New Delhi: Despite the fact that the electoral bond scheme has been seriously questioned by different sections of society across the country and the petition challenging its legality in the Supreme Court is still pending, the Narendra Modi government is pressing ahead with it.
As per the response to an application filed under the Right to Information Act (RTI), electoral bonds worth Rs 19,000 crore have been printed so far. Of these, bonds worth more than Rs 6,200 crore have been sold in 13 phases altogether.
It is worth noting that the cost of printing the electoral bonds is not borne by the buyer but by the government. That means the printing cost is being borne by the people – taxpayer – indirectly.
The cost of printing one electoral bond comes to Rs 25, with an additional 6% GST charged both by the Centre and the state governments.
The State Bank of India (SBI) is the only bank authorised to sell electoral bonds. For the process by which individuals and entities can buy electoral bonds to make a donation to a political party and the party concerned can encash the bonds through a verified account with the bank, the SBI charges bank commission. These costs too are paid with taxpayers’ money.
Responding to an application filed by RTI activist Commodore Lokesh Batra (Retired), the SBI has disclosed that in 2018, a total of 6,04,250 electoral bonds worth Rs 7,131.50 crore were printed and the following year, 60,000 bonds totalling Rs 11,400 crore were printed.
The printing of electoral bonds is done at the Indian Security Press (ISP) located in Nashik. According to the documents received, the ISP’s print run thus far is as follows:
- 2,56,000 electoral bonds of Rs 1,000;
- 2,56,000 bonds of Rs 10,000;
- 93,000 bonds of Rs 1 lakh;
- 26,000 bonds of Rs 10 lakh; and
- 14,650 bonds of Rs 1 crore.
In all, 6,64,250 election bonds have been printed at a cost of Rs 1.86 crore. And it is the Department of Economic Affairs in the Union Ministry of Finance, the taxpayer’s money, in other words, that pays for their printing. It is strange that the expense incurred in printing the electoral bonds is not recovered from the buyer or the political parties.
There have been 13 rounds of sale of electoral bonds so far in which 12,452 out of the 6,64,250 printed electoral bonds, worth Rs 6210.40 crore, have been purchased.
Interestingly, a staggering 91.81% of this amount has come through the sale of electoral bonds in the highest denomination of Rs 1 crore. The remaining 7.91% is made up of bonds of Rs 10 lakh. The sales of bonds of Rs 10,000 and Rs 1000, have been so negligible as to be non-existent.
The documents provided by the SBI give a break-up of the number of electoral bonds sold denomination-wise:
- 5,702 bonds of Rs 1 crore;
- 4,911 bonds of Rs 10 lakh;
- 1,722 bonds of Rs 1 lakh;
- 70 bonds of Rs 10,000; and
- 47 bonds of Rs 1000.
Printing of low-denomination bonds: an unnecessary burden on taxpayers
The above figures make it clear that the sale of the lowest-denomination bonds has been next to nothing. Since it is the Central government which pays for the printing of every electoral bond, its move to continue printing the Rs 1000 and Rs 10 bond is being seen as a waste of the taxpayer’s money.
The idea of going for low-denomination bonds was the brainchild of the Bharatiya Janata Party (BJP), which felt that it would enable people from every section of society to make contributions to political parties. This view had emerged at a time when the Modi government was thinking of launching an electoral bond scheme and had sought the opinion of all political parties.
On August 24, 2017, BJP general secretary, Bhupendra Yadav, in a letter to the then union finance minister, Arun Jaitley, had suggested that electoral bonds of Rs 10,000 and less should be considered in addition to high-denomination bonds.
Yadav wrote, “To encourage people of all strata to participate in the process, while protecting their identities from being disclosed, if that is the preference, the bonds should also be available in denomination of Rs 2,000/-, Rs 5,000/- and Rs 10,000/- in addition to the higher denomination.“ The Wire had provided this information in a report published in late November 2019.
Having accepted the suggestion, the Central government has ended up printing 2,56,000 electoral bonds of Rs 1,000 and the same amount in the denomination of Rs 10,000. The number of bonds sold in both denominations so far is only 47 and 70!
The cost incurred on the printing of bonds of these denominations is Rs 1.43 crore.
The taxpayer has to bear the cost of bank commission too
The documents procured under the RTI also reveal that the commission earned by the SBI in the sale and encashment of the electoral bond, too, is to be recovered from the Central government.
For 13 rounds of electoral bond sales held thus far, the SBI has sent the Centre a bill of Rs 3.48 crore. The SBI’s commission for the 13th round of electoral bond sale, from January 13, 2020, to January 22, 2020, is Rs 5.34 lakh.
According to a letter written by SBI chief general manager, Vasudha Bhat Kumar, to the joint secretary (budget) in the Department of Economic Affairs (Ministry of Finance), the bank has asked for the bill to be settled in full.
The documents show that the Centre has made a payment of Rs 77.44 lakh to the SBI thus far, which covers seven rounds of the electoral bond sale (until January 2019).
The SBI has asked the Union finance ministry to deposit the remaining amount of Rs 2.70 crore along with a GST of 18%, as well as 18% GST that had not been paid in the earlier instalment.
What also comes to light through the SBI chief general manager’s letter is that the Central government is deducting 5% TDS on the electoral bonds and not 10%. The bank has written to the department of economic affairs for reimbursement of 5% TDS as the Central government had deducted 10% TDS on the Rs 77.43 lakh payment it had deposited as the bank’s commission for seven rounds of electoral bond sales.
Not only that, SBI has even asked the Centre to pay the Rs 270 that the instalment of Rs 77.43 lakh had fallen short of.
The 14th round of sale of electoral bonds was to commence in April, which could not be held due to the coronavirus pandemic, although the banks have been open during this time. As of now, it is not clear whether the Centre plans to hold the next round after some time.
Although there is no provision pertaining to electoral bonds that a round of sale that is missed can be held at a later date, in 2018 the Central government did just that – the proposed sale of electoral bonds in January 2018, the first round, was actually conducted two months later, in March 2018. The framework governing the process of sale and purchase of electoral bonds was not ready by January.
The controversy over electoral bonds
According to election laws, if any individual or organisation makes a political donation of Rs 2,000 or more to any political party, then the party in question is required to furnish information about the donor.
The electoral bond scheme has done away with this ‘hurdle’. Now, through the electoral bond scheme, anyone can make a political donation ranging from Rs 1,000 to Rs 1 crore to any political party without his or her identity having to be revealed. All that a political party is required to disclose is the total amount of contribution that has been raised for it through the medium of electoral bonds.
It is precisely for this reason that electoral bonds are being considered a big threat to the idea of transparency in the area of political funding.
Following the launch of this scheme, there has been a distinct drop in political contributions made through other means, such as cheques, to the major political parties, and correspondingly, there has been a big spike in the donations coming through electoral bonds.
The facts speak for themselves. In 2018-19, almost 60% of the contributions raised by the BJP, amounting to Rs 1,450 crore, came from electoral funds. Contrast it with 2017-18, when the BJP declared Rs 210 crore as the donations received through electoral bonds.
To introduce electoral bonds the Modi government amended several laws in 2017 (after making changes in the Finance Act, 2017, and corresponding amendments in statutes such as the Representation of People Act,1951, the Reserve Bank of India Act, 1934, the Income Tax Act, 1961, Foreign Contributions Regulation Act, 2010, and Companies Act, 2013. The scheme was notified in January 2018).
It is these very amendments that have been challenged in the Supreme Court by the non-governmental organisation, Association for Democratic Reform (ADR), which works towards electoral and political reform with a view to strengthening democracy and governance. However, on the last few occasions, the Supreme Court hearings have been continually put off.
In its petition, ADR has stated that the amendments to the statutes in question have opened doors for unlimited political donations by foreign companies and legitimised large-scale electoral corruption. The complete opacity built into this mode of political donations is a huge problem, the organisation has pointed out.
Last year several disclosures were made regarding electoral bonds which revealed that the RBI, Election Commission, law ministry, RBI governor, chief election commissioner and many political parties had written to the Central government to register their objections to the proposed electoral bond scheme. However, the union finance ministry had brushed aside those objections and gone ahead with their plan.
The RBI had stated that amending the RBI Act, 1934, in order to legalise anonymous donations under the electoral bond scheme would create a bad precedent – apart from encouraging money laundering it would pose a threat to the fundamental principles of the Central bank’s regulatory framework.
The Election Commission too filed an affidavit in the Supreme Court that the donations received by political parties through electoral bonds would be a threat to the very idea of transparency.
Apart from this, documents received through RTI applications show that when a draft of the proposed scheme was prepared, it had a provision for discussions and consultations with political parties and members of the public. After a sitting with Prime Minister Modi that provision was removed.
The documents also reveal that the BJP knew about the scheme even before the draft was prepared. Four days before the proposal was to be placed before the prime minister, BJP general secretary Bhupendra Yadav, as mentioned earlier, had written a letter to the then-finance minister, Arun Jaitley, with suggestions from the party for the electoral bond scheme.
Translated from the Hindi original by Chitra Padmanabhan.