Tag: Elections

Political analysts in India have consistently raised concerns about the role of political finance in fostering corruption within the largest democracy globally.

The essence of this concern is vividly displayed during general elections, where the lack of transparency in political funding and the obscure movement of funds have often favored the ruling party, also leading to a significant escalation in election expenses. The 2019 general elections in India, for instance, marked the most expensive electoral event globally, tallying a staggering $8.6 billion in costs—an amount nearly twice the expenditure of the 2014 elections, as indicated by research from the Centre for Media Studies based in Delhi.

However, a remarkable and unexpected legal verdict from India’s Supreme Court might herald a shift in this landscape. On February 15th, in a historic decision, the apex court of India invalidated the electoral bond system, which had been in place for seven years, aiming to inject a basic level of transparency into campaign financing.

Introduced in 2017 by the ruling Bharatiya Janata Party (BJP), electoral bonds permitted individuals and corporations to make unrestricted and anonymous donations to political parties. Under this framework, contributors could acquire interest-free, tax-exempt bonds from the state-owned State Bank of India (SBI) for donation to a political entity of their choice, which could then convert these bonds into cash. Former Finance Minister of the BJP, Arun Jaitley, contended that this mechanism would enhance transparency in political funding by facilitating the flow of clean money while safeguarding the anonymity of the donors.

However, critics argue that over the years, the system has predominantly obstructed the public’s right to transparency regarding the sources of political funding. Moreover, it has disproportionately benefited the BJP, with reports indicating that by November of the previous year, approximately 90% of corporate donations from bonds, amounting to nearly $2 billion, went to the ruling party, according to findings from the Association for Democratic Reforms (ADR), a nonprofit organization advocating for electoral reforms and one of the petitioners in the case.

In its recent ruling, the court declared electoral bonds unconstitutional and directed the SBI to immediately cease issuing them. Additionally, the court instructed the bank to furnish details of all bond transactions since April 2019 to the Election Commission, including the value, date of purchase, and the purchaser’s identity, within a week.

According to Trilochan Sastry, the chairman of ADR, the court’s decision signifies a potential transformation ahead of the next election cycle, empowering voters to ascertain the sources of political party funding and enabling civil society organizations to scrutinize potential quid pro quo arrangements between companies and political entities, thus averting the risks associated with crony capitalism.

The petitioners argued that electoral bonds have fostered a culture of secrecy, posing a threat to the democratic process. Sastry emphasized the fundamental right of voters to be informed about the financial backing received by political parties.

While the government justified the anonymity of donors as a means to shield them from potential retribution, critics contend that since the state-owned bank maintains records of both donors and recipients, the ruling party could exploit this information to its advantage. ADR’s data revealed that to date, electoral bonds worth 160 billion rupees ($1.9 billion) have been issued, with the BJP accounting for a significant majority of 57%, compared to just 10% for the primary opposition, the Congress party.

The Supreme Court, in a comprehensive 232-page judgment, sided with the petitioners’ arguments. Chief Justice DY Chandrachud asserted that India’s right to information extends beyond state affairs to encompass information crucial for participatory democracy. He stressed the indispensability of transparency in political party funding for informed electoral decision-making, urging the government to embrace openness rather than cloaking matters in secrecy.

The judges further remarked that corporate donors seldom contribute to political parties out of altruistic motives, highlighting the imperative for accountability in the electoral process. They cautioned against allowing unlimited corporate contributions, which could undermine the accountability of elected representatives to their constituents.

The BJP’s spokesperson, Gopal Krishna Agarwal, affirmed the party’s commitment to ongoing reforms in electoral funding, pledging compliance with the court’s ruling. The Congress Party, India’s principal opposition, welcomed the decision, expressing hope for a departure from such practices in the future.

Election monitoring bodies, including ADR, anticipate that the court’s verdict will impose stringent constraints on corporate funding. Sastry emphasized the necessity of adopting transparency norms similar to those in other democracies like the United States and the United Kingdom, where regulations limit corporate contributions to curb undue influence on elections and policymaking.

However, skeptics caution that while the abolition of electoral bonds may mitigate some issues, the broader political finance system, both before the introduction of electoral bonds and now following their annulment, remains shrouded in opacity. Milan Vaishnav, director of the South Asia program at the Carnegie Endowment for International Peace, described a system where corporations, hesitant to openly contribute funds for fear of reprisal, channel donations clandestinely, perpetuating a culture where cash remains paramount and leaving no digital trail.