Electoral Bonds – A Threat to Democracy, But Nothing Has Changed

Electoral bonds on sale again before Bihar elections 2020, despite objections from EC, RBI & Law Ministry

The Modi government continues the sale of controversial electoral bonds before Bihar elections. This is despite serious concerns raised by Election Commission of India, Reserve Bank of India and Law Ministry. 

(Image: Shruti Mathur/The Quint)

(This piece was first published on 27 October 2020. It has been republished in light of Supreme Court order on plea seeking ban on electoral bonds, ahead of Assembly polls.)

Video Editor: Abhishek Sharma

Did you just buy an electoral bond to make a political donation? And, were you told your donation would remain anonymous?

Well, unknown to you, the electoral bond carries a hidden unique alphanumeric code which is known to the State Bank of India – information that it could share with the government. So, if you donated to an opposition party, the government could find out.

The simple fact is - your political donation is not actually anonymous.

How do we know this? Well, the Bihar Elections are on and the government announced the sale of electoral bonds between the 19th and 28th October for anyone – individual, group or company, wanting to make a political donation.

So, we at The Quint also bought an electoral bond worth Rs 1,000 from the State Bank of India’s (SBI) Parliament Street Branch in Delhi.

We placed the Bond under ultra-violet light which revealed that the bond had a unique hidden alphanumeric code 0T 015103 which is visible only under ultra-violet light and not to the naked eye.

The frustrating part is that The Quint had published this information in April 2018, exposing this feature of unique hidden alphanumeric code in electoral bonds, which allowed the government to track political donors of opposition parties.

We did follow-up stories about how this undermined democracy and the election process. Based on our story, a petition was filed in the Supreme Court but, sadly, the matter is still pending. The issue was also raised by the Opposition in Parliament but has anything changed?

No. Nothing has changed.

RBI, EC, Law Ministry – All Raised Concerns

The government continues to sell electoral bonds, despite concerns raised by the Election Commission of India (EC), the Reserve Bank of India (RBI) and the Law Ministry. Let's take a look at those concerns in more detail –

First, the RBI’s concerns –

RTI documents reveal that former RBI Governor Urjit Patel, in 2017 had written to the then finance minister Arun Jaitley,  strongly advising that electoral bonds be issued digitally, and not as a scrip or a physical certificate. He said that if issued in certificate form, the bonds could be used as currency, could be exchanged through multiple hands which might lead to money laundering. But the Finance Ministry overruled Patel’s concerns.

Nothing Changed.

Second, the Ministry of Law and Justice raised similar objections –

They also said that the bonds could be used as currency leading to money laundering. These objections too, were overruled.

Nothing Changed.

Third, the Election Commission –

Back in May 2017, the EC wrote to the Law Ministry raising a separate concern – about the proposed anonymity of those donating money via electoral bonds. The EC said – if the public is not told WHO the donors to political parties are, it will make the entire process of political funding, opaque.

For instance, the annual audit reports filed by political parties to the EC in 2018-19 shows that the BJP bagged a massive 57% of funding via electoral bonds, while the Congress got just 15%. So, not only were the donations favouring one party, the public would also never know who the donors were.

The EC also pointed towards the amendment of Sections 182 and 182 (3) of the Companies Act, 2013, which practically permitted the creation of companies for the sole purpose of making donations. The EC said this would allow black money to be used as political donations via shell companies. But it seems the Election Commission’s concerns were ignored by the Government.

And, nothing changed.

Matter Pending In SC For Months

Let’s also talk about the petition in the Supreme Court, seeking a stay on the sale of electoral bonds –

In March 2019, just before the Lok Sabha elections, the then chief justice Ranjan Gogoi heard the petition. In April, Gogoi ordered all political parties to submit details of the electoral bonds received by them to the Election Commission in a sealed cover. But surprisingly, he did not stay the sale of electoral bonds.

In January 2020, once again, the Chief Justice SA Bobde heard the matter briefly, but he too, refused to grant an interim stay on the sale of electoral bonds. All the fears and concerns raised by the Election Commission, the RBI, the Law Ministry, the information about the secret hidden numbers on each bond, all this was known to the Supreme Court, and yet it chose not to stay the sale of electoral bonds. And so, a flawed, insecure and corruptible election funding process stays in place.

Nothing has changed.