Electoral Bonds: The Right to Know Who Funds Our Potential Parliamentarians

While electoral bonds currently have a legitimate framework, they are surely premised on questionable grounds.

The recent petitions before the Constitution Bench of the Supreme Court of India challenging the “selective anonymity” of the electoral bonds scheme of the central government raise a fundamental question, whether the right to privacy of select individuals or organisations reigns over the citizens' right to information under Article 19(1) of the Constitution.

The Supreme Court reserved its judgment in the three-day-long hearing with the only actionable direction at this stage intended for the Election Commission of India (ECI) to produce particulars of all donations received by every political party in India including the quantum of the donations and bank accounts in which the bonds were encashed up till 30 September 2023.

While we await the verdict of the apex court, it may be worthwhile to gauge the germ of the discord and what we as citizens stand to gain or lose if electoral bonds are to prevail.

Why Were Electoral Bonds Introduced in the First Place?

It’s no secret that funding of political parties often entails covert and underhand dealings.

In 2017, to curb the inflow of “black money”, the Central government introduced a series of amendments to institute a legitimate funnel of funding political parties in the form of electoral bonds, which effectively are promissory notes that citizens can purchase from a designated bank, State Bank of India (SBI) in this case and donate equivalent amounts to political parties of their choice.

These amendments effectively granted the parties three privileges. One, they were no longer obligated to reveal contributions received from electoral bonds under the Income Tax Act. Two, doors to foreign funding through electoral bonds were opened up for them and finally, the upper limit of corporate donation to parties was also removed.

Moreover, under the 2018 scheme, while only KYC bona fide customers could purchase these bonds, they were exempted from the declaration of their names or personal details on the bonds. So effectively, the donor's identity remained anonymous.

But, the irony lies in the fact that the identity wasn’t wholly shrouded. SBI, a central government body retained such records, and law enforcement bodies, again central government functionaries, were authorised to access details of the donors.

So, the electoral bonds' scheme espoused transparency for only one stakeholder, i.e., the government while bulwarking any access to information for all others, including the opposition parties.

What Do the Petitioners Contend?

Among other prayers, the petitions challenge the legitimacy of the scheme on three primary grounds:

One, it breeds selective anonymity by granting access to information of the donor to exclusively the donee while legitimising complete opacity for others.

Two, it manifests arbitrariness in allowing foreign funding for political parties while placing stringent embargoes on other entities like media and NGOs.

Finally, it sanctions kickbacks and quid pro quo arrangements since corporate donors can easily push for their vested interest being served by political parties, especially those in power through handsome donations while donning the invisibility cloak of the electoral bonds for the rest of the world.

How Do Electoral Bonds Impact Us?

While the electoral bonds currently have a legitimate framework, they surely are premised on questionable grounds with regard to democratic principles.

The Right to information is impliedly guaranteed under the right to freedom of speech and expression under Article 19(1)(a) of the Indian Constitution as held in several judgments of the apex court, including Bennett Coleman v. Union of India, (1973), and Shreya Singhal and Ors v. Union of India (2014) to name a few.

Thereby, access to knowledge about who is funding our prospective representatives becomes our fundamental right. Moreover, mere information about donors of electoral bonds cannot be justiciable under the reasonable restrictions specified under Article 19(2) of the Indian Constitution especially since, the design of the Scheme enables the monopoly of such information for only a particular section of the society, i.e., the ruling party.

The technical obstacle to this implied right that the government emphasised is that under the Representation of People Act, 1951, political parties may be registered entities but not constituted by any law of the Parliament or the Constitution. Consequently, they are not deemed “public authorities” liable under Article 19(1).

Relying on this, the Attorney General stated the electoral bonds protect the right to privacy of the donors who might otherwise be exposed to political vendetta. Further, he informed the bench that the “peripheral right” to information is itself a guaranteed right. This is worrisome because the division of a peripheral right and a guaranteed right does not have any watertight boundaries and if this was to be true, then the right to education and the right to privacy being read into Article 21 of the Constitution by this very court would be called to question.

Knowing Who Nurtures Our Potential Representatives

The government’s second defence was fulcrum upon the objective of arresting black money through the erstwhile systems of cash-based transactions. With the income tax declaration threshold being reduced from Rs 20,000 to Rs 2,000, cash channels for political parties can continue to flourish up to Rs 20,000 without any reporting.

The question that we finally come down to then is what purpose do the electoral bonds really serve? Influential individuals can depute others to purchase multiple electoral bonds to evade scrutiny while corporates can set up shell companies to do the same.

Parallelly, as the Chief Justice of India himself pointed out, putting a bar on cash is not practically possible. It continues to thrive and fill the coffers of the political parties as the third economy. Why then safeguard a discriminatory and partisan scheme when the root problem remains unhinged?

Just as the declaration of the criminal antecedents of a political candidate facilitates an informed choice among the voters, knowing who nurtures our potential representatives lends much-needed clarity to the citizens regarding the allegiances of the political parties.

Vedanta Limited’s preferential position as bidders of coal mines being directly proportional to their electoral bonds investments in the ruling party is another reminder about why beyond the technical barbed wires of whom can we ask for information and under what law, it is the principal of natural justice that upholds the citizens’ right to know and ask about the source of electoral bonds.

A crucial element of the arguments in this case highlighted the conundrum of the competing rights between the right to information of the citizens as voters and the right to privacy of specific citizens as donors of electoral bonds. The fear of repercussions and backlash on donors for donations to specific political parties is not unfounded.

However, given the scheme's liberal scope for the quantum of donations, it becomes the easiest channel to assert one's influence over the parties, irrespective of whether they are favourable to the larger public good or not. This can set a dangerous precedent if the chosen political party happens to be in power and statistics evince that currently 99 per cent electoral bonds are encashed in favour of the ruling party.

(Yashaswini Basu is a Bengaluru-based lawyer. This is an opinion article and the views expressed above are the author’s own. The Quint neither endorses nor is responsible for them.)