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Blinding Transparency

On January 19, 2019 the Communist Party of India (Marxist) and the Association for Democratic Reforms (ADR) filed writ petitions under Article 32 of the Indian Constitution to strike down the amendments to the Finance Act, 2017 and the earlier 2016 Finance Act. The Finance Act, 2017 introduced electoral bonds and the 2016 Act amended the Foreign Contribution Regulation Act (FCRA), 2010 to allow for foreign companies with subsidiaries in India to fund political parties. The amendment also removed the cap on campaign donations by companies.  This move, it was contended, fostered corruption, increased the avenues for black money and leaned towards opacity in the process of political funding for Indian elections. The petition targeted how the move created pathways for unlimited individual and corporate donations to political parties by legalizing anonymous donations. Further, the amendment to the FCRA was also said to open the Indian democracy and its politics to the forces of international lobbyists.
Breaking down the issue
The Electoral Bonds Scheme was introduced in 2017 by the BJP government. It was promoted as a cashless way to contribute to political funds that would tackle black money and bring in transparency in the process by routing it through proper banking channels. These bonds could be purchased at authorized State Bank of India branches during selected periods of sale. Interestingly, there was no requirements of receipts for donations below rupees 2000. The ruling government favored anonymity in purchase as they believed it would prevent later targeting of donors if their favored party did not come to power, a point raised by the Attorney General while arguing in the Supreme Court for the Scheme. It legalized anonymous contribution by exempting the bonds from disclosure that would have otherwise been required under Section 29(c) of the Representation of Peoples Act, 1951 (RPI). However, almost immediately after introduction, the Election Commission of India (ECI) submitted an affidavit to the Supreme Court claiming that the Scheme in fact wrecked transparency and left donations, both domestic and foreign unchecked. Hence, it was claimed that the Scheme was very much in contradiction to the efforts made by the ECI to make political funding more transparent and open to accountability. While the ECI was not against the use of Electoral Bonds, it feared the havoc anonymity would create to the efforts made by it to conduct free and fair elections. This concern resonated with ADR and CPI(M) who filed the petition in the Apex Court.
Where things stand now
With the matter being heard during the conduct of the Lok Sabha elections, the Supreme Court refused to stay the sale of electoral bonds but it did order political parties to submit donor details to the ECI in a sealed envelope which could not be opened by the ECI without the Court’s permission, thus arriving at a halfway house solution before a final hearing could take place.
The ECI has claimed that the amendment to Section 29(c) of the RPI Act has taken away its legal right as an independent ombudsman to keep track of the funding received by any political party, which impinges its larger function of ensuring free and fair elections. The Commission has claimed that, for a voter, knowing only about the candidate they are voting for would be a veiled truth if they do know who is funding them.
New Election, Same Old Issue
The concerns surrounding electoral bonds is not a new one. Indian elections have been troubled by it for several decades now. However, the issue loses steam as soon as the election season comes to an end and is pushed to the center of controversy again when the next cycle begins. Multiple committees, namely the Tarkunde Committee, Dinesh Goswami Committee, the Indrajit Gupta Committee and a Law Commission Report  have provided extensive reports on how the scheme can be improved and how electoral malpractice can be curbed but to no avail. If history is anything to go by, then it must be accepted that the upcoming Supreme Court decision would not be the final and ultimate arbiter on the issue of black money in political funding. While the decision may address the issue retrospectively, it would still set a precedent for the future. The importance of the decision must be identified in its possibility of identifying and extending the powers of the ECI to foster its efforts on electoral reform. However, one must also remain cautious of being too optimistic as there is an equal possibility for the Court to uphold the validity of the working of the bonds.
Transparency and Privacy
RTI information regarding the purchase of electoral bonds shows that 3622 crore rupees worth electoral bonds were sold in just two months, in March and April 2019. Another RTI report suggests that of the 215 crores donated earlier, 210 crores have been made in favor of the ruling BJP government and 5 crores in favor of the Congress Party. Hence, even smaller political parties have begun to question the Scheme as it affects their chances of survival in the pandemonium that is Indian politics. While the concern of the political parties remains on one side, the flip side to the issue comes from the perspective of anonymous donors. With the Right to Privacy being identified as a fundamental right through the Puttaswamy judgment, the question remains open as to what happens when a donor does not want to disclose their identity. While the determination of this answer calls for a larger policy debate on whether right to privacy aids or debilitates free and fair elections, a simpler appraisal rooted in utilitarian values would suggest that preserving democracy through free and fair elections is more important than the privacy of a donor. However, the larger concern that needs immediate attention is the lack of a political will to usher in electoral reforms.
No will, no way
The Central Government’s claim of electoral bonds increasing transparency and accountability seems counter intuitive when it has also legalized anonymity. It is a well-known fact that electoral reforms have not been successful in India because political parties have opposed any sort of effort to ameliorate the situation. Whenever these reforms have come, it has been a top-down phenomenon wherein the Supreme Court is the institution that directs political parties towards accountability post-facto. This brings into serious question the ECI’s ability to independently implement reforms and work as an effective ombudsman. While it is undeniable that the ECI under T.N. Seshan’s tenure saw the most incredible success with reforms, with the rise in BJP’s power and the return of one-party majorities, we see the political party becoming almost omnipotent as compared to the regulatory institution.
Money and muscle power obviously influence politics. A move that reduces transparency is bound to increase the already plural disparities when it comes to the matter of elections and voting. Asymmetric information flow, intimidation, violation of the Model Code of Conduct, for example, are already issues that plague any election that takes place in India. Unchecked money power would only make the woes of the ECI worse and is an undeniable danger to democracy. Despite the limitations placed on spending by political parties during elections, resources spent on campaigning in India remains one of the highest in the world and is definitely beyond the cap set by the ECI.
As the ECI tries to establish its supremacy, it must be acknowledged that it is actually the next move of the Supreme Court that will decide the fate of this problem. Even with the Court ordering political parties to provide information concerning donors to the ECI in a sealed cover, it is unlikely to act as a deterrent against malpractice. At this juncture, it is necessary for the ECI to reconsider the previous suggestions given by the various committees to push for electoral reform. Perhaps one of the most feasible suggestions remains the possibility of the State funding political parties where the funds used by them and any donations received by the political parties would be controlled by the State and the use of any other source would be deemed illegal. Alongside this, a dedicated monitoring of the elections would definitely lead to positive results and a controlled usage of much needed monetary resources, that can later be directed towards more productive activities of the State.




Namratha Murugeshan is an undergraduate candidate of Law (B.A.LLB Hons.) at NALSAR University of Law, Hyderabad. Her interests entail Legal Reform and Public Policy.


In Content Picture Credit: Sabrangindia

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