India’s top court lifts veil on political funding: 5 things to know

NEW DELHI — India’s Supreme Court has struck down as “unconstitutional” a contentious scheme known as electoral bonds, which allowed individuals and companies to make anonymous and unlimited contributions to political parties.

The landmark judgment comes just ahead of the general elections due in April and May. The system had been slammed by critics as advantageous to the ruling Bharatiya Janata Party (BJP), which takes in the lion’s share of political donations.

While the decision is unlikely to significantly hurt Prime Minister Narendra Modi’s popularity and the BJP’s chances of returning to power for a third straight five-year term, it does give the struggling opposition some timely ammunition.

Here are five things to know:

What are electoral bonds and how do they work?

Announced by Modi’s Finance Ministry in 2017 and launched the following year, electoral bonds were interest-free financial instruments that could be purchased by Indian citizens or companies from the government-run State Bank of India (SBI) to donate to political parties of their choice. Denominations ranged from 1,000 rupees ($12) to 10 million rupees.

The receiving parties — which could then cash the bonds within 15 days — had to be registered and must have received at least 1% of the vote in the last general election or state polls.

When introducing these bonds, the government said the aim was to bring in “clean money and substantial transparency” into the system of political funding, compared with the “total non-transparency” of cash donations. Yet the donors’ identities were confidential, and critics feared the government would be in a position to access the records through the state bank it controls — valuable data that could be used to influence contributors and grant favors.

India’s Prime Minister Narendra Modi waves to supporters as he arrives to attend a rally in Guwahati on Feb. 4.   © Reuters

What did the top court say?

In its ruling delivered on Thursday, the Supreme Court ordered the issuance of electoral bonds to be stopped. Within three weeks, the SBI must submit to the Election Commission of India the details of bonds purchased since April 12, 2019, including date of purchase, name of purchaser and denomination.

The SBI is also required to submit the details of political parties that received these contributions, while the ECI will have to publish the information shared by the SBI on its official website within one week of receipt by March 13.

“The question that we ask ourselves is whether the elected would truly be responsive to the electorate if companies which bring with them huge finances and engage in quid pro quo arrangements with parties are permitted to contribute unlimited amounts,” the court said.

“The reason for political contributions by companies is as open as daylight,” it added, pointing out that even Solicitor General Tushar Mehta, who appeared before the court on the government’s behalf, “did not deny during the course of the hearings that corporate donations are made to receive favors through quid pro quo arrangements.”

Who benefited the most?

According to the Association for Democratic Reforms (ADR) — an apolitical nongovernmental organization working on electoral and political reforms as well as one of the petitioners in the case — electoral bonds worth 165.18 billion rupees were purchased between March 2018 and January 2024.

The association said in a statement that the BJP declared donations worth 65.66 billion rupees between the financial year ending March 2018 and the last fiscal year, while the Congress party declared 11.23 billion rupees from electoral bonds during the same period. About 55% of the total electoral bonds declared by recognized political parties during this period were received by the BJP, it added.

Jagdeep Chhokar, founder member and trustee of the ADR, said that Thursday’s judgment restored faith in democracy, rule of law and the Supreme Court itself.

“It has comprehensively removed the latest mischief in the electoral system introduced in 2017, but we have to remember that the infirmities which existed in the electoral system pre-2017 still have to be worked on,” he was quoted as saying in the ADR’s statement. “In the euphoria of this judgment, we must not forget or overlook ground reality.”

Senior advocate Prashant Bhushan, who argued the case for the ADR, separately said the top court held that the program violated “the fundamental right to information of citizens to know about who is contributing this much money to political parties.”

He said the court also struck down an amendment that allowed companies to make “unlimited” contributions to political parties. Previously, companies could not contribute more than 7.5% of their annual profit.

How has the main opposition Indian National Congress party reacted?

Congress welcomed the judgment, saying the party had strongly opposed the bond scheme because “it was not transparent, could encourage corruption and could turn black money into white.”

“Every voter, citizen and journalist of this country has a right to know which company gave what amount of money to which party and what favor that firm got in return,” Pawan Khera, chairman of Congress’ media and publicity department, told reporters. “Today, the prime minister has been exposed … his corruption has been exposed.”

Calling the electoral bonds scheme “one-sided,” Khera said: “There was no level playing field for [the opposition]. Corporate houses were scared of giving funds to us because they did not want to [upset] the shehenshah,” using an Urdu word meaning “emperor” — an indirect reference to Modi.

“We are grateful to the Supreme Court and all the lawyers who fought to restore democracy in this country,” he said.

What does the BJP have to say?

“We respect the decision of the Supreme Court,” senior BJP leader and former Law Minister Ravi Shankar Prasad told reporters. He stressed that the Modi government’s decision to create electoral bonds was “undertaken for a very laudable objective to bring in transparency in electoral funding [and] to decrease the influence of cash on polls.”

He said that donors also wanted to remain anonymous, “which is not unnatural.” His reasoning was that contributors would worry that if they contribute to a particular ruling party, and then that party is replaced, the incoming government could turn against them.

On Congress’ accusations of corruption against the BJP, Prasad said, “Those whose DNA is based upon corruption and bribery, please don’t make those allegations against the BJP.”

The Indian Express newspaper cited BJP leaders as saying off the record that the party did not expect the Supreme Court ruling to have much of a tangible effect, though it was a “moral” setback.

“The verdict will not have any major impact on the electorate, nor will it hit our resources badly. But certainly, the opposition would use it to attack the government,” it quoted one of them as saying.

source : asia.nikkei.com