A break-up of the donations made to two major national parties, the Bharatiya Janata Party and the Congress, and revealed in their audited annual statements for the last two fiscals shows that the implementation of the electoral bonds scheme has substantially reduced the cash component of donations.
But equally this has also coincided with a reduction in the proportion of donations that are declared contributions (that are above ₹20,000 and where the donors are known). This has in effect provided anonymity to some large contributors.
There has also been a significant skew in favour of the ruling party in the issuance of electoral bonds — the BJP received ₹210 crore of the overall ₹221 crore redeemed in financial year 2017-18.
The Congress received only ₹5 crore and the rest of the parties, ₹6 crore. The government had stated in the Lok Sabha that in FY 2018, 520 electoral bonds worth ₹222 crore were issued, of which 511, worth ₹221 crore, were redeemed.
In a petition being heard in the Supreme Court, the Association for Democratic Reforms has argued against the anonymity-based funding scheme, as that makes it possible for black money to be donated to parties through shell companies.
It is also skewed towards the ruling party, which is positioned to identify the donors and is capable of discouraging donations to other parties.
Interestingly, the Election Commission of India has also critiqued the scheme arguing against anonymity as it militates against transparency and prevents citizens from knowing the sources of funding for political parties.
When the electoral bonds scheme was announced by Finance Minister Arun Jaitley in 2017, the government touted this as a measure to “cleanse the system of political funding.”
By allowing contributors to political parties to buy bonds at specified banks using electronic modes of payment and after having completed Know Your Customer (KYC) requirements, this system was supposed to reduce unaccounted cash contributions while allowing a degree of anonymity for donors.
₹990 crore in all
The BJP received ₹990 crore as total contributions and collections in financial year 2017-18, nearly seven times more than the Congress’s ₹142.8 crore. The BJP received 66.34% of the overall donations above ₹20,000 given to the six national parties, (BJP, INC, NCP, CPI(M), CPI, AITC) in FY 2016-17. In FY 2017-18, the BJP's share increased to 73.49%.
Donations to the BJP that were filed in its contribution report (donations above ₹20,000) amounted to ₹438 crore which was 44.2% of its overall contributions.
Bonds worth ₹210 crore amounted to 21.2% and the rest (35%) was the proportion of small donations (less than ₹20,000 each).
In the year 2016-17, the corresponding numbers were 53.06%, 0 and 47% respectively. Effectively, the anonymous/cash donations decreased from 47% to 35%, but the proportion from declared donors also reduced from 53.06% to 44.2%, suggesting a chunk of such donors could now be contributing anonymously to the scheme.
For the Congress, in FY 2017-18, of the ₹142 crore in total contributions, ₹26.65 crore was listed as the donations from the contributors’ report and amounted to 18.7%, electoral bonds (₹5 crore) amounted to 3.5% and small contributions (less than ₹20,000) amounted to 77.71%.
The corresponding figures for FY 2016-17 were 25.2%, 0 and 74.8% respectively. In sum, for the Congress, the proportion of contributions from declared donors came down by 6.5% points, offset by a marginal increase due to the bonds scheme (3.5% points) and an increase in anonymous small donors who contribute mostly in cash by nearly 3% points unlike the case for the BJP for whom the contributions from smaller donations fell as a proportion of overall.
Website Factly reported that data obtained from the State Bank of India, the authorised bank to issue electoral bonds, show that the amount of money issued through bonds has significantly increased since the end of FY 2017-18; ₹1,056 crore worth bonds were purchased by the end of calendar year 2018, the bulk of it in October and November 2018, prior to the Assembly elections held in the last months of the year.
There was hardly any demand for lower denomination bonds (₹1,000 and ₹10,000) with higher denomination bonds (₹10 lakh, and ₹1 crore) constituting 94% in total numbers and 99.9% in total value.
In January and March 2019, the SBI sold electoral bonds worth ₹1,716 crore.
A break-up of the party-wise donations via electoral bonds will not be known before they file their annual statements but the Supreme Court recently directed political parties to submit the details of all such donations to the Election Commission by May 30, after the announcement of the general election results.
( With inputs from Vignesh Radhakrishnan )