Transparency allows voters to hold both politicians and donors accountable for their actions and potential conflicts of interest.
Transparent electoral funding is crucial for the well-being of any democracy. It fosters public trust, strengthens accountability, and promotes fair competition in elections. When voters know who funds political campaigns, they can make informed decisions based on the values and interests backing each candidate. Opaque funding breeds suspicion and fuels conspiracy theories, eroding public trust in the political process.
Transparency allows voters to hold both politicians and donors accountable for their actions and potential conflicts of interest.
When funding sources are clear, citizens can scrutinize the potential influence of donors on policy decisions. Donors with vested interests may try to exert undue influence on politicians, leading to policies favoring specific groups over the general public. Transparency ensures that elected officials prioritize the needs of the people they represent, not the interests of hidden backers. Unequal access to funding creates an uneven playing field, disenfranchising smaller parties and candidates with limited resources. This can lead to a concentration of power in the hands of a few, ultimately limiting democratic choice. Transparent funding allows for a more level playing field, giving all candidates a fair chance to compete based on their ideas and merit.
Opaque funding channels raise the risk of money laundering and other forms of corruption, undermining the integrity of elections. Transparency makes it harder for illicit actors to influence elections, deterring corrupt practices and ensuring the legitimacy of outcomes. By promoting public trust, accountability, and fair competition, transparent electoral funding contributes to the overall health of democratic institutions.
It empowers citizens, encourages participation, and fosters a climate of political integrity.
While the benefits of transparent funding are clear, achieving it can be challenging. Finding a balance between protecting legitimate donor privacy and ensuring transparency requires careful consideration. Electoral bonds, introduced in India in 2018, aimed to bring transparency to political funding. However, their short journey has been riddled with controversy, culminating in their recent invalidation by the Supreme Court on February 15, 2024.
What were Electoral Bonds?
These were bearer instruments, similar to currency notes, available in denominations ranging from Rs 1,000 to Rs 1 crore. Individuals or companies could purchase them from designated State Bank of India branches and donate them to registered political parties within 15 days. The anonymity of the buyer and the opaque nature of transactions were key features of the scheme.
Promises and Problems:
Proponents argued that electoral bonds would curb opaque cash donations and black money in political funding. Electoral bonds were presented as a step towards more transparency compared to the previous system of anonymous cash donations. The requirement for KYC verification during purchase reduced the potential for completely anonymous black money donations. Supporters argued that the guaranteed anonymity and ease of use could encourage individuals and entities to donate through official channels rather than opaque routes, potentially increasing the overall transparency of political funding. Proponents argued that anonymity could protect individuals especially from smaller towns or rural areas from potential reprisals for donating to certain political parties. This was seen as a way to level the playing field and encourage wider participation in political funding. The use of pre-denominated bonds aimed to simplify the donation process for both donors and political parties, potentially reducing administrative burdens associated with handling individual cash donations.
However, critics raised concerns about the lack of transparency. The anonymity offered by electoral bonds was the most significant point of contention. Critics argued it shielded large donors, particularly corporations, from public scrutiny potentially leading to undue influence on political parties. The lack of information about donors hindered public understanding of potential conflicts of interest. Studies suggested that electoral bonds primarily attracted donations from established political parties potentially further marginalizing smaller or newer entrants. The anticipated shift from cash to formal donations wasn’t fully realized. Concerns remained about the misuse of electoral bonds, such as channeling them through multiple individuals or entities to circumvent donation limits.
Legal Challenges:
Petitioners argued that the anonymity of donors violated the right to information enshrined in Article 19(1)(a) of the Indian Constitution. Voters, they argued, had a right to know who funds political parties to make informed electoral choices. Critics contended that anonymity benefitted large donors, particularly corporations, giving them undue influence over political parties compared to smaller donors. This was seen as a violation of the principle of equality before the law. Opponents argued that anonymity hampered accountability in political funding, making it difficult to track the source of donations and identify potential conflicts of interest. The scheme limited the Election Commission’s power to regulate political funding, raising concerns about its effectiveness in ensuring fair and free elections.
Final Verdict:
A five-judge Supreme Court bench unanimously declared the electoral bond scheme unconstitutional. The Court highlighted the anonymity feature was deemed incompatible with the right to information hindering informed decision-making by voters and eroding transparency in political funding. The Court held that the limitations on the Election Commission’s powers under the scheme were unreasonable and undermined its ability to ensure electoral integrity. The Court found no compelling interest justifying the anonymity granted to donors outweighing the concerns of transparency and accountability.
The Road Ahead:
The Supreme Court’s verdict has effectively ended the chapter on electoral bonds in India. The judgment has been welcomed by transparency advocates, but the question of reforming political funding remains. As India seeks alternative solutions, striking a balance between transparency, accountability, and legitimate donor interests remains a key challenge.
Dr. Daisy Sharma is Assistant Professor, University of Rajasthan, Jaipur
