From Indias largest newsroom, I'm Arun George and this is the Times of India podcast. Or transparency or political party could be a declaration yog. Electoral bond was former. Finance Minister Arun Jaitley explaining in 2018. Why the electoral bond scheme would clean up political funding in the country and bring in greater transparency. Unfortunately, that hasn't
happened. And that's why A5 Judge Bench of the Supreme Court is hearing arguments on whether the scheme should be allowed to stand at all. Retired Major General Anil Verma is the head of the Association for Democratic Reforms, or ADR, which is one of the petitioners that has challenged this scheme. In today's episode, he explains why the electoral bond scheme is so biased in favor of certain
parties. He also explains why we should know who buys electoral bonds and whether there are possible alternatives to the existing system. But first, let's look at what electoral bonds were created to replace. Anil Verma says that despite the perception that electoral bonds are the only way to give political donations, the old ways still exist. So the electoral bond system is just the latest way for people to donate money to political parties anonymously.
All the other systems which were being used earlier are still there and that is direct donations by anybody, individual, company trust or any group. So the basic donations used to be by means of cash, by means of online donations, through the banks, by checks, by drafts, by D collections, then sale of coupons, when some of the national parties do that in a big way. And these are basically the systems which are there.
At ADR you have documented this over years and I remember reports that would say that that the BSP would say get donations of 99,999 and never 20,000 so that they would not have to disclose the donors. How transparent was this system? As it stood. Even then, bulk of the donations used to be from unknown sources. This percentage has been varying like about 8 to 10 years back when I joined ADRS and then it used to be almost 70 to 75% from unknown sources.
We still include electoral bonds also in the unknown sources component by the way. So even now it is in the range of 60 to 65% from unknown sources. The rest of the thing which is from the known sources is as per the law, any donation to political parties which is ₹20,000 and above has to be declared. So below that it it is not supposed to be declared how much they are getting in the form of cash and other things. One really speaking doesn't know.
Before the creation of the electoral bond system, a popular way for corporate entities to make payments to political parties was through electoral trust. So corporates like the Tatas and Bharti Group had these electoral trusts which would make donations to political parties. In 2014, the Election Commission told these trusts to make the details of these donations public.
These trusts would also often donate to both the opposition and ruling parties to ensure a somewhat level playing field. But after the electoral bond scheme, Anil Varma says that these trusts are now donating far less funds.
So I think there are 1516 of them in the country as of now and they have a system wherein anybody, any institution, any individual, any company can donate to these electoral trusts and 99% of that donation is supposed to be transferred to the political party for which it is meant. Now in this they're supposed to disclose everything, the mode of donation, who is the donor, which bank, what form and all
that. What I have noticed is that the amount which used to be transferred to the electoral trusts has drastically reduced now. Over these last 2-3 years, since the time the electoral bond scheme was introduced, because why would the corporates want their attention to be disclosed in the electoral trust system? Then they can get away with it in the electoral bond system. Moving on to the electoral bond scheme itself.
Could you? Explain for somebody who's trying to understand now, What is it about the electoral bond system that makes it so opaque to public scrutiny? The government says that the electoral bond scheme is through the banks. Therefore the KYC is known. The whole process goes through a bank because this is like a bearer bond. Anybody can buy it, any individual, corporate or so, and then they can deposit in whichever political party is account that they wish to.
So the whole thing is through the bank. That part is agreed. But The thing is that when the electoral bond scheme was introduced by the government. All the major acts, that is the Reserve Bank of India, the Income Tax Act, the Companies Act and the RPA 1951. All these acts were amended. The identity of the donor is not known to anybody. Only the State Bank of India knows because these bonds are dealt by them. So obviously the State Bank of India knows.
