A mysterious source of campaign funds that has generated hundreds of millions of dollars in revenue for the ruling Bharatiya Janata Party (BJP) has been ruled by the country's Supreme Court in November as “prioritized by opacity.'' It is currently under scrutiny in India. May be “abused for money laundering”.
The Supreme Court is expected to announce its ruling on Thursday on an ongoing petition seeking a ban on electoral bonds, which are a major source of funding for political parties in India, particularly the Bharatiya Janata Party.
The court's ruling could fundamentally determine how India's general elections from March to May are fought. How much of a role does untracked money play in that? and who has the resources to control the political landscape.
However, while donors using electoral bonds are technically anonymous, State Bank of India is publicly owned, meaning the ruling party has access to its data. Critics say this is likely to deter big donors from using electoral bonds to donate to opposition parties.
And in 2017, India's central bank, the Reserve Bank of India, warned the Modi government that the bonds could be misused by shell companies to “facilitate money laundering.” In 2019, the country's election commission described the system as “a retrograde step as far as transparency of donations is concerned.”
Since 2018, secret donors have donated about 16,000 billion Indian rupees (more than $1.9 billion) to political parties through these bonds. An analysis by the Association for Democratic Reforms (ADR), a non-governmental organization, found that between 2018 and March 2022, 57% (approximately $600 million) of donations through electoral bonds went to Prime Minister Modi's Bharatiya Janata Party. It was done.
These funds will help transform the Bharatiya Janata Party into a powerful electoral machine as India prepares to head to the polls between March and May, when more than 900 million voters will elect a new government. did it. From funding tens of thousands of WhatsApp groups promoting policies to paying for bulk bookings of private jets, electoral bonds have provided the Bharatiya Janata Party with a massive financial infusion, giving it an edge over its rivals. You have a clear advantage.
How do electoral bonds work and why are they criticized as “undemocratic”?
What is an electoral bond?
Electoral bonds (EBs), like banknotes, are “bearer” products. They are sold in denominations of 1,000 rupees ($12), 10,000 rupees ($120), 100,000 rupees ($1,200), 1 million rupees ($12,000) and 10 million rupees ($120,000). These can be purchased by individuals, groups or business organizations and donated to a political party of their choice, and redeemed interest-free after 15 days.
Political parties are required to reveal the identity of all donors who donate more than 20,000 rupees ($240) in cash, but the names of those who donate through electoral bonds must never be revealed, no matter how large the amount. There isn't.
Since its introduction, EB has become a major vehicle for political funding, with 56% of all funding in Indian politics coming from EB, according to an ADR report. It is extremely popular because it allows people to donate money anonymously, but many argue that it is shrouded in secrecy and can be undemocratic and a front for corruption.
In introducing new laws allowing this type of funding, the Modi government also scrapped a number of requirements aimed at increasing transparency in political funding. Previous laws that placed limits on corporate donations have been repealed, and companies are no longer required to disclose their donations. As a result, foreign companies, which were previously not allowed to fund political parties in India, are now able to do so through their Indian subsidiaries.
“EB has legalized backroom lobbying and unlimited anonymous donations,” said ADR chief Major General Anil Verma (retired). Mr Verma said confidentiality regarding the identity of donors was problematic. “It could be a big company, it could be a player raising illegal funds through shell companies. We don't know who is contributing. This is what many believe is legalized and institutionalized corruption. It has become something that is called.”
How will electoral bonds benefit the Bharatiya Janata Party?
The Bharatiya Janata Party is the biggest beneficiary of electoral bond donations. According to data from the Election Commission of India, 57% of total donations through EB from 2018 to March 2022 went to the Bharatiya Janata Party, amounting to 5.271 billion rupees (approximately $635 million). ) reached. By comparison, the next largest political party, the Indian National Congress, received 952 million rupees (about $115 million).
EB rules stipulate that only publicly owned State Bank of India can sell these bonds. Many argue that this would ultimately give the government of the day unlimited power.
Economist Raghuram Rajan, former Reserve Bank of India governor, wrote in a Times of India article last year that “bonds are issued by public sector banks, so an unprincipled government can control the lists of donors and recipients.'' We may come to know about it,” he wrote. “Given the carrots and sticks at the government's disposal, few individuals or companies will donate large sums to the rebels through these bonds,” Rajan added.
EB also contributed to the electoral advantage of the BJP. “These may be called electoral bonds, but the rules state that the money must be used only for elections,” said Lokesh Batra, a former Indian Navy commodore who has spearheaded a campaign for greater transparency in campaign finance. There is no stipulation that it cannot be done.” “That means whoever has more money can use that money to buy up media space and increase advertising. Wherever there is money, it can be spent,” he added.
Critics say the discrepancy in funding received by the BJP and its closest rival, the Congress, helps explain the unequal playing field created by the EB. For example, in May 2023, the state assembly polls in the southern state of Karnataka pitted the Congress and the Bharatiya Janata Party against each other. The Bharatiya Janata Party could spend $197 million ($24 million) and the Congress $136 million ($16 million), according to affidavits filed by both parties with the Election Commission. .
The Modi government also has the power to decide when to sell these bonds. Although EB rules technically only allow bond sales during the first 10 days of a new quarter: January, April, July, and October, the government broke that rule and It allowed donors to buy these bonds on the eve of two important elections. This forms part of a case currently before the Supreme Court.
Why else are electoral bonds being criticized?
Critics say that by allowing unlimited anonymous donations from any source, electoral bonds open the door to “legalized corruption,” allowing corporate donors to effectively sponsor ruling parties and control governments. They claim that it allows them to influence decisions.
“Donors clearly view these anonymous donations as an 'investment,'” Verma said.
He also added that the introduction of electoral bonds raises questions about whether elections are truly free and fair. “Electoral bonds have eroded the concept of equality in electoral politics. Most donations go to the ruling party, regardless of who is in power,” he said.
“From the day the system was introduced, the government's priority appears to have been to keep the identities of donors and parties secret,” Batra said.
Who is challenging EB in the Supreme Court?
In 2017 and late 2018, two NGOs, ADR and Common Cause, and the Communist Party of India (Marxist) filed two separate petitions in the Supreme Court asking the Supreme Court to abolish the electoral bond system.
Now, six years later, the court is expected to finally rule on these cases. In November 2023, the court announced that it had finished hearing the petition challenging the bond system.
The agency said at the time that the EB system had “serious flaws”, created an “information black hole”, “focused on opacity” and “needs to be removed”.
This does not stop widespread sales of these bonds. EB's latest tranche was sold at 29 locations nationwide from January 2nd to January 11th. This money is likely to make up the bulk of each political party's political activity funds in the run-up to this year's general election.
