Electoral bonds 'likely to be sold' ahead of Lok Sabha polls: Will Supreme Court act?

By Rosamma Thomas*
Under clause 8 of the Electoral Bond Scheme, 2018, bonds can be issued for 10 days each in January, April, July and October, and an additional 30 days in the year of a general election. With general elections 2024 just months away, the 30-day period of issuance of bonds might be invoked again, even though the whole scheme has been challenged in the Supreme Court.
On November 02, 2023, the SC hearing in the matter was completed and the judgment was reserved. In its order of November 2, 2023, the SC directed the Election Commission of India (ECI) that: “In any event, we now direct that the Election Commission shall produce up-to-date data until 30 September 2023 in terms of the interim directions which were issued on 12 April 2019. The exercise shall be carried out on or before 19 November 2023. The data in sealed packet shall be handed over to the Registrar (judicial) of this court.”
Transparency activist Commodore Lokesh Batra filed an RTI with the Public Information Officer (PIO) of the ECI in the third week of November 2023, requesting copies of the complete set of documents including notings in the file(s)/folders on which Commission (EC) had processed the directions of the SC order of November 2, 2023.
Commodore Batra brought to the notice of the PIO that he had filed a similar RTI request even after the SC order of April 12, 2019, and had been provided complete file documents including a list of 105 political parties which provided details of electoral bonds in sealed cover to the EC. Batra attached that list with his current RTI application, adding that in October 2023 the State Bank of India, in response to an RTI application, had said that only 25 political parties had opened accounts for the purpose of encashing these bonds.
Commodore Batra mentioned that as per the existing Electoral Bond Scheme, each Electoral Bond (EB) is a promissory note (akin to currency note) -- hence the SBI would have details of EBs buyers/donors as per their KYC (Know Your Customer protocol). 

SBI would also have details of ‘political party account’ in which the said EB is redeemed, because each Electoral Bond (EB) has a hidden number verified by the SBI’s authorized branch before redemption in a political party’s ‘specific account’, which is opened for the purpose of redeeming electoral bonds. Legally, the political party would not know the name of the donor based solely on the anonymous promissory note termed ‘electoral bond’ it received.
Like in 2019, Commodore Batra sought the ‘List of Political Parties’ which had submitted EB details to ECI in sealed covers, in compliance with the letter from the Election Commission dated November 3, 2023.
In his response, on December 18, 2023, Binod Kumar, the public information officer of the Election Commission, denied information under the Section-8(1)(b) of the RTI Act.
It is noteworthy the Section-8(1)(b) of the act mentions “information which has been expressly forbidden to be published by any court of law or tribunal or the disclosure of which may constitute contempt of court.”
Commodore Batra filed an appeal against this denial of information, arguing that the Supreme Court had not forbidden publication of the information. Commodore Batra pointed out that the PIO had also failed to offer a cogent reason for denying the information. While the PIO under section 7(1) of the RTI Act, 2005 quoted Section-8(1)(b) for denial of information, he had failed to provide justification for arriving at the reason for denial, as envisaged under the Section 7(8)(i) of the RTI Act, 2005.
Speaking with this reporter, Commodore Batra noted that two days after the SC reserved judgment, on November 4, 2023, the government announced 15 days of sale of Electoral Bonds from November 6-20, 2023. Electoral bonds were sold again for 10 days in January 2024. 

Though the apex court directed the ECI to produce up-to-date data until September 30, 2023 in terms of the interim directions issued on April 12, 2019, it is to be noted that the bonds have been sold already for a period of 45 days after September 30, 2023. (10 days in October, 15 days in November 2023 and 10 days in January 2014).
The Electoral Bond scheme is problematic for several reasons, with the potential to kill democracy by offering undue advantage to the party in power – between March 2018 and September 2023, the bonds were sold in 30 phases. 

The vast majority of the bonds sold are in the denomination of Rs 1 crore each – clearly, these bonds are becoming the major source of electoral funding, and are being purchased by the very rich, or corporate players, rather than the average Indian. Only 0.0001% of the bonds were in the denomination of Rs 1,000. The vast majority of these bonds (57%) also go to the party in power.
In response to a question in the Lok Sabha, on February 5, 2024, Pankaj Chaudhary, Union Minister of State for Finance answered that Electoral Bonds worth Rs16,518 crore had so far been purchased from the State Bank of India. The government had paid SBI Rs 8.57 crore as commission, and Security Printing and Minting Corporation of India Limited had received Rs 1.90 crore – the ordinary Indian bears this expense that the government shoulders.
In his response, the Union minister explained that the objective of the scheme is to ensure that “clean, tax paid money is coming into the system of political funding through proper banking channel.” 

However, as has been speculated, since the bonds are anonymous, it is possible for them to change hands several times before being submitted to a political party for encashment – who can guarantee that black money is not turned white through this scheme, as a man holding a bond of Rs 1 crore value could sell it to someone else at, say, Rs 1.2 crore, in exchange for the favour of turning Rs 20 lakh of black money white?
Also, the Department of Economic Affairs has referred to correspondence showing that 18% GST is charged on the bonds, but reimbursed by the government to SBI; what this means is that the burden is borne entirely by the Indian citizen.
The Electoral Bond scheme was introduced through amendments to law that lifted restrictions on the amount of donations that private firms could make; Election Commission, in a letter to the Ministry of Law and Justice in 2017, underlined that the proposal to lift the limit on donations from companies “opens up the possibility of shell companies being set up for the sole purpose of making donations”. 

Firms no longer need to declare which party they are contributing to; transparency in fund-raising by political parties is compromised as no reporting of contributions received is expected from the political parties. Donations can also be received from foreign companies having majority stake in Indian firms, which “could lead to Indian policies being influenced by foreign companies.”
If the Supreme Court does not rule in this matter with some urgency, the Centre may declare another round of 30-day issuance of the bond, in different phases, ahead of general elections 2024.
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*Senior journalist