The government also knows. And if they wish to know which party has got how much money from which donor, it's very easy for them to find out. There were many objections to the scheme at the very outset, but they were also set aside in favor of the scheme, which was pushed through Parliament in such a way that the lawmakers in Rajya Sabha never even debated
the issue. When this scheme was being introduced and various stakeholders were asked to comment on it, please take your mind back to what the Reserve Bank of India said and the Election Commission of India said and see the various reports of the Law Commission. But I'll just elaborate a little bit on the objections of the RBIRBI had very clearly said that this will open the doors of illicit funding. We all know about companies which are illegal and they are formed to convert black money
into white. So how difficult is it to route the money through banking channels? It is not difficult at all. Foreign funding is not permitted for the political parties. By amending the FCRA, etcetera. Now, how do we know that the funding is not coming from foreign sources and that our elections are not being affected by that? Election Commission of India had also raised similar objections to the scheme.
They changed their stand subsequently when the case came up for hearing in 2019. That's a different matter. But initially they had a lot of reservations about this scheme, but all those were just overlooked by the government and it was pushed through the parliament. Anil Varma says that despite the claims of the government, the bond scheme is hardly transparent. In theory, only the central government and the State Bank of India know who has bought the bonds and for whom.
But he says the public also very much has a right to know. It's not just the laws that were amended to ensure that the anonymity of donors was maintained. Anil Verma says that multiple institutions that ideally should have batted for greater transparency have reversed their stand over the years. The SBI says KYC, details of donors are confidential. December 20, somebody filed this thing that you know, give us the details of the donors of the electoral bonds to the political party.
In December 20, the CIC, the chief central Information Commission, dismissed this appeal. And they said that there was no larger public interest which was involved and the applicant was not justified in interfering with the right to privacy of the donors. So far, the Supreme Court of India has also refused to stay the sale of electoral bond despite repeated submissions and requests for hearing on the matter. And I think we have filed up to 8 or 9.
Appeals with the Supreme Court to hear the matter and you finally it is being heard. CI CS decision of December 20 is completely opposite to its decision of 2008 and 2013. In June 2013, again on ADR petition, the CICI declared that political parties are public authorities, but now it is.
Change the thing. So while the disclosure of the identity of a donor makes contribution by electoral bonds is not mandated by law due to the 17 amendments, the efficacy of RTI Act two in cutting out such information has been compromised. Now the decision of the CIC and the reluctance of the Supreme Court. Convey that there is no public interest in revealing details of donors donating electoral bond. Any apprehensions about illicit political funding are totally misconceived.
This isn't the first time that the Supreme Court or the Chief Justice of India is hearing a challenge to the electoral bond scheme. In 2021, the Supreme Court, headed by Chief Justice SA Bob Day, told parties to give details of electoral bonds to the Election Commission. I asked Anil Varma what happened after that.
Election Commission has the data in the sense that they have these contribution and donation reports, but the amount who is donating and all I don't think they have that information is only with the State Bank of and of course the central government. The court also said that, you know, it's very easy to sort of correlate the two and you know, anyone who really wants to can do it.
So what is the need? There has been a little bit of reluctance on the part of Supreme Court to hear this electoral bonds case because it is a very sensitive case. Thousands of crores of rupees of donations are coming in through this thing and all the parties are involved, All of them are recipients. I think that is why the Supreme Court is also treading very carefully in this, though at
that time, the bench said. That it's a very weighty matter, grave issue requires great deliberation and all that. But they didn't do anything after that when the political party submitted everything in a sealed porn. And that was the end of the story. It all went into a deep freezer. In his first statement to the Supreme Court before the hearing of the case started. India's Attorney General R Venkataramani submitted that citizens do not have a right to know the political funding
through the electoral bonds. Under the constitutionally guaranteed right to freedom of expression and speech. Venkataramani argued that they can be no general right to know anything and everything without being subjected to reasonable restrictions. AD Rs Anil Verma does not agree and says it really raises the question of whether political parties are answerable to the people or not.
More importantly, given the money paid by the nation's citizens are being used to fund the system, he says. We are entitled to greater transparency. Ironically, the printing of these bonds and the SBI State Bank of India's Commission for facilitating the sale and purchase of the bonds is paid from the taxpayers money by the Central now given that the people's money is being used to give benefit to political parties.
It again raises the question whether or not the political parties are answerable or accountable to the people. Our standard is that the citizens have a right to know where the political parties are raising funds in a legitimate manner and not using the electoral bond scheme just to fill their coppers, and the public interest should outweigh the claims preventing such crucial information from being accessible. It also needs to be emphasized.
That political parties are operating in public domain and transparency in their working and financial operation is essential for citizenry to access, for exercising an independent and informed choice. Therefore, this argument, which the Attorney General has given it, doesn't hold much water. I mean, they say that the public doesn't have the right to know. Basically, it's your money paid as various taxes that's paying for the electoral bonds, and yet you can't know who's buying the
electoral bonds. But the central government knows who's paid the money and who's received it. It can make sure that no illegal funds are in the political funding system. Shouldn't that be enough? Well, for one, it implies that only one party, the one in power in the central government, can know who's donating to whom. This, in turn, could mean donors to other political parties could
be targeted. But more importantly, at a time when industrial houses are accused of getting undue favors from governments, AD Rs Anil Verma explains why it isn't enough for just the central government to know who the donors are, how much they're giving, and to whom. The main thing is tell who are the donors. That is all because these bonds are sold in the denominations of 1,10,00,000, one lakh and 10,000 and so on. Bulk of the donations are in the 1,00,00,000 denomination.
So who's doing that? It is very obvious that it is the corporates who are doing it. If we want our policies and systems and everything to be made by some corporates who have a quid pro quo arrangement with the political parties, then that is how the democracy will run. But is that really the way we want things to go? At least we don't think so as it stands. A total of 24,000 electoral bonds have been sold so far and they're worth 13,700 crore
rupees. This is between 2000 18 and July 2023. A majority of the electoral bonds bought, which is over 50%. Were worth over ₹1,00,00,000. Anil Verma says that as it stands. Parties in power, within the central government or in states benefit the most. From the electoral bond scheme, he explains why. In two thousand 2122, the share of electoral bonds of the total income of eight national parties from unknown sources was 83%. So 83% from electoral bonds only. It has become the preferred
thing. From our assessment, it is common practice that whichever party is likely to win elections gets more funding from the corporates. Especially if you analyze the electoral trust scheme, you'll find that some of the trusts they are donating to both the major parties. To a larger extent to BJP, to a lesser extent to Congress, because for the simple reason that BJP is in power. So if tomorrow some other party wins the election, the corporates will start donating
more to them. Even now, some of the parties say that we are opposed to the electoral bond scheme just because they are from the opposition now. But they are all receiving funds from electoral bonds. If they are opposed to it, then why are they receiving it? And they're receiving a good amount, substantial amount. Even the regional parties are receiving substantial amount. So there is a bit of a duplicity and hypocrisy in this whole
thing. You're also saying that basically this system as it stands would favour A ruling party, not necessarily the central one. But even at the state level it would favour A ruling party rather than non ruling party. Yes, yes. We have carried out a study amongst the regional parties or this thing. TMC has got the maximum amount of money from electoral bonds. Similarly, their TTP has got. Similarly, in Tamil Nadu, DMK has got, in Orissa BJD has got and at the central level, BJP has got.
So it is a clear indication that ruling parties are getting electoral bonds, not surprisingly. The BJP, which introduced the scheme, has got. The most money till. Date through the Electoral Bond scheme. It has received over 5, 1000 crore rupees. So far, to put that amount in perspective, 5000 crore rupees was the amount set aside. To give every 15 to 17 year old in the country and every senior
citizen in the country. Doses of COVID-19 vaccine in 2022, in comparison the only other national. Party that comes close to the BJP is the Congress with just under 1000 crore rupees in the same period. Anil Verma says one thing this difference in funding does is it ensures that some parties have a lot of money to spend on an election campaign while the others don't. This also means that if you're deciding to contest elections,
you'd. Need a lot more money just to compete, which in turn eliminates the rise of candidates not from the biggest. Political parties. So the stark difference in the share of donations coming to national parties reflects poorly on the level playing field and fairness. The direct corporate donation declared by BJP are at least three to four times more than the total corporate donations of all the other national parties.
In financial year 1718, it was more than 18 times that of all the other national parties, YSRC. An increase of 4906%, JDU 1605%, TRS 813% and BJD 104%. Now you just see this rise from corporate donations. It's all because of the electoral mode, so the whitening gap. Between the funds which have been declared by the various political parties is more grave when the figures are compared between the national and the
regional parties. The 2017 reforms could not address the issue of lack of level playing field and unequal access to resources amongst the recognized political parties. The inequity that we observe here is not marginal. But significant enough to pose a threat to the ideals of democracy. This also discourages meritorious candidates, especially those from the marginalized groups and women who are short of resources.
There is no comparison between the huge difference which is there in the amounts received by the ruling parties versus the others, so obviously the level playing field has been skewed. One would argue, or maybe even certain parties would argue, it has always never been a level playing field. There's always been a party that has had an inherently huge advantage over others. Would you say that this gap is bigger now? Yes, yes, yes, yes.
This type of difference was not there and this is increasing by the year it is going on increasing by the. As Anil Verma has already pointed out, there's no way for a common man to know who's funding which party and. Possibly. Which policy? He says. Even a simple fix in the scheme would make it dramatically transparent. I personally feel that even if just the identity of the donors is disclosed in the system, it will make a huge difference if it is there in the public domain.
If they're on the Election Commission website, then everybody's aware if you're OK. So that would at least impose some portion on the political parties as to whom they're accepting funds from. That is the main thing right now. Nobody knows. Anil Verma says there is. No ideal. System of political funding. But the electoral bond system as it stands in India is unique and as opaque as it gets. And more importantly. It hasn't really stopped.
The inflow of illegal funds into the political system. There can be no ideal system of political funding. Of course, this electoral bond scheme itself is a unique thing. It is not there in any other country. I mean, there is no foolproof system, but yes. In the Law Commission reports and various other reports, they have all said that why should each and every PESA received by a political party not be accounted for?
And you are seeing what is going on, horse trading, hotels, moving MPs and MLAs here and there and all that which goes on. Do you think that is all done through the banks? What money is being used for that? If the Supreme Court verdict does go. Against ADR again like it did. But what for you are the big worries if the electoral bond system is allowed to stay in its current form?
Our biggest worry is this, only that we do not know what source of funding is. We have also been saying that there is a need to have a ceiling on the expenditure, which is done by the political parties. I mean, imagine for a country like ours, I understand that our GDP is increasing and we are developing, but is it really required that we spend more money than what US spends in its presidential elections? That is again my personal thing.
Is it really required? Do we need to spend so much money? Is there a serious case for that? Public funding or state funding of elections as people talk about? But technically we do have a ceiling, right? It's just that nobody follows. No. No, no, no, no, no, no. Please don't mix up the things. That ceiling is for candidates. They cannot spend more than 40,00,000 in the state assembly elections and 75,00,000 in the
general elections. But for political parties there is no ceiling and the bulk of the expenditure is done by the political parties. And even these candidates, of course we know they spent 10 times or more. Of course, everybody in their official statement states they have never crossed more than 50 to 60% of the authorized left. You remember Atal Bihari Bajpaiji had said in the Parliament that we all start our career with law with a lie that
is this expenditure statement. Today's episode was produced by Jayraj Singh and Anuja Singh. For a daily spotlight on people, ideas and stories that matter, subscribe to us. We're available. On TOI, Spotify, Apple, Google Podcasts, and all other platforms of your choice. For any news tips, e-mail us at TOI Podcast at Timesinternet dot in.