THE details of the scheme of electoral bonds outlined by the finance minister in parliament have only confirmed what was apprehended when the proposal for electoral bonds was first announced in the January 2017-18 budget. The scheme is nothing but a way of harnessing corporate funding for the ruling party and facilitating the takeover of the political system by big money.

According to the finance minister, the electoral bond will be a bearer instrument in the nature of a promissory note. Selected branches of the State Bank of India would issue the electoral bonds purchased through a valid account. The bond would be in multiples of Rs 1,000, Rs 10,000, Rs 1,00,000, Rs 10,00,000 and Rs 100,00,000. The bond would be available at the designated SBI branches for ten days each in the months of January, April, July and October.

The bond will have a life of 15 days during which it can be donated to a registered political party who can encash it through their party’s bank account. The party does not have to disclose who it received the bond from.

The finance minister claims that this will bring in more transparency and cleanse political funding. Such a claim is hypocritical and far from the truth. If transparency is the goal, the identity of the donor and that of the recipient party should be publicly known.

The system of electoral bonds will only facilitate corporate funding to the ruling party and open the way for legitimising bribery and corruption. Companies will have the incentive to provide huge contributions to the ruling party to earn its favour. Already through the last Finance Bill, an amendment has been made to the Company Law. The cap on companies giving funds to political parties of 7.5 per cent of the average of net profits earned in the previous three years has been removed. Further, the amendment had done away with the requirement which provides for disclosure of the name of the political party to which the company makes the contribution.

Thus, a company can give unlimited amounts as donations to a political party. Moreover, it is not obliged by the electoral bond system to disclose to which party it has donated.

The quid quo pro for getting an offset contract for the Rafale deal, or the various pay-offs for legalising the regulatory violations of a leading business house can now take the form of electoral bonds.

The donations made through electoral bonds will be through the State Bank of India, the biggest nationalised bank as per the scheme. Though the identity of the company or donor will not be made public, the government will have the means to find out the identity of such donors from bank data which can be accessed through government agencies. No company or big donor will risk the ire of the ruling party and government by giving donations to the opposition parties.

The donations made through anonymous bonds will only facilitate and legitimise bribery. As of now a company which wins a contract would have to pay a bribe illegally under the table. The electoral bond scheme will make all such kickbacks legal. For instance, if a commission of 10 per cent has to be paid by a company for getting a contract worth Rs 1,000 crore, all it has to do is to provide a electoral bond for the amount of Rs 100 crore to the ruling party. There is no way for the public to know about such a donation, nor can any investigating agency ask questions about it.

The other less noticed aspect of the electoral bond scheme is that it opens the way for foreign companies to fund political parties in India without it becoming public. In the Finance Bill of 2016, the government had amended the Foreign Contribution Regulation Act (FCRA) to treat contributions by Indian subsidiaries of foreign companies as funding from Indian sources. With this amendment of the FCRA, foreign corporate funding to political parties was legalised.

It may be recalled that all the amendments made to the Representation of People Act, the Reserve Bank of India Act, the Income Tax Act and so on were smuggled in through the Finance Bill. Since the Finance Bill is a Money Bill, these amendments were thus put outside the purview of scrutiny and voting in the Rajya Sabha.

The Modi government’s brazen effort to establish a nexus with the corporates for political funding must be resolutely opposed. The CPI(M), for one, will not accept the electoral bond scheme. The Party has consistently opposed corporate funding to political parties. An important aspect of electoral reforms would be to prohibit corporate funding to political parties. Instead, corporates should be allowed to donate to a State run trust which will utilise such money for State funding of elections.

The CPI(M) wants all donations to political parties, as per the existing provisions of law, of Rs 20,000 and above, to be recorded with the identity, address and PAN card details of the donor. There should be no violation of this provision as provided in the electoral bond scheme.

(January 3, 2017)