Opportunity to save democracy from big money

FEBRUARY 15, 2024, will be remembered as an important day in the history of democracy in India. The Supreme Court delivered a judgment declaring the electoral bond scheme (EBS) unconstitutional. “The issuing bank shall herewith stop the issuance of electoral bonds,” the court ordered.

The judgment is unprecedented because it overruled a scheme under which various political parties had received Rs 16,518 crore between March 2018 and January 2024, with a bulk of them going to the party in power at the Centre without anyone, with the possible exception of the ruling dispensation, knowing who had given how much money to whom.

The EBS was announced in February 2017 by the then Finance Minister in his Budget speech. It was introduced with the stated purpose of bringing transparency in electoral funding. But when the details of the scheme came to be known, it was clear that the EBS had removed whatever fig leaf of transparency the system had earlier.

The court’s judgment makes it clear that opaque, or even ‘selectively’ or ‘partially’ transparent or ‘selectively’ or ‘partially’ opaque, funding arrangements are not at all acceptable in this country because they are antithetical to democracy. The court has categorically upheld the principle of a ‘level playing field’ for all participants in the electoral process.

The court has also emphasised the citizens’ right to know about the sources of funding for political parties. This is a shot in the arm that the Right to Information Act urgently needed. This major citizen-centric law has been given a raw deal by the government and the authorities over the years, and even the judiciary has been lukewarm about it. This judgment provides the much-needed legal validation and support that this extremely important law needs.

Arguably, one of the most important issues that the court has dealt with is the contributions by corporates to political parties, which was the cornerstone or raison d’être of the EBS. As part of the scheme, the Companies Act was amended to delete a provision which said that companies could contribute only up to 7.5 per cent of their average profit over the last three years to political parties. This amendment created a situation whereby a company could legally donate as much money as it liked to parties and even a loss-making company could donate as much money as it liked. A parallel amendment to the Foreign Contribution Regulation Act (FCRA) made it possible for foreign companies to set up subsidiary firms in India and make contributions to these parties through these subsidiaries. This was potentially a very serious issue that could enable foreign entities to actually control political parties in India with massive donations.

The court possibly saw this danger and declared that the removal of the 7.5 per cent limit on corporate donations to parties was unconstitutional.

The court has directed the State Bank of India (SBI) to “submit details of electoral bonds purchased …to the ECI (Election Commission of India). The details shall include the date of purchase of each electoral bond, the name of the purchaser of the bond and the denomination of the electoral bond purchased.” It should further include the details of political parties that have received contributions through electoral bonds. The court has further ordered the SBI to “disclose details of each electoral bond encashed by political parties, which shall include the date of encashment and the denomination of the electoral bond”. The apex court has asked the bank to submit the information to the ECI by March 6.

It has further directed that “the ECI shall publish the information shared by the SBI on its official website within one week of the receipt of the information, that is, by March 13.”

This is a great boost to transparency because all that was kept hidden from the public eye for the past six years is going to be available for all to see. It has the potential to reveal at least some information, if not details, of the corporate-political nexus and quid pro quo that have been suspected over the years.

Apprehensions were expressed in some quarters soon after the judgment about the possibility that the disclosures directed by the court may actually not happen and ways may be found to prevent them from happening. The fact that these apprehensions may not be completely baseless is shown in a report published in a leading newspaper.

This perhaps indicates that the implementation of the judgment might not be easy. This is where those interested in democracy and transparency have their job cut out.

The court has done its job in an admirable way by giving an unambiguous and comprehensive judgment. The responsibility of implementing lies with the institutions, one statutory and the other constitutional, which have been directed to take action by the court — the SBI and the ECI. The onus is now on them.

But, in the final analysis, the buck stops with the ultimate owners of the country: we, the people. This attractive opening provided by the apex court to save democracy from the clutches of big money must not be missed.