what is to be done. To this effect, certain policy solutions have been proposed. French political scientist Julia Cagé has talked about “democratic equality vouchers” whereby each citizen can be allowed to donate a fixed amount, for example, 2000/-, yearly to the political party of their choice, and this 2000/- be reimbursed to the citizens. In other words quantitative giving back to citizens rather than qualitative, vague promises of “good governance” and “acche din” (good days). Until India can revamp its political funding and spending regulations, it cannot fully be the “mother of democracy” that it claims or strives to be. The maxim of “One rupee one vote” that electoral bonds have perversely brought about must be overthrown, and the true democratic idea of “One person one vote” be realised in its place.

By- Akshat Oinam

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