Needed: Full Disclosure On Electoral Bonds

Context: The Supreme Court’s suggestion to ‘match the following’ on political donations is impractical and incorrect.

Changing paradigm of political funding in India

• In 2014: Congress and Bharatiya Janata Party (BJP) were guilty of illegally accepting donations from two companies registered in India but whose controlling shareholder was Vedanta, a foreign company.
  • This was in contravention of Foreign Contribution (Regulation) Act (FCRA), 1976, as the donations accrued from “foreign sources” within the meaning of law.
• In 2016 and 2018: The government amended the FCRA through the annual Finance Bills to retrospectively legalise the violations.
• In 2017: Electoral bonds were introduced, and anonymous cash donations to political parties reduced from Rs 20,000 to Rs 2,000 to ensure greater transparency in political funding.

Issues with the electoral bonds:

• Anonymity: Introduction of electoral bonds brought a new form of anonymity to thousands of crores of donations.
  • Earlier, only profit-making domestic companies could contribute to political parties; now, loss-making companies can too.
  • Earlier, foreign companies or companies where the controlling stake was held by a foreign company couldn’t contribute, now they can.
  • Even if registered companies filed annual financial statements, many do not disclose political donations. Crucially, political parties do not need to disclose their electoral bond donors either.
  • There are close to 25 lakh potential donors comprising just companies and firms.
  • Legal support:
    • Firms, unlike companies, have no regulatory mandate to submit their annual reports except for filing their annual tax returns since their functioning is regulated by Acts other than the Companies Act of 2013.
    • The Finance Bill of 2017 amended Section 182 of the Companies Act of 2013 to remove the requirement for declaring disaggregated donations to political parties.
• Reduced public and legislative oversight: Only the ruling party via the State Bank of India (SBI) has a full account of all donations being made via electoral bonds, to itself and to Opposition parties.
• Delayed auditing: For instance, the audit reports for 2019­20 of major national parties were made available on the Election Commission’s website in 2021.

Conclusion:

• It is only RTI applications with the SBI that offer a glimpse into the crores of money funding political parties, and therefore influencing public policies.
• Companies and political parties could exercise moral leadership and voluntarily dis­ close the identity of recipients and donors, as the Jharkhand Mukti Morcha recently did.