Quid pro quo: On electoral bonds and political funding

The recent disclosure of electoral bond funding by corporate houses to political parties raises pertinent questions about the influence of corporate entities on political decision-making processes and the inherent biases embedded within India’s electoral financing system.

India’s political arena has long been shaped by the interplay of money and power, with the financing of elections standing as a pivotal determinant of political success. In 2017, the Indian government introduced electoral bonds as a purported solution to address concerns surrounding the use of black money in politics. These bonds allowed individuals and corporate entities to make unlimited donations to political parties anonymously, with denominations ranging from Rs 1,000 to Rs 1 crore. Ostensibly aimed at promoting transparency in political funding, the electoral bonds scheme quickly became ensnared in controversy.

Electoral bonds are bearer instruments available in various denominations, allowing individuals, groups, or corporate organisations to donate anonymously. While parties are required to disclose donors contributing more than 20,000 rupees in cash, donations via electoral bonds can remain anonymous, leading to concerns about “legalised corruption” and unequal playing fields in elections. Despite lofty promises of reform, the electoral bonds scheme failed to deliver on its objectives. Instead of curbing the influence of black money, it became yet another avenue for the flow of illicit funds into the political arena. The gap between rhetoric and reality exposed the inherent flaws in India’s electoral financing system, highlighting the need for substantive reform.

The recent landmark ruling by the Supreme Court mandating the State Bank of India to disclose the details of political funding via Electoral Bonds has brought to light significant revelations regarding the financial contributions made by corporate entities to various political parties. Topping the disclosed list is the Bharatiya Janata Party (BJP), having reportedly received electoral bond funding amounting to ₹6,061 Crores, leading the pack. Following closely behind are the Trinamool Congress (TMC) with ₹1,610 crore and the Indian National Congress (INC) with ₹1,422 Crores. Among the noteworthy disclosures, it’s worthwhile to mention the absence of electoral bond funding for Left Parties, including the CPI(M) and the CPI, who have consistently opposed such financial mechanisms, setting them apart from parties embroiled in the quagmire of corporate influence. Notably, these parties have actively campaigned against electoral bonds, advocating for their prohibition through both political and legal avenues.

The nexus of power and finance

Politically, the revelation of substantial electoral bond funding underscores the pervasive influence of corporate interests in shaping the country’s political discourse and policy agenda. This influx of funds, particularly to the ruling Bharatiya Janata Party (BJP), altered the dynamics of political funding and provided a substantial financial advantage, propelling the potential for undue influence and favouritism in governance. Critics argue that such lopsided funding mechanisms create an uneven playing field, where parties aligned with corporate interests gain an unfair advantage over those advocating for marginalised sections of society.

One of the most contentious aspects of the electoral bonds scheme was its opacity. While donors remain anonymous, the beneficiaries reaped the rewards of corporate largesse without disclosing the source of their funding. This lack of transparency not only undermined the principles of democracy but also perpetuated the influence of vested interests in shaping political outcomes. At the heart of India’s electoral funding crisis lies a deeper malaise – the erosion of democratic principles and institutions. The prevalence of feudal mindsets, characterised by deference to authority and a lack of civic engagement, has perpetuated a system where money dictates electoral outcomes. This representation deficit undermines the very essence of democracy, relegating the interests of the marginalised to the sidelines.

Assessing constitutionality and transparency

Legally, the Electoral Bond Scheme has faced scrutiny for its constitutionality and lack of transparency. The Supreme Court’s ruling to disclose funding details marks a significant step towards transparency in political finance. However, revelations of donations from companies under investigation by government agencies highlight potential loopholes and avenues for corruption and the potential for quid pro quo arrangements between corporations and political parties. The challenge lies in balancing the right to privacy for donors with the need for transparency and accountability in political funding. The Court’s decision underscores the importance of upholding constitutional values while ensuring the integrity of electoral processes.

Economic considerations

Economically, the involvement of corporate entities in political funding raises broader questions about the interplay between corporate power and market dynamics. At least 30 shell companies purchased electoral bonds worth over ₹143 crore. These shell companies are suspected of being used for illegal activities or tax evasion. Forty-one companies, facing probes by agencies like the CBI, ED, and IT department, donated a total of ₹2,471 crore to the BJP under the SBI electoral bonds scheme. The use of electoral bonds by companies under investigation for alleged wrongdoing highlights the risks associated with corporate involvement in political activities. It raises concerns about the misuse of corporate resources for political purposes and to meet partisan ends, potentially undermining the principles of fair play and economic justice. 

Donations, often made in exchange for favours or to evade prosecution, expose the symbiotic relationship between money and influence. In a well-functioning democracy, electoral funding should not be a decisive factor in elections. However, in India, it has become a tool for perpetuating entrenched power structures and subverting democratic norms.

Ensuring accountability and transparency

In light of these revelations, there is an urgent need for comprehensive reforms to ensure accountability and transparency in political funding. While the Supreme Court’s ruling to disclose funding details is a step in the right direction, it is only a first step towards addressing the systemic challenges plaguing India’s electoral finance system. Moving forward, there should be greater oversight and scrutiny of corporate donations to political parties, with mechanisms in place to prevent conflicts of interest and undue influence. This includes revisiting existing laws and regulations governing political finance, as well as introducing new mechanisms to ensure accountability and fairness in the electoral process.

Ultimately, the integrity of India’s democracy depends on the trust and confidence of its citizens. It is incumbent upon policymakers, civil society, and citizens alike to work together towards a more inclusive and participatory political system.