Transparency in Electoral Financing and Electoral Bonds

Oct. 7, 2020, 2:17 a.m.   suryasikha98  
Economics and Law   Pens of Law students   Public Policy    

Profile of the Author: Bhagyashree Chauhan is pursuing her final year in BBA LL.B. from Symbiosis Law University, Hyderabad. Her primary areas of interest are Constitution and Socio-Legal issues.

While political funding is a required component for political parties to play their role in the democratic process, the cornerstone of a well-functioning democracy is accountability and transparency in the funding of politicians. The lack of transparency of political funding sources encourages bribery and gives rise to a quid pro quo between major donors and politicians.[i] Policy choices are consolidated in societies where parties or political leadership are too dependent on support from a few preferred contributors or supporters. When one party has indomitable leverage to excess campaign finance, the equitable playing field gets diminished.[ii]

In India, recent reforms in political finance have done little to make parties responsible for the money they earn and have legitimised secrecy instead. India is heading in the opposite direction in the name of accountability Political finance has long served as the wellspring of corruption in India. For the average Indian, it is hardly breaking news to learn that the murky flow of funds that drives politicians and political parties largely explains why corruption remains prevalent in India.

As the cost of elections has risen, in return for easy campaign cash, politicians and bureaucrats under their influence have mastered the art of skilfully leveraging the legislative and policy levers at their disposal. And if an ambitious candidate is so fortunate to win a higher office, the search to restore one's re-election funds starts anew. Campaign spending is an expense, one that, while you're in power, all of it pays back the principal and interest. Although these factors are well established, public financial support 's dark tides often stream off from public view.[iii]

On the contrary, it can be posed to an angle of which is why the voter wants to know the source of party funds at all. This is simply because, when voting, the voter is entitled to make an informed choice. A crucial part of ascertaining this decision is to coming to the interpretation where the transfer of money and its circulation or implications might highlight the repercussions of such a choice. It is also essential to ensuring accountability.[iv] Furthermore, it seems difficult at best to request that the identity of the donor would remain undisclosed even to the campaign, considering that it is impossible to prevent donors and parties from interacting with each other altogether. If this strategy guarantees that only the public is kept in the dark, it is fair to ask if accountability is realistically improved by electoral bonds.[v]

This strategy provides a solution to the cash donation crisis, but it does not bode well for India's democracy to correct just one element while concealing the majority of the system in further obscurity. Essentially, electoral bonds fail to offer useful information to the voters that lets them make more informed choices about voting. This seriously contradicts the assertion of accountability made by the regulation. Fundamentally, if political parties do not work for the people, how can people be represented by the governments they form?

As stated earlier, after amendments to Section 182 of the Companies Act, the provision for companies to report the information of benefited political parties in their profit and loss declaration was eliminated. In addition, the names of individuals or organisations giving less than Rs 20,000 or those who contributed via Electoral Bonds do not need to be reported by parties. Anonymous contributions (from shell corporations, international or government corporations) have been allowed by these non-disclosure clauses. Section 77 of the RPA, 1951, only governs the spending of 'individual' candidates and not parties. In the absence of a cap on party spending, total expenditure can be higher than individual expenditure limits, since these limits do not explicitly extend to expenditure on behalf of a candidate by political parties or by other actors. It means that candidates might potentially benefit from major illegal expenditure on the part of other actors.

The Money Bill introduced last year also allowed bonds to be bought even by foreign firms, which was under challenge. At the hearing of the petition, the Supreme Court directed all the parties to provide the EC with details of the funds they had received in a sealed cover by 30 May, 2019 but did not, by way of an interim stay of the bonds, grant immediate relief.[vi]

The need for an hour is to get donors into the public domain as the scheme is updated for transparency. Shouldn't it be correct for the public to know who is financing political parties? In the political system, if rivals come to power, donors will still have a fear of re-evaluation. But this is not a response to not revealing it to the public. This is a fundamental question pending the judgement of the Supreme Court.


Q. What is the need of peeking into transparency in electoral bonds and financing?

Ans. The need for civilians to know where their money has been invested by the government as well as the need to ascertain the fact that the elections are being held fairly without any ulterior motives attached to the agenda of political parties participating in the election arises the urge to peek into the matters of transparency in electoral financing and bonds.

[i] Shelly Mahajan and Maj. Gen. Anil Verma (Retd.), Transparency and Accountability in Political Funding (India, April 4 , 2014) (07-10-2020,2:12 AM)

[ii] Election Commission of India, 2006

[iii] In Depth – Political Funding (India, 10th August, 2019) (07-10-2020,2:12 AM)

[iv] Devesh Kapur and Milan Vaishnav, Costs of Democracy: Political Finance in India, (New Delhi: Oxford University Press, May 25, 2018) (07-10-2020,2:12 AM)

[v] Rajagopal, Krishnadas, Give Info to ECI on Each Donor, Each Electoral Bond in Sealed Covers: SC Orders Political Parties (India, 12th April, 2019) (07-10-2020,2:12 AM)

[vi] Regulation of Foreign Involvement in Elections: India (24th July, 2020) (07-10-2020,2:12 AM)

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