For Modi, transparency=anonymity

The Supreme Court, after sitting over the petitions for a year, has posted them for hearing on March 26. If it doesn’t order a stay, anonymous donations will be made to political parties in April

Photo Courtesy: Social Media
Photo Courtesy: Social Media

Jagdeep S Chhokar

Transparent: Easily seen through, recognised, detected, manifest, obvious, open, frank, candid.

Anonymous: Without any name acknowledged, as that of author, contributor, or the like, whose name is withheld.

Despite the dictionary meanings given above, can there be doubts whether ‘transparency’ and ‘anonymity’ mean the same thing? Please read on.

One section in the Budget speech by the Union Finance Minister in the Lok Sabha on 1 February, 2017, while presenting the Union Budget for 2017-2018, was titled “Transparency in Electoral Funding.” This section said:

“164. India is the world’s largest democracy. Political parties are an essential ingredient of a multi-party parliamentary democracy. Even 70 years after Independence, the country has not been able to evolve a transparent method of funding political parties which is vital to the system of free and fair elections. An attempt was made in the past by amending the provisions of the Representation of Peoples Act, the Companies Act and the Income Tax Act to incentivise donations by individuals, partnership firms, HUFs and companies to political parties.

Both the donor and the donee were granted exemption from payment of tax if the accounts were transparently maintained and returns were filed with the competent authorities. Additionally, a list of donors who contributed more than ₹20,000 to any party in cash or cheque is required to be maintained. The situation has only marginally improved since these provisions were brought into force. Political parties continue to receive most of their funds through anonymous donations which are shown in cash.

165. An effort, therefore, requires to be made to cleanse the system of political funding in India. Donors have also expressed reluctance in donating by cheque or other transparent methods as it would disclose their identity and entail adverse consequences. I, therefore, propose the following scheme as an effort to cleanse the system of funding of political parties…” .

In his ‘post-Budget media interaction’, the Finance Minister said, “These bonds will be bearer in character to keep the donor anonymous”.

The two statements given above seem to indicate that the Finance Minister considers ‘transparency’ and ‘anonymity’ to be synonymous, unless it is an Orwellian doublespeak.

What did the Finance Bill do to Electoral Bonds?: Four existing laws were amended to introduce Electoral Bonds: Income Tax Act (IT Act), Representation of People Act (RP Act), Companies Act, and the Reserve Bank of India Act. The amendments in the IT and RP Acts enabled and ensured that political parties did not (a) need to disclose who gave them electoral bonds, maintaining the ‘anonymity’ of the donors, as promised by the Finance Minister, and (b) to pay income tax on the amount of electoral bonds they received.

The Companies Act laid down that a company could not donate more than 7.5% of its profits to political parties. The amendment done by the Finance Bill removed this limit thus making it possible for a company to donate all its profits to political parties. It also made it possible for anyone to set up a shell company and for this company to donate whatever it likes to political parties without anyone knowing anything.

The above has been confirmed by the data of 2017-18. Out of bonds worth ₹222 crore that were sold, BJP received ₹ 210 crore and Congress received ₹5 crore and none of the other parties reported having received any funding via electoral bonds

Earlier there was a rule that a company which donates any money to a political party had to declare the amount and the name of the party to which the donation was made. This rule has been deleted, once again, in keeping with the promise of the Finance Minister.

What has actually happened? : “The Scheme of Electoral Bonds to cleanse the system of political funding in the country” was notified on January 2, 2018. As a result, each political party is required to declare the total amount of money they have received through these bonds but who gave how much money is not known.

Similarly, a corporate buying and giving electoral bonds to political parties has to only declare the total amount of money donated to political parties through electoral bonds but does NOT have to declare how much it gave to which political party.

As specified under the scheme, no one knows who bought these bonds… except the State Bank of India (SBI) which is the only bank authorised to sell these bonds and that too from designated branches.

With only State Bank of India knowing who buys the bonds, how long will it take for this information to move to the Reserve Bank of India, and in turn, to the finance ministry, is not difficult to guess. And once it goes to the finance ministry, how long does it take to reach the political party in power is also not a mystery. What that would mean is that the political party in power can, and in all likelihood will, exert pressure on the buyer of electoral bonds to donate the bonds to itself and not to the opposition parties. This will happen irrespective of the party in power. This is perhaps the reason why there was hardly any opposition to this provision in Parliament.

The above has been confirmed by the data of 2017-18. Out of bonds worth ₹222 crore that were sold, BJP received ₹ 210 crore and Congress received ₹5 crore and none of the other parties reported having received any funding via electoral bonds. What this means is that 95% of the total amount of bonds went to the BJP!

Action in response: There was a reaction from civil society. Association for Democratic Reforms (ADR) and Common Cause filed a PIL in the Supreme Court on September 04, 2017 challenging the constitutionality of the Electoral Bond scheme on two counts: (a) The scheme violates the citizens’/voters’ fundamental ‘right to know’ because it prevents citizens/voters to know about the source of donations to political parties, and (b) Passing the Electoral Bond scheme as part of the Finance Bill which is a ‘money bill’ violates the description and requirements of a ‘money bill’ given in the Constitution. The petition was admitted on October 03, 2017. Subsequently, a petition was also filed by the CPI(M) on January 19, 2018 opposing the scheme.

The matter stayed pending till recently. Finally, on February 19, 2019, a letter was sent to the Supreme Court Registry requesting for an early listing. Also, an application was filed on March 04, 2019, asking for a stay on the Electoral Bond Scheme. A hearing was held on March 11, 2019, where the Supreme Court said that it will hear both, the petitions and the application for stay, on March 26, 2019.

In the meanwhile, the government announced three more windows for the selling of electoral bonds: from March 01-15, April 01-20, and May 06-15, 2019.

With the next hearing in the Supreme Court being scheduled for March 26, 2019, electoral bonds will be sold from March 01 to 15. Whether the Supreme Court stays the scheme on March 26, so that the sale during April 01-20 and May 06-15 is stopped, remains to be seen.

(Jagdeep S. Chhokar is a former professor, Dean, and Director In-charge of IIM, Ahmedabad, and a founder-member of Association for Democratic Reforms. Views are personal)

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