Why the idea of Electoral Bonds is an eye-wash (Part 1)

this note is to vent my thoughts on the fractured will of the established political parties to usher genuine electoral reforms in India. I am talking about the introduction of the electoral bonds by the incumbent NDA government (only after the Election Commission recommended) lowering of the limit of making anonymous (cash) transactions from 20000 INR to 2000 INR .(read Section 29C of the Representation of the People's Act).

Lets look the at the latest modifications to the election regulations —

  • now anyone (individual or corporate) who wants to make contributions to the political parties anonymously can do so by electing to channel the payment in cash (Rs. 2000 bundles) without linking anything to the payment or
  • by buying the proposed electoral bonds via banking channels to ensure anonymity of contributions . In short a company can buy electoral bonds and handover the bond to any party of its choice , almost like cash.

It is clear ,at the time of writing this post, there is not access to information regarding of the report furnished under Section 29C RPI Act (supra). The provision ,merely mandates handing over of a report by the Political Party’s registrar to the Election Commission of India. The issue is being litigated and pending before the Supreme Court in a petition filed by activist filed by RTI activist Subhash Chandra Agrawal . This petition came after the Chief Information Commissioner interpreted the Definition of “Public Authority” (under section 2(h) of the Right To Information Act, 2005) to include Political Parties.

1[29C. Declaration of donation received by the political parties. —

(1) The treasurer of a political party or any other person authorised by the political party in this behalf shall, in each financial year, prepare a report in respect of the following, namely: —

(a) the contribution in excess of twenty thousand rupees received by such political party from any person in that financial year;

(b) the contribution in excess of twenty thousand rupees received by such political party from companies other than Government companies in that financial year.

(2) The report under sub-section (1) shall be in such form as may be prescribed.

(3) The report for a financial year under sub-section (1) shall be submitted by the treasurer of a political party or any other person authorised by the political party in this behalf before the due date for furnishing a return of its income of that financial year under section 139 of the Income-tax Act, 1961 (43 of 1961) to the Election Commission.

(4) Where the treasurer of any political party or any other person authorised by the political party in this behalf fails to submit a report under sub-section (3), then, notwithstanding anything contained in the Income-tax Act, 1961 (43 of 1961), such political party shall not be entitled to any tax relief under that Act.].

The argument in favour of the change is that now political parties cannot receive donation from corporates in cash ,therefore, will disincentivize generation of cash . This is incorrect for the reason that there is no upper limit to the number of people who can donate in Rs.2000 . No kyc is tagged. Therefore this argument is bogus.

Another argument being that ,private donations must be allowed to avoid prosecution in post election aftermath. I my opinion the benefits of privacy are less than of public disclosure. In a democratic polity , information about funding is directly linked to policy making . The public must know who is the donor to understand all policy debate better.

A needed alteration must be is no one can deposit cash without kyc tags (aadhar,pan). I don’t accept that this would remove the poor to donate/invest or support the political parties because the poor don’t donate invest or support anyone but themselves and for good reason.

I hope to compare the global regulations with that of India in my next post.