Watch Nidhi Razdan: Supreme Court of India rules on electoral bonds Video Credit: Gulf News

That India’s Supreme Court’s verdict striking down the opaque system of electoral bonds as “unconstitutional” came as a shock to most people would be an understatement. The top court has sided with the government on almost all major decisions it has taken in recent years.

But last week, a five-judge bench of the Supreme Court gave a body blow to the ruling BJP by scrapping the election funding scheme, which had been widely criticised by opposition parties and activists for its lack of transparency which largely benefited the BJP.

The electoral bonds scheme, which was introduced in 2018, allowed companies and individuals to donate money anonymously to political parties through bonds that were issued by the state owned State Bank of India (SBI).

The only entity therefore that knew the identities of those who bought the bonds was the SBI. In other words, the government knew as well. The laws were also amended in such a way that corporates could make unlimited donations to political parties, doing away with an earlier cap. Imagine the quid pro quo.

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Elections thrive on cash

The then Finance Minister Arun Jaitley had strongly defended the scheme as one which would end anonymous cash donations to parties and “cleanse” the system. But the Supreme Court has strongly disagreed, saying people have a right to know who is funding political parties and that there are less restrictive ways to curb black money in the system.

A look at the figures will tell you why the BJP has been such a strong votary of electoral bonds. More than half the donations in the last 6 years have gone to the BJP at Rs6,564 crores. The Congress was a very distant second at Rs1,123 crores. Regional parties also benefited from the opaque scheme, like the Trinamool Congress which got over Rs1,000 crores, coming in at third place overall.

So the end of the electoral bonds scheme could not have come a moment too soon. But will it be enough to clean up political funding in India? Unfortunately, not. Indian elections thrive on cash and that had not completely disappeared with electoral bonds. This will now thrive even more. All parties do some imaginative accounting to conceal the actual money they get.

The BJP has a huge head start on funding compared to other parties and it still has other ways and means to restrict the ability of the opposition to raise funds. The move to freeze the bank accounts of the Congress party a few days ago, citing an income tax violation, is a case in point.

Read more by Nidhi Razdan

Introducing public funding

So what is the way forward? Former Chief Election Commissioner SY Quraishi has suggested eliminating private funding altogether and introducing public funding for political parties. Another option he has suggested is setting up a National Election Fund to which all donors could contribute.

The funds could be allocated to parties based on their electoral performance. This he argues would eliminate the concerns about donors’ reprisals. We need to think seriously about our options.

Should India adopt the UK model- where political parties are not allowed to spend more than £30,000 per seat, or the US model which has no such limits. However the US has recently used “democracy vouchers” in local elections in Seattle where the government gives publicly funded vouchers to voters who in turn decide which candidate to donate the money to.

Other countries have public funding like Germany where parties get money based on their importance or performance within the electoral system. This is based on the votes they get in past polls etc.

Another solution could be keeping the provision of anonymity for small donors, but requiring large amounts to be disclosed. So in the UK for example any party which gets more than £7,500 from a single source in a calendar year has to disclose it.

There are no perfect solutions on cleaning up election funding. But India cannot stop looking for a better way to fund polls. What it needs is the political will across the board to do so.