Alternatives to Electoral Bonds: To Enhance Transparency in Political Funding

Context

This editorial is based on the news “S Y Quraishi on electoral bonds: No going back to square one” which was published in the Indian Express. 

• Following the Supreme Court’s ruling that deemed the electoral bonds scheme unconstitutional, the SBI was instructed to hand over its data to the Election Commission of India which has disclosed it to the public.
• Since the data released by the SBI is partial, it would be impossible to match the donors and recipients. 

Opaque Election Funding: Who Are the Donors?

• Donation by Unlisted Companies: Unlisted Well-known major companies are not among top Electoral Bond (EB) purchasers. Most donor companies are unlisted and unknown.
• Possibility of Shell Companies:The donation amount of some companies is greater than their net profit. Some top donors have questionable pasts or IT issues. 
  • This raises the possibility of shell companies set up solely to donate funds.

Electoral Bonds and the Struggle for Democracy

• The Supreme Court strikes down the Electoral Bond scheme as unconstitutional.
• Data on donor companies now partially available on the Election Commission website.
• Analysis reveals opaqueness and potential for quid pro quo corruption.

Importance of Transparency in Political Funding

• Free and fair elections require transparency.
• Voters have the right to know donors and amounts.
• Opaque funding leads to corruption and crony capitalism.
• Transparency crucial for good governance and democracy.

The Way Forward: Alternatives to Electoral Bonds

• State Funding of Political Parties:

• • Based on electoral performance (e.g., 100 per vote)
  • Banning corporate donations to parties.
  • Independent audits of party accounts by third party auditors.

• National Election Fund:

• • Corporates and private entities donate to the central fund.
  • Income tax concessions for donations.
  • Addresses concerns of corporate harassment by rival parties.

State Funding of Political Parties: Pros and Cons

• Pros:

  • Reduces corruption and arm-twisting of donors.
  • Enhances the reputation of political parties.
  • Small investment for honesty and transparency in governance

• Cons:

• • Public bears the cost (possible solution: small cess)
  • Potential rise of non-serious candidates.

International Practices and Applicability to India

• 71 out of 180 countries provide state funds to parties based on votes.
• Prevalent in Europe (86%), Africa (71%), Americas (63%), and Asia (58%).
• Operational details can be discussed and resolved.
• No reason why it cannot work in India.

Conclusion

• Although the Supreme Court judgement averted catastrophe but did not resolve the issue.
• Debate must shift to finding alternatives for transparent political financing.
• State funding of parties and National Election Fund are viable options.
• Transparency is crucial for the integrity and character of Indian democracy.