- Over time, electoral bonds have become the favoured mode of political donation. Bonds
worth ₹13,791 crore have been sold in 27 tranches until July 2023. - The ADR’s research has shown that electoral bonds accounted for 55.9% of the donations totalling ₹9,188 crore received by 31 political parties. Unsurprisingly, the BJP got the lion’s share of 74.5% of electoral bonds redeemed until 2020-2021.
- The INC was a distant second, at 11%, followed by the Biju Janata Dal, the YSR Congress Party and the Trinamool Congress. It would be naive to believe that political parties depend on these inflows to meet their insatiable requirement of funds.
- The expenditure on the last general election to the Lok Sabha has been estimated at between ₹55,000 to ₹60,000 crore. Most dealings of political parties continue to be in cash, but the receipts from electoral bonds enable them to meet their transactions with the formal economy, such as the costs of infrastructure expansion, equipment and publicity in the print, electronic and digital media.
- This gives them an enormous advantage over their rivals in influencing voter behaviour and electoral outcomes.
Challenges: Critics argue that the scheme compromises transparency in political funding, as the public and the Election Commission cannot trace the source of the donations. The anonymity provided by electoral bonds raises concerns about the possibility of money laundering and channelling illegal funds into political parties. Smaller or regional parties may face challenges in attracting large donations compared to national parties, potentially creating an uneven playing field.
Problems: The lack of a robust mechanism for scrutinizing the source of funds can lead to potential misuse of the scheme. The scheme has faced legal challenges, with concerns raised about its compatibility with the principles of transparency and fairness in elections. Critics argue that the scheme may impact the democratic process by allowing powerful entities to influence politics without public accountability
2. Election Expenditure in India
Election expenditure in India encompasses various costs associated with conducting electoral campaigns and activities, including campaigning by political parties and candidates, as well as administrative expenses incurred by election authorities.
Candidate Expenditure
- Candidates incur expenses on rallies, public meetings, posters, banners, advertisements, and other promotional activities to garner voter support.
- Expenditure related to travel, accommodation, and transportation for candidates and their campaign teams during the election period.
- Costs associated with advertising in newspapers, television, radio, and social media platforms to reach out to voters.
- Other miscellaneous expenses, such as hiring volunteers, organizing events, distributing promotional materials, etc.
Political Party Expenditure
- Political parties undertake various campaign activities, including rallies, public meetings, door-to-door campaigns, etc., which incur significant expenditure.
- Parties invest in advertising campaigns, including print, electronic, and digital media advertisements, to promote their candidates and party ideologies.
- Operational expenses of political party offices, staff salaries, maintenance costs, etc., are also part of election expenditure.
Election Commission Guidelines
- The Election Commission of India (ECI) sets expenditure limits for candidates and political parties to ensure a level playing field and curb excessive spending.
- Candidates are required to submit expenditure details to the ECI within stipulated timeframes, and violations of expenditure norms can lead to disqualification or penalties.
Transparency and Monitoring
- The ECI monitors election expenditure through various mechanisms, including scrutiny of expenditure declarations, formation of flying squads and surveillance teams, and intelligence gathering.
- Political parties and candidates are mandated to maintain records of all expenses and submit expenditure reports for scrutiny.
3. Discrepancy between Ideals and Reality
The disparity between professed democratic ideals and actual political practices in India remains stark, despite attempts such as the electoral bonds scheme. Indian politics, characterized by its heavy reliance on funding, lacks substantive content and has become merely formalistic. Elected representatives often prioritize the interests of their financiers over those of their constituents, leading to a glaring gap between rhetoric and action.
Undermining of Democratic Principles
This disconnect undermines the essence of democracy, shifting governance away from being "of the people, by the people, and for the people." Vested interests dominate policymaking, masquerading as national interest while disregarding the needs of marginalized sections. As a result, the majority fail to benefit from governmental policies, with resources and benefits disproportionately favouring the elite.
Market-Centric Policies and Marginalization
Policies ostensibly designed to address poverty, unemployment, healthcare, and education often defer to market forces, exacerbating disparities and perpetuating marginalization. Concessions to businesses further limit public sector resources, hindering the provision of essential services to the marginalized. For instance, the neglect of education perpetuates cycles of poverty, as evidenced by the inadequate educational standards revealed in reports like the Annual Status of Education Report (ASER).
The pervasiveness of Illegality and the Black Economy
Businesses, unsatisfied with legal gains, resort to illegal practices, contributing to the black economy. Systemic illegality thrives with the complicity of policymakers and the executive branch. Weak accountability mechanisms within the government further facilitate this trend, eroding democratic principles and fostering a culture of corruption.
Feudal Mindset and Weaknesses in Accountability
The persistence of a feudal mindset within society reinforces weak accountability structures, hindering the strength of Indian democracy. Individuals often defer to authority rather than challenging it, perpetuating systemic weaknesses. This is evident in institutions tasked with upholding democratic values, further exacerbating the hollowing out of democracy in India.
4. Election Dynamics and Monetary Influence
Elections in India often deviate from assessing candidates based on performance, focusing instead on factors like caste, community, and region. Political parties strategically target specific voter segments, cultivating vote banks through bribery and mobilization tactics. The electoral process involves substantial financial investments for campaign activities, which significantly surpass the official expenditure limits.
Financial Demands and Election Expenditure
The permitted election expenditure limit of ₹95 lakh for a parliamentary constituency falls short of the actual financial demands, estimated to be around ₹50 crore. This disparity leads to the mobilization of approximately ₹49 crore through illegal means per candidate. Parties also incur significant expenses for organizational activities, office maintenance, and mobilization efforts, largely funded through illegal channels.
Electoral Bonds Scheme
The introduction of the electoral bonds scheme aimed to provide legitimate funding avenues for political parties and reduce their reliance on illegal funds. However, criticisms arose regarding the scheme's opacity and potential loopholes. The anonymity of donors under this scheme raised concerns about the legitimacy and motives behind political funding.
Ineffectiveness of Electoral Bonds
Despite expectations, the electoral bonds scheme failed to curb the influence of illegal funds in politics. The scheme's design allowed for potential misuse, including the use of shell companies, foreign donations, and trading practices that obscured the transparency of donations. The removal of donation limits based on profits further exacerbated the potential for bribery and misuse of funds.
Continued Influence of Black Money
The electoral bonds scheme, while presented as a solution, became just another avenue for political funding. The major source of funding for political parties continues to be through black money routes, highlighting the ineffectiveness of the scheme in addressing core issues related to campaign financing and transparency.
5. Unveiling Cronyism in Political Funding
The recent revelations regarding electoral bonds shed light on deeper issues within Indian politics, exposing elements of cronyism and favouritism in funding practices.
Purposeful Funding Categories
Data analysis reveals that funds provided to political parties serve various purposes.
- Businesses use donations as a means to secure favours from policymakers, including favourable policy manipulations and preferential treatment in policy implementation, such as obtaining environmental clearances or securing contracts.
- Some donations are made to escape potential prosecution for wrongdoing, leveraging political influence to mitigate legal consequences.
- Contributions are also made as investments for future benefits, even by parties not currently in power, showcasing a strategic approach to securing influence and favours.
Complexities and Arm-Twisting
The intricacies of rules and regulations create opportunities for arm-twisting and coercion.
- Businesses under scrutiny for rule violations may use political contributions as a shield against prosecution. The threat of legal action can be mitigated through political connections and influence.
- Lengthy legal processes can serve as a form of punishment themselves, leading to businesses seeking ways to navigate legal challenges through political means.
Transparency and Accountability
A well-functioning democracy should not necessitate excessive funding or opaque financial mechanisms like electoral bonds:
- In an accountable political system, elections would be conducted within reasonable expenditure limits, without the need for secretive funding mechanisms.
- The reliance on mechanisms like electoral bonds highlights weaknesses in democratic practices, indicating a need for reforms to strengthen democratic institutions and reduce undue influence in politics.
Challenges to Democratic Integrity
The electoral bonds scheme, while intended to streamline funding processes, has inadvertently highlighted deeper challenges within Indian democracy, including the influence of money power and the potential weakening of opposition voices.
6. Conclusion
The electoral bonds scheme was a step towards addressing financial opacity in politics, its limitations underscore the deeper-rooted challenges that require multifaceted solutions. Upholding democratic integrity demands concerted efforts to tackle the influence of illicit funds, promote transparency in political finance, and ensure that elections truly reflect the will of the people. These efforts should align with constitutional principles and international best practices to safeguard the democratic foundations of the nation.
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Mains Pratice Questions 1. Examine the disparity between professed democratic ideals and the actual practices observed in election expenditure in India. How does this discrepancy impact the democratic process? (250 Words)
2. Suggest policy measures and reforms that can strengthen democratic institutions and reduce the undue influence of financial interests on political decision-making processes. (250 Words)
3. What are the challenges faced by regional parties in securing political funding as compared to national parties? How can a level playing field be ensured in campaign finance regulations? (250 words)
4. The Supreme Court's decision to strike down the Electoral Bond Scheme has reignited the debate on political funding reforms in India. Discuss the potential implications of this decision and suggest the way forward for ensuring transparency and accountability in political finance. (250 words)
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