The Narendra Modi government’s insistence that there had not been a single corruption charge against it has fully gone to pieces this year (even though it was hardly a truthful claim even before). Questions about the Modi government’s handling of the Rafale deal have become so serious that there are calls for an inquiry in France. Meanwhile, a top Central Bureau of Investigation officer has accused the Prime Minister’s Office and National Security Advisor Ajit Doval of unduly interfering in corruption investigations. Now, the outgoing Chief Election Commissioner has raised questions about the Modi government’s scheme to reduce corruption in political funding: Electoral bonds.
Electoral bonds are simple money instruments that any Indian citizen can buy from the State Bank of India and then hand over to a political party of their choice during specific 15-day windows. The government insisted that because you have to purchase such bonds by cheque and through the banking system, that the money coming in is likely to be “white” and not “black”.
But while introducing electoral bonds, the government also made a few other things clear: neither the person buying the bonds nor the political party that receives it would have to disclose the identity of the bond-purchaser. This essentially means donations to political parties can be completely anonymous. The government also amended rules that had earlier said companies could only donate upto 7.5% of their average net-profit over the previous three years. This rule ensured that shell companies were not being established merely to funnel money into politics. But the Modi government’s amendments did away with this. Another amendment removed the requirement for firms to declare their political contributions on their profit and loss statements.
Altogether, as researcher Milan Vaishnav put it, “far from reducing opacity in how politics is financed, this new vehicle merely legitimises it”. The Election Commission thought so too, telling the government in December 2017 that it was a “retrograde step” before a new CEC suddenly announced that it was a “step towards the right direction.” Now OP Rawat, who retires as the Chief Election Commissioner, has waded in as well:
“While we have not done a full assessment yet, prima facie I feel that none of our concerns have been addressed in the [electoral bonds] scheme notified on January 2. Actually, there are many grey areas in this because when there is no ceiling on party expenditure and the EC cannot monitor it, how can you be sure that what is coming in is not black money as there is a secrecy of the donor. Even foreign money can come and even a dying company can give money now because the clause that insisted that only companies with minimum 7.5% profit in the last three years could donate has been removed. So, prima facie, it appears that the scheme cannot really deliver whatever it was intended to.”
Read that again. The Chief Election Commissioner is saying that the Modi government’s big new scheme to reduce political funding cannot be monitored, that his concerns have not been addressed and even asks, “How can you be sure that what is coming in is not black money?”
For a government that insists it wants to crack down on corruption, going so far as to derail the entire economy in the unsuccessful effort to go after black money that was demonetisation, this is a damning statement. It is also worth noting that the electoral bonds scheme has been challenged in the Supreme Court, though the matter is still pending.
Considering this government’s refusal to come clean on questions about Rafale and demonetisation, and its constant undermining of India’s institutions, one cannot expect Rawat’s statement to lead to any introspection. But it is clear what a government that did care about transparency would do: suspend electoral bonds altogether, consult the Election Commission on how to make the scheme more transparent starting with ensuring it is not anonymous, and then taking those amendments back to Parliament for a genuine consultative process instead of the rush to pass it this year.
Anything short of this only lends credence to the questions around crony capitalism and corruption that have hovered over the Modi government particularly over the last year or so.
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