Electoral Bonds : The Biggest Scam of Independent India (Part-2)

 

Hi everybody. So let's have a recap of what we discussed till now. We were trying to understand the relationship between black money and power in Indian Politics by dividing it into four phases. We have covered three phases till now.

RECAP: We started from 1947 to 1986 when Congress was the dominant political party and how they tried to abuse their power to get more money and muscle power to win the elections. In the second phase(1986-2003) we saw the rise of criminals and black money in Indian Politics and no big changes were made. In the next phase(2003-2017) the government tried to bring in some reforms but it turned out to be corrupted and the circulation of Black Money continued. So as you can see no government or Prime Minister(from Nehru to Manmohan Singh) could even shake the foundation of this corrupted system

4th Phase: 2017-Present

On 8th November 2016, Prime Minister Narendra Modi announced the demonetization of 500 and 1000 notes. He said that this would eradicate all the black money from the economy.

The very next year(2017) the then Finance Minister Arun Jaitley introduced two reforms while presenting the budget to the Parliament.

The first reform was if the amount or donation made to a political party is more than Rs 20,000 then it can't be given in cash but only cheques.

But wait, this was the same reform that Vajpayee brought in and it was a failure as donations can be made in installments right?

VERY GOOD OBSERVATION!

But now there is a twist!!

Jaitley said that money can't be divided which means that it cannot be paid in installments now. So, now onwards the total amount given by an individual can be seen. Now the money donated will all be in white money.

The first reform was a success and was revolutionary as it was the first time the government had come in with a perfect reform.

The second reform he brought in was...

THE ELECTORAL BONDS

Now let us understand what electoral bonds

Imagine I want to donate money to a political party. So, I'll go to the State Bank of India and ask for an electoral bond. So SBI would give me a bond(kind of a certificate). The price of this bond will be in multiples of Thousands, ten thousand, One Lakh, Ten Lakhs, and One Crore.

So if I  want to donate 5001 rupees I can't do that.

The next step is that I'll be asked for my Aadhar Card and KYC. When all this is done I will be given an electoral bond and I'll be the owner of the bond.

This is what an electoral bond looks like. I will get only 15 days to give this bond to the political party. The party takes this bond and goes to SBI to encash the money. According to the government, all these bonds are anonymous. This means that the bond won't have my name on it.

So, when a political party gets this bond they don't know from whom they got this bond.

According to Arun Jaitley, there were two benefits 

One- The anonymity of the bonds prevents the companies from being pressured by other political parties.

Two- Since KYC is involved there is no business for illegal companies.

These reforms were truly revolutionary and thanks to the efforts of the Modi Government the circulation of Black Money was illegal and Black Money never came into our politics ever again. 

Well not all stories have happy endings

Problem with electoral bonds:

There are three main arguments :

1. Secrecy

2. Limit

3. Black Money

 Let us understand them one by one.

To understand secrecy let us take the example of two parties Aam Aadmi Party (AAP) and Dravida Munnetra Kazhagam (DMK).

The Aam Aadmi Party's formation was to fight corruption in India. So their leader Arvind Kejriwal said that whether any party does this or not, AAP will mention all their donors' names and the amount on their websites. But in 2018 they changed their minds. They removed that list from their websites. The reason was that before the state or central elections their donors used to call them complaining about threats they get from other parties. This was exactly Arun Jaitley's argument that electoral bonds could solve this problem.

Remember this statement I made earlier?

"So, when a political party gets this bond they don't know from whom they got this bond."

But the Supreme Court said that these
Political Parties know from whom they get donations

For eg: DMK knew that they got 509 crores from Future Gamings Co between 2018 and 19. So how does this secrecy work?

So were these bonds actually a secret or these were a secret but for you, me, and the public?

Second Argument is Limit: There used to be a limit of 7.5% of the profit of the company that can be donated. But this limit was removed. So, now companies can donate any amount of money to a party.

The last argument is Black Money. But Ani, Black money was removed, right?

Sadly no

In 2023 ADR(Association for Democratic Reform ) an NGO found the above result. Congress's funds of 61%, BJP of 52%, and TMC(Trinamool Congress) of 93% came from these electoral bonds.

There were criticisms inside the BJP government itself.

One from the Finance Ministry itself.

Secretary of the Ministry Subhash Chandra Garg said that these corporate funds can only benefit the ruling party but later he changed his mind after that.

Other  from the Reserve Bank of India (RBI)

RBI argued that this scheme would violate the Prevention of Money Laundering Act 2002.

Let's dive deep into this argument.

RBI said that though KYC is done and a legal company would donate it, they wouldn't know where the money came from. Let us understand with an example

So, let's say I have an illegal company and also I have a puppet legal company. If I want to donate to a party I will buy an electoral bond through the legal one but the money I am going to give, was earned by the illegal company(black money). And since the political party knew the company(illegal) I will convince them to help my illegal business to continue.

So, RBI said that a commercial bank like SBI shouldn't issue this bond. It proposed to issue these bonds by the RBI itself which would prevent money laundering.

Not only RBI, but even the Election Commission of India questioned this.

They wrote to the Law Ministry that the electoral bond would reduce transparency in the political funding. Their exact statement was,

Even the Opposition(Congress, AAP, DMK, JD(U), RJD, SP, BJD, TMC, TDP) criticized this scheme but later they too benefitted from this scheme. Only the Communist Party of India stayed away from this scheme.

Ok, now those were a lot of facts to digest. So let's call it off and continue it in the next blog. In the next blog, we will see how the Supreme Court intervened in this scheme.

REQUEST TO OUR READERS:

This is an extremely complex issue and even to research about and understand it takes a lot of time. We sincerely request you to read about this and share it with as many people as possible.

Thank you for reading

And see you in Part-3 of Electoral Bond.

Bye