• UGI USER
  • Mar 30, 2024
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BONDS, BIG MONEY AND AN IMPERFECT DEMOCRACY

Relevance: GS 2 – Governance: Important Aspects of Governance, Transparency & Accountability and institutional and other measures.

Why in the News?

  • The Supreme Court of India has declared the electoral bonds scheme unconstitutional, which was intended to eliminate the financing of elections with black money.
  • Illegal financing leads to the control of politics shifting into its hands, undermining democracy.
  • If successful, this scheme could have transformed Indian politics, benefiting the nation significantly. Despite the introduction of electoral bonds, there has been no noticeable change in the way politics is conducted in India.
  • Elections still witness an escalating amount of illegal funds being spent by political parties and candidates.

Gap between Professed and Actual Practices

  • Merely introducing measures like electoral bonds cannot make undemocratic politics democratic.
    • Indian politics demands significant funding due to its hollow and formalistic nature.
  • Elected leaders often prioritize the interests of their financiers over their constituents.
  • There is a clear discrepancy between what politicians profess and what they actually practice.

Undermining Democracy

  • This gap undermines democracy as the government no longer represents ‘of the people, by the people, and for the people’.
  • Most people feel they do not benefit from government policies, while vested interests reap the majority of the developmental gains.
  • Policies are cleverly packaged to appear in the national interest, but often, vested interests are prioritized over marginalized sections.

Impact on Marginalized Sections

  • Issues like poverty, unemployment, ill health, and poor education are left to market forces.
  • Concessions to businesses further exacerbate disparities, making essential services unaffordable for the poor.
  • Inadequate public services, like education, harm the marginalized sections.
    • For instance, the Annual Status of Education Report (ASER) reveals that 40% of children aged 14 to 18 cannot read, write, or do basic math.
  • Education doesn’t receive priority due to the top-down development model, where resources are monopolized by the elite.

Black Economy and Systemic Illegality

  • Businesses, unsatisfied with legal gains, resort to illegal methods, contributing to the black economy.
  • Systematic illegality is possible when policymakers and executives collude in subverting the system.
  • The triad of black income generation relies on weak accountability from government personnel.

Roots of Democracy’s Weakness

  • Weak accountability of government officials is foundational to the erosion of democracy in India.
  • This is reinforced by a prevalent feudal mindset in society, where individuals are more inclined to submit to authority than challenge it.
  • This submissive attitude is evident in institutions meant to uphold democracy.

Money and the Election Process

  • Voting often hinges not on a candidate’s performance but on factors like caste, community, and
  • Political parties strategically divide the electorate along these lines to secure votes.
    • Vote banks are cultivated, and constituents are often bribed just before an election.
  • Campaigns are primarily run by paid workers; crowds for rallies and meetings are mobilized using money, transportation, and food.
    • Large rallies are organized to influence voters, requiring funds for posters, cutouts, hiring muscle men, and keeping the media satisfied.

Expenditure Discrepancy

  • The permitted election expenditure limit is ₹95 lakh for a large parliamentary constituency.
  • However, insiders suggest the actual expenditure is closer to ₹50 crore, leaving a deficit of ₹49 crore that needs to be sourced from illegal funds.
  • Parties also spend significant amounts on organizing their operations, running offices, and mobilization—again, largely sourced from illegal funds.

Electoral Bonds Scheme: Controversies and Criticisms

  • Introduced to reduce the dependence on illegal funds by providing a legitimate funding source for political parties.
  • From its inception, the scheme faced criticism for its lack of transparency.
  • The public was kept in the dark about who was financing a political party and for what reasons—legitimate or illegal.
  • The scheme facilitated the use of white money for bribes, potentially increasing the influence and manipulation by businesses and the wealthy.
  • The bonds could only be given to a political party, leaving individuals dependent on illegal funds.
  • Parties could use the funds for various purposes, