The damage electoral bonds are doing

The story: In a democracy, political power should flow from people’s approval, as measured by results in elections. In practice, this system is often

The damage electoral bonds are doing

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• The story: In a democracy, political power should flow from people’s approval, as measured by results in elections. In practice, this system is often distorted by a number of factors, financial power being the most prominent of them. If large corporates or foreign groups start funding local political parties in a big way, a lot can change quickly.
• Foreign funding: It was found by the Delhi High Court in 2014 that Indian political parties took foreign funds in violation of the Foreign Contribution (Regulation) Act, 1976. Soon, the government brought amendments to the law {Foreign Contribution (Regulation) Act (FCRA), 1976, and Companies Act, 2013} which retrospectively set right the wrongs committed by multiple parties! In 2016 and 2018, the government amended the FCRA through the annual Finance Bills, to retrospectively legalise the violations.

• Arrival of electoral bonds: The biggest setback has been the lack of transparency in political funding due to the new electoral bonds.

1. In 2017, the introduction of electoral bonds brought a new form of anonymity to thousands of crores of donations. These bonds are such that only the ruling party via the State Bank of India (SBI) has a full account of all donations being made via electoral bonds.
2. The Parliament, the Election Commission and the Opposition parties do not have this information, nor do the public.
3. In effect, electoral bonds give political power to companies, wealthy individual donors, and foreign entities, thus diluting the universal franchise of one voter-one vote.
4. Earlier, foreign companies or companies where the controlling stake was held by a foreign company couldn’t contribute to political parties. Now they can. According to the ECI, this may allow unchecked foreign funding of political parties in India, leading to policies being influenced.

• Amendments in Companies Act, 2013: The Finance Bill of 2017 amended Section 182 of the Companies Act of 2013 to remove the requirement for declaring disaggregated donations to political parties. Earlier, only profit-making domestic companies could contribute to political parties; now loss-making companies can too. Also, the limit of 7.5% for corporate donations to political parties has been removed. With this, corporations are free to donate any amount of money and are not liable to declare the recipient of their donations.
• RTI gone: The Right to Information (RTI) Act of 2005 enables easier access to information held by public authorities. But above changes could in effect nullify the impact of transparency provisions even if political parties come under the Right to Information (RTI) umbrella.
• Summary: The Supreme Court can order full and real-time disclosure, to the actual benefit of transparency and accountability. Companies and political parties could exercise moral leadership and voluntarily disclose the identity of recipients and donors, as the Jharkhand Mukti Morcha recently did. In many advanced countries, elections are funded publicly. This ensures principles of parity and there is not too great a resource gap between the ruling party and the opposition. Until the elections get publicly funded, there can be caps or limits on financial contributions to political parties. Every vote is not equally valuable if companies can influence policies through hidden donations.