Herald View: Why the electoral bonds judgement is too little, too late

On 15 February, after what seemed like an eternity, the Supreme Court of India finally pronounced the electoral bond scheme ‘unconstitutional’. It took them seven long years after the first petitions were filed challenging the scheme—and perhaps a fair assessment of the cost of this delay will be possible only after the upcoming Lok Sabha election.

For if these elections are gamed, it will be in no small measure thanks to the thousands of crores ‘donated’ anonymously to pave the way to outcomes of choice.

For both donor and recipient, in quid pro quo deals that citizen-voters will most likely never learn about, even though the Supreme Court has now found the scheme to be in violation of citizens’ right to information.

For context, the Union government had argued in a written submission last year that the citizens’ right to know must be balanced with a person/ entity’s right to privacy while donating to political parties; that citizens did not have a ‘general right to know regarding the funding of political parties’; and that the ‘right to know’ itself is not a general right available to citizens. Not exactly an advertisement for transparent funding of elections.

Objections to the scheme were raised even before they were announced in the Union Budget of 2017 by the then finance minister Arun Jaitley. The initial objections came not from the ‘compulsive contrarians’ or civil rights activists Jaitley loved to mock—who didn’t know about it yet—but institutions such as the Reserve Bank of India (RBI) and the Election Commission of India (ECI).

Those objections and the stakes (most critically, election outcomes) were both very substantial grounds for our justice system to prioritise a thorough scrutiny without any delay. But our most learned judges took their time, which meant that an opaque, ‘unconstitutional’, sinister scheme was allowed a free run for seven years.

Was this enough time to manipulate the outcome of some elections? Is the pushback now—on the eve of another general election, when all the crores are in the party coffers already, available to be deployed at will— not a case of closing the stable door after the horse has bolted?

Three previous chief justices of India played a hand in letting the scheme have a free run, refusing to list the case, or hear the challenge and grant at least an interim stay to keep the scheme in abeyance till its merits could be properly assessed.

The implications of letting it run, even before a thorough appraisal, were too grave to ignore. Even a surface-level assessment revealed features that made the scheme suspicious. For example, the electoral bonds are freely transferable bearer bonds, which implies they can easily, anonymously change hands, and the original buyer of the bond needn’t be the ultimate donor.

So much for its supposed transparency because all these transactions, we were told, would have a banking footprint and not involve cash. Not true: only the original purchase is, of necessity, a banking transaction; being a bearer bond, it’s as good as cash and can be bought for cash, which also makes it a neat money-laundering instrument.

Suspect feature #2: the bonds could be bought only from the governmentowned State Bank of India, which also means that the so-called donor anonymity feature was a sham, because the government—and by extension the ruling party—would have easy access to donor information.

Does it make for a level playing field if the government and its investigative agencies have donor information—with all the potential consequences of that access—but nobody else does? These arguments were made by the RBI and the ECI.

The RBI had pointed out that making the necessary amendments in the RBI Act ‘would seriously undermine a core principle of central banking legislation and doing so would set a bad precedent’. It had also argued that creating a banking trail for donations to political parties was possible anyway through cheques, bank transfers and demand drafts.

The RBI reply (on Monday, 30 January 2017) to a late-hour finance ministry e-mail (on Saturday, 28 January 2017; the Union Budget was to be tabled on 1 February) soliciting its views on the proposed amendments noted: ‘There is no special need for, or advantage [in], the creation of an Electoral Bearer Bond, that too by disturbing an established international practice’.

The ECI had objected as well. In an affidavit to the Supreme Court, the ECI had explained that to exclude the reporting of donations received by political parties through electoral bonds would have ‘serious repercussions on the transparency aspect of [the] funding of political parties’.

In its submission to the Standing Committee on Personnel, Public Grievances, Law and Justice in May 2017, the ECI objected to the amendments in the Representation of the People Act exempting political parties from disclosing details of donations received through electoral bonds. It’s ‘a retrograde step’, the ECI had said.

On the other hand, in the leaky, admittedly flawed system the electoral bonds scheme had sought to replace, political parties had to compulsorily declare the details of donors who had given them more than Rs 20,000 a year.

Not to take anything away from the dogged persistence of all those who made this belated verdict possible, but the brutal reality of the timing of this judgement is that at this late juncture, it will make no difference to how the crores received anonymously through electoral bonds will shape the outcome of the next general election.