Surpassing every concern and suggestion, the BJP government first legalized the controversial electoral bonds scheme and then, in January 2018, notified rules for the same. According to these rules, SBI would sell these bonds to the donors in four 10-day windows in January, April, July, and October every year and an additional 30-day window in the years of a general election. These bonds needed to be redeemed within 15 days from the date of purchase by the political parties. This limited sale window was a measure suggested by the RBI as a precaution against money laundering (Original RBI’s recommendation was to sell bonds only twice a year for a short duration of time).
But just before the May 2018 Karnataka state elections, Finance Ministry opened an extra ten days window as an exceptional case on the instructions of Prime Minister’s Office as claimed in the files of Finance Ministry itself. Exacerbating the situation that started as an exception became a precedent, and another particular window for selling of electoral bonds was opened in November 2018, ahead of significant assembly elections of Chhattisgarh, Madhya Pradesh, Mizoram, Rajasthan, and Telangana. This time the source of this instruction was not mentioned.
The suit was emulated before the 2019 general elections as well, where the Union government insisted on an extension of 5 days to the 30-day window. However, this time the Supreme Court, who was hearing petitions challenging the validity of this scheme, asked the government not to violate any defined rules.
The core argument of introducing the electoral bonds scheme was to ensure anonymity to donors who express reluctance in donating by cheque or other transparent methods as it would disclose their identity and entail adverse consequences as claimed by the government. Nevertheless, there exists a serial number on the electoral bonds to keep an audit trail with the SBI, which can be provided to the enforcement agencies requested. This implies that a donor will never get anonymity from the government of the day, and the only people in the dark will be the opposition parties and the citizens.
On the contrary, another RTI filed by Venkatesh Nayak showed that no representation or petition or communication was being received from any unspecified donor, regarding the need for maintaining the confidentiality of their identity while making donations to political parties.
Furthermore, another bill that needs to be amended to make the electoral bonds scheme a reality was the Companies Act, which permitted only profit-making companies to donate money to a political party. The provision had also put a cap on the donations that companies could make annually and forced them to disclose to which party they were donating money. However, lacking a majority in Rajya Sabha at that time which might lead to obstruction in passing the proposed amendments. Hence, the government decided to add the most controversial parts of the amendment in Money Bill because, under Article 110 of the Indian Constitution, a money bill does not require to be passed by the Rajya Sabha.
To proceed with this route of bypassing Rajya Sabha, Law Ministry was consulted, which responded that this illegal step was a one-off exception and urged the government to “avoid considering this practice as a precedent.” The law ministry concluded that “in a strict sense it may not be considered as a money bill,” but signed off anyway according to the documents obtained by transparency activist Saurav Das, a member of the National Campaign for People’s Right to Information (NCPRI).
Another interesting point to note in context to this whole scheme is that the banking fees, commissions, printing costs, and associated charges with electoral bonds are neither paid by the anonymous donor nor the recipient political party. The money is paid from the Consolidated Fund of India, a Government of India account that includes all direct and indirect tax revenues. Hence, ordinary citizens end up paying for providing a secure infrastructure of banking channels, accounts, and printing presses that facilitate political donations.
Currently, the Supreme Court of India is hearing a Public Interest Litigation (PIL) filed in 2017 by Association for Democratic Reforms (ADR) and the Communist Party of India (Marxist) seeking a stay on the scheme. An interim order in early 2018 put some curbs on the scheme, but a final decision in the matter is still pending from the Apex court. Meanwhile, the Central Information Commission (CIC) asked the government in January to reveal the names of those who requested that donors buying electoral bonds remain anonymous.
All the documents related to this series can be accessed here.