February 25, 2024

Travails of a Chaukidaar: Fraud and Deception of Electoral Bonds

Nilotpal Basu

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INDIANS are privy to the continuous theatrics of the prime minister. Underlining the ‘legitimacy’ of his government, he asserted the absolutely clean and corruption free credentials of its trademark governance! The catchphrase used was that the government would act more as a choaukidaar – a watch dog – for safeguarding the interest of the people. The leader’s aggressive assertion was echoed by smaller minions of BJP and RSS in a shrill cacophony by counter posing that corruption is ‘in the very DNA’ of the opposition.

However, from the very outset it became clear that this was more in the nature of Shakespearian ‘sound and fury, signifying nothing.’ The transfer of Rs 15 lakhs to the books of every Indian account holder proved to be a bad joke – ‘jumla’ in the words of the second-in-command Amit Shah himself. If at all, opacity has been the hallmark of the Modi regime, be it on the question of Rafale deal in which CAG became a complicit entity to cover up huge discrepancy in pricing or the abrupt substitution of prime minister’s relief fund with PM Care with neither transparency nor accountability.

True to this brand of measures that Modi regime had come to represent, ‘electoral bonds’ became its signpost. The government made tall claims of taking on black money in election funding through greater transparency by channelising primarily corporate contribution through the ‘legitimate’ banking instrument of electoral bonds. The anonymous and unlimited nature of corporate funding of elections was the basis of such an aggressive claim. However, the historic verdict of the Supreme Court on the electoral bond has put to place the government’s real intention. The government today stands exposed like that proverbial ‘emperor without clothes in the marketplace’.


The Supreme Court verdict has struck down the electoral bond scheme comprehensively. The scheme itself, as well as, the amendments to Income Tax Act, Companies Act, Foreign Contribution Regulation Act, Representation of People Act and RBI Act, stand being struck off. Overall, the apex court left nothing to imagination by declaring that the whole package was unconstitutional.

The foundation of the judgment is based on the fundamental right of information of citizens to know about the ‘political affiliation’ of corporate funding to political parties.

The core consideration of contestation between the government on the one hand and the petitioners – Association of Democratic Reforms (ADR), Common Cause and the Communist Party of India (Marxist) was between two ideas: right of information of the electorate so as to make an informed choice on the one hand and the confidentiality of the corporate donor on the other. The five-judge Supreme Court bench were unanimous in their conclusion with the Chief Justice DY Chandrachud writing the order for four judges while Justice Sanjiv Khanna wrote a separate, but concurrent judgment upholding the complete lack of constitutionality of the electoral bonds. Elaborating, the bench explained that the amendments are violative of the Right to Information under Article 19 (1) (A) and that unlimited corporate funding violated and undermined prospects of free and fair elections. The court was categorical that information about corporate contributors through electoral bonds must be disclosed as the donations by corporates are essentially for quid pro quo purpose. The amendments to the Companies Act permitting unlimited political contributions by companies, even if they were loss making was arbitrary and unconstitutional. In fact, the electoral bond scheme also allowed Indian subsidiaries of foreign corporates to contribute notwithstanding the far-reaching implications for national sovereignty of our electoral democracy and the right of the Indian citizens to form legitimate Indian governments.  

The 232-page judgement with CJI on behalf of himself, as well as, three other judges authored 158 pages while Justice Khanna’s was a 75-page concurring opinion. The government’s initial defence obviously was to stonewall the judicial scrutiny contending that court must exercise restraint in deciding the case due to “preeminence and primary roles of legislature and the executive” in matters concerning the court has in its conclusion flatly rejected this argument by holding that “the true nature of the law” did not indicate that the scheme was in the nature of an economic policy. Though the amendment to Section 31 of the RBI Act could be considered a financial provision, the key features of the scheme – anonymity and unlimited corporate funding – are related to the electoral process; thus, justifying and underlining the jurisdiction of the apex court.

Amendments introduced through the Finance Act ensured that no information would have to be disclosed in transaction of electoral bonds. Amendment to Representation of Peoples’ Act exempted political parties from publishing the details of contributions received through electoral bonds. Changes to Income Tax Act exempted political parties from maintaining a detailed record of contributions through electoral bonds. Amendments to the Companies Act removed any obligations to maintain details about bonds contributed to political parties, including its political affiliation. 

The judgement of the apex court is historic because it notes that there is a great political inequality in India and the inequality is driven by money. Consequently, people with deep pockets influenced political decisions. “Economic inequality leads to differing levels of political engagements because of the deep associations between money and politics.” It provides large corporate donors a “seat at the table” and allows them to influence policy. The voter, therefore, must have access to information to assess whether “a correlation between policy making and financial contributions” exists. Indicating that SBI being the only designated bank to deal with electoral bonds and the KYC in place, the gaps in the scheme exists to enable political parties to know particulars of the contributions made to them. The court rejected the claim of foolproof anonymity. Justice Khanna in his separate judgment had gone to available data to a great length to establish that overwhelming bulk of the electoral bond contributions were from bonds with Rs 1 crore denominations and overwhelming majority of recipients of the bonds were parties which were leading either at the central or the state governments.


As much as the claim of the Modi government about its intention to embark on a crusade against black money through demonetisation, that the stated objectives of the electoral bond scheme were similarly fraudulent rooftop announcements has now become clear. The crusade against cash has brought unlimited anonymous corporate funding through the backdoor. Interestingly, the scheme never asked the corporates who were purchasing electoral bonds to disclose the source of their money. Obviously, electoral bonds could “by implication also turn out to be a route for converting black money through the banking instrument.”  

The marketing of electoral bonds as instrument for electoral funding itself is unfounded. The absence of any regulation for the end use of electoral bonds by political parties makes it clear that electoral funding through electoral bonds went far beyond just funding of elections of parties; it led to financing them per se and allowing them to use these in any manner they feel necessary. This is also borne out by data which is annexed to the SC order showing that the total amount collected was far in excess of the cumulative expenditure limits for candidates prescribed by the Election Commission. That the electoral bond scheme gave a fillip to corporate funding of political parties which the apex court has found to be essentially in the nature of quid pro quo becomes clear of the astronomical jump in the amounts donated by corporates post introduction of the scheme.

That the scheme constituted a major conduit for consolidating and reinforcing the corporate nexus with the ruling dispensations is the most startling endorsement which the SC’s historic verdict underlines. Obviously, BJP is running for cover. It goes without saying that there are other parties which have been beneficiaries of BJP’s grand scheme of fraud and deception, but as initiators BJP’s disproportionate responsibility for financing itself with the purpose of making financial gains and most importantly, highjacking democracy can never be ignored. Of course, with its influence limited to a single state, the contribution received by TMC which constitutes 95 per cent of its total earnings is definitely going to raise many eyebrows.


With concrete directions  to the SBI and the Election Commission, the judgement  has set out a commendable course for reversing the setback to electoral democracy in the country by making corporate funding transparent for paving the way towards a level playing field. However, this exercise of which corporate funded which party is not for the entire period of the life of the electoral bond scheme. The very fact that despite the enormity of the implications of the apex court’s conclusion of declaring the electoral bond scheme as comprehensively unconstitutional, the delay in drawing this conclusion has contributed to the exacerbation in the present levels of “economic inequality” between political parties. Further, the apex court’s conclusion would leave room for the question as to whether moneys received by the political parties accessed through an unconstitutional instrument can be retained with any level of legitimacy! 

The Communist Party of India (Marxist) has already expressed its sense of welcome over the judgment. It is indeed heartening for us that our contention at every stage in the battle to delegitimise the electoral bond scheme right from the day amendments were introduced in the parliament to the notification of the scheme now stands vindicated. We have been sincere in fighting the pernicious attempts of the government in all fora by finally approaching the apex court for relief. We have reinforced our credentials by not opening the designated SBI account and denied ourselves any opportunity to even receive any corporate donation through the electoral bond route. This was noted during the proceedings in the Supreme Court by the CJI himself.    

Therefore, we feel empowered to take it upon ourselves to rigorously pursue the struggle for the legitimate electoral reforms along with other political forces who will be interested in joining this shared battle for a more transparent manner of political funding, particularly, electoral funding. That is the core area to safeguard our democracy. Breaking the nexus of corporates and and politics is a paramount imperative.  





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