April 2019

Electoral Bonds: Bonding Money and Power?

Raman Jokhakar

Politics is the gentle art of getting votes from the poor and campaign funds from the rich, by promising to protect each from the other – Oscar Ameringer


Election buzz is getting louder. A notable change in this election from a financial perspective is that of funding of elections via electoral bonds. The Finance Act, 2017 brought a far-reaching and even questionable change that restricts citizens’ fundamental right to know where the money comes from. The Finance Minister called it “substantial improvement in transparency”. One can say this is a substantial example of false equivalence.


Elections like everything else require money. It is well known that power chases money and money seeks out power. One of the greatest threats to democracy is money manipulating power. Electoral Bonds (EB) compound these perennial problems manifold and even legitimise what is fundamentally against the interest of citizens. Here is how the scheme works:


a.  EB are as much or more opaque than earlier systems:

i.   They are bearer instruments and a political party does not have to disclose the name of the donors to anyone ever (as they don’t even know it);

ii.   Companies are not required to disclose the names of political parties to whom they give bonds; 

b.  The cap on corporate political funding of 7.5% of last three years’ net profits was removed at the same time;

c.  F.Y. 2017-18 data shows1

i.   53% of all income (donations) of six political parties came from Income from Unknown Sources2  amounting to Rs. 689.44 crore including 31% from EB (Rs. 215 crore) and Rs. 354.38 crore from voluntary contributions below Rs. 20,000 where donor details are unknown (F.Y. 2017-18);

ii.   Six national political parties received 90% of all donations from companies and 10% from 2,772 individual donors ;

iii.  The ruling party got 80% of its total income from unknown sources.


1   From Association of Democratic Reforms (ADR) website/reports.

2     Unknown sources means – income declared in tax returns but without giving sources of donations below Rs. 20,000 and includes donation via electoral bonds, sale of coupons, etc.


As a wise citizen, you can connect the dots. C K Prahalad3  gave an interesting perspective a decade ago: “I cannot but assume that private funding of elections of this magnitude is predicted on making an appropriate return. Given the risky nature of the investment in elections, politicians as venture capitalists, we can assume, will not settle for a less than ten-fold return.”


3   Seventh Nani Palkhivala Memorial Lecture, January, 2010



In the Indian context, it is hard to understand why companies should fund important institutions and events of democracy to this extent with anonymity? Why should corporates not disclose how much and where the EB were given if they are only participating in the democratic process? Why should political parties not disclose cash and non-cash funding? Why should political parties not be audited by a panel approved by ECI and CAG as proposed by an ADR report? Till this happens, I am not sure if political parties really represent people and their interest!


Opaque funding through EB could easily be legitimising corruption for favours granted by those in power in a way that can never be known. While politicians are never known for matching words and actions, one didn’t expect it from this government. Clean money without source is akin to unclean money and is a slap on the face of ‘transparency’.






Raman Jokhakar


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