The March 15 release of entities and individuals who donated to political parties under the electoral bonds scheme has set the proverbial cat out of the bag. It marks a major legal milestone in the disputed area of transparency in political fundraising
In India, electoral bonds represent a relatively novel idea in the field of political financing. Electoral bonds were introduced in 2017 and allowed private citizens and corporate entities to anonymously donate an unlimited amount of money to any political party. The bonds were being bought by donors in fixed denominations from the State Bank of India (SBI) and given to any political party, which could cash them using a bank account until a historic decision from the Supreme Court in mid-February abolished the seven-year-old election funding system, just weeks before the Lok Sabha elections scheduled for April-May, this year.
The bonds exempted the recipient political parties from having to give the Election Commission of India (ECI), or anybody else, the donor’s name.
In accordance with the electoral bonds scheme, a bond was created with the characteristics of a bearer promissory note. According to the Association for Democratic Reforms (ADR), a bearer instrument is one that does not have the name of the buyer or payee, hence no ownership information is recorded and the holder of the instrument is considered to be the owner. Reforms to guarantee greater accountability and transparency in political fundraising have been called for in the light of the concerns expressed regarding electoral bonds. To stop any misuse of these instruments, some had proposed that stronger rules and disclosures be required.
The electoral bonds scheme for political fundraising was declared unconstitutional by the Supreme Court on February 15, citing violations of the right to knowledge and freedom of speech and expression guaranteed by the Constitution. In its ruling, the Court had ordered the SBI to give the ECI access to all electoral bonds that were cashed, starting from April 12, 2019, by March 6, 2024. A five-judge Constitution bench led by Chief Justice of India DY Chandrachud had criticized the electoral bonds scheme in February and ordered the SBI to release information about each bond that the political parties had purchased.
The bank thereafter had requested the Court for an extension until June 30, 2024, which was challenged by the ADR, one of the petitioners who had opposed the electoral bonds scheme in the Supreme Court.
The SBI in its plea had told the apex court that details of purchases of electoral bonds at the branches are not maintained centrally at any one place, but in two different silos. “No central database was maintained. This was done so as to ensure that donors’ anonymity would be protected,” the bank said. It also said that “retrieval of information from each silo and the procedure of matching the information of one silo to that of the other would be a time-consuming exercise”. Furthermore, the bank had stated that donor details are kept in sealed covers, which are deposited in the main branch in Mumbai. However, the top court on March 11 turned down the SBI’s request and set a 24-hour deadline for it to share the details.
To gather information on all bonds collected at its various branches across the country was a mammoth task. The timing made a difference. With March 31 being the last day of the financial year, banks are busy with closing. Hence, diverting resources to collect data on electoral bonds was a challenging task.
According to the SBI, it had asked for time not to hide the data, but to ensure that the data is collected and curated correctly and in an organised manner. However, despite a tight deadline, the SBI submitted the data on March 12 evening. According to the bank’s affidavit, a total of 22,217 electoral bonds were issued between April 2019 and February 15, 2024, before the Supreme Court scrapped the scheme.
Within this, 3,346 bonds were purchased between April 1, 2019, and April 11, 2019, of which 1,609 bonds were redeemed. Further, 18,871 bonds were purchased between April 12, 2019, and February 15, 2024, according to the affidavit. Out of the total 22,217 bonds purchased, 22,030 bonds were redeemed. The remaining 187, the bank said, was redeemed and the money was deposited to the prime minister’s national relief fund, according to the rules. Actually, the scheme allowed donors to purchase and donate electoral bonds to political parties. These were to be redeemed within 15 days, failing which the amount would go to the PM’s fund.
The SBI has provided the ECI with the date of purchase and denomination of the bond, the names of political parties who have redeemed them along with the relevant date and denomination, according to the compliance affidavit submitted to the Supreme Court. However, the affidavit does not mention whether the unique code on each electoral bond that could be used to match the donation to the party that received it is part of the data.
In the affidavit, SBI Chairman Dinesh Kumar Khara said the bank has ready records in which the date of purchase, denomination and name of the buyer were recorded and the date of encashment and the denominations of the bonds encashed were also recorded. According to a letter written by SBI’s deputy managing director to the ECI, the bank shared the data on electoral bonds with the ECI in two separate password-protected PDF files stored in a pen drive. A separate envelope containing passwords to open the PDF files was shared. The first PDF file contained the details of purchasers and the second had the names of political parties who encashed these bonds, according to the letter made available as part of the affidavit filed by the SBI in the Supreme Court. With the earlier March 6 deadline for the SBI to submit the data not being followed by the bank, the ECI had been asked to make the data public by March 13. The ECI uploaded the data on its website by 5 pm on March 15.
Chief Election Commissioner Rajiv Kumar said that the poll body will disclose electoral bonds data on time. “We have three pillars—disclosure, disclosure & disclosure. Disclose everything to people. The Commission has been in favour of transparency. The SBI has given us in time, and we have received it. We will disclose it on time,” he said when asked about the SBI sending electoral bonds data to the ECI as per the Supreme Court’s order. According to the data uploaded by the poll panel, the buyers of electoral bonds include companies such as Grasim Industries, Megha Engineering, Piramal Enterprises, Torrent Power, Bharti Airtel, DLF Commercial Developers, Vedanta Ltd., Apollo Tyres, Lakshmi Mittal, Edelweiss, PVR, Keventer, Sula Wine, Welspun, and Sun Pharma.
The parties that redeemed the electoral bonds include the BJP, Congress, AIADMK, BRS, Shiv Sena, TDP, YSR Congress, DMK, JDS, NCP, Trinamool Congress, JDU, RJD, AAP and the Samajwadi Party, according to the data.
Later, the Supreme Court on March 15 issued a notice to the SBI on the question of disclosing the unique number of the bonds. The top court was hearing a plea on SBI not sharing the unique alphanumeric code printed on each electoral bond which would have helped match donors with political parties. The release of that data will finally make electoral bonds a fully transparent process.
—By Abhilash Kumar Singh and India Legal Bureau