In its interim order on the petition challenging the constitutional validity of the electoral bonds, the Supreme Court has asked political parties to provide all details of funding received through such bonds in a sealed cover to the Election Commission (EC). This would mean the parties will now have to disclose the name of the donors, the very thing that they are not mandatorily made to do in the electoral bonds scheme as it exists now.

This is a good decision. At present, political parties have to disclose names of all donors who donate above Rs 20,000 in cash or any amount by cheque. If a company donates Rs 2 crore to any party, the party will have to disclose the name of the company to the Election Commission while the company will have to disclose the name of the party in its balance sheet.

But if the donation is made through electoral bonds, the party will disclose that it got the amount and the company will disclose that it paid the amount. But the party will not disclose the company’s name and the company will not disclose the party’s name. Is this transparency? Is this reform? Or is this an invitation for quid pro quo?

The government has been continuously arguing that the introduction of the bonds is an electoral reform and will bring transparency in electoral funding. It has also argued that since the bonds can only be purchased through banking channels, it will also eliminate the use of black money in elections. Any instrument that allows donors to hide behind anonymity is obviously a tool for hidden transactions. The very fact that the receiving party knows the identity of the donor opens donors for future quid pro quo.

It matters little that the bonds are to be purchased only through bank accounts. That only provides that the money is donated from tax accounted for funds and not in black money. But with tax exemptions available under Section 80GGB of the Income Tax Act. no one in his or her sane mind will want to donate in black money.

The worst part is that political parties are not required to submit the name of donors who contributed through electoral bonds in their report to the Election Commission. This means that the public is never going to know which individual or company donated to which political party. It also means that if large government contracts and tenders or any other kind of favouritism is bestowed on such individuals or companies, it will be impossible to prove quid pro quo. It will open the flood gates for corruption in high places, the very thing the NDA government says it is trying to obliterate.

Also, the rule that the electoral bonds must be purchased through banking channels is not a guarantee that only tax accounted funds will be used to make the donations. Some companies have a maze of subsidiaries and shell companies that have been designed to show a huge amount of cash in hand or carry forward losses from previous years. It is very easy for the promoters to pump in their black money for the cash in hand or generate book cash by showing profits in the current year to adjust past losses. This money can then be used to buy electoral bonds and fund political parties.

Politicians are also known to approach favoured businessmen to adopt this route for their party funds, with a promise to “make amends” once they come to power. It is obvious that in this scheme of things, it is the ruling party or the party that is favoured by opinion polls to come to power that is going to benefit. Since the BJP is currently the hot favourite, it is reaping rich dividends from electoral bonds.

The Election Commission has told the Supreme Court it had informed the government that the introduction of the bonds and subsequent changes in many laws to facilitate these would be a huge setback for transparency in electoral funding. If at all the electoral bond route is to be allowed, first of all they should not be sold as a bearer instrument. Whoever purchases such bonds must specify the name of the party for which he or she is buying, which should also be specified on the bonds, making them account payee instruments. Then, companies and individuals must report the same with the name of the political party in their tax return.

Finally, all political parties must disclose the name and address of donors who paid through electoral bonds in their report to the Election Commission. That would make the system transparent and above board.

But one has little hope that it will be done. For, the bonds seem to have been intentionally designed to be an opaque method of funding through which black money could be routed to political parties. Hence the Supreme Court has to step in and either force the government to change the scheme to disclose the name of the donors or scrap the bonds.

(The writer is Editor-in-Chief, www.indiacommentary.com)