Hidden Hazards

Electoral bonds fail to make political donations transparent; provide back-door entry for foreign funds

- Soni Mishra

IN JANUARY THIS YEAR, when the seventh tranche of electoral bonds went on sale, the response was impressive. Bonds worth 350.4 crore were purchased. In October 2018, just ahead of the assembly elections in five states, donors displayed an even bigger interest, buying bonds worth 401.7 crore.

In the run-up to the assembly polls, the government decided that electoral bonds will be sold in March, April and May 2019. On the face of it, a hike in donations to political parties just ahead of elections is not wrong. It ought to be welcomed even, since the avowed purpose of electoral bonds is to enhance transparency in political funding.

But serious questions are being asked about whether the scheme has ended up increasing the opaqueness in the system, and whether it only serves to legitimise the already entrenched nexus of corporates and political parties. These questions arise from an analysis of the scheme’s format and norms, and from the statistics related to it since March 2018, when the first tranche of electoral bonds was sold.

An analysis by the Association for Democratic Reforms found that, after electoral bonds were introduced, more than half the contributions to political parties came from unknown sources. ADR’s study of the contributions reported by political parties for 2017-18 found that 53 per cent of the 689.44 crore that was received came from unknown sources. While 51 per cent of this came from donations below 20,000, which can be legally anonymous, as much as 31 per cent came from electoral bonds.

This figure concerns only the first tranche. The impact of the remaining six tranches can be visible only in the contribution reports for 2018-19. In the seven tranches issued so far, bonds worth 1,407 crore have been purchased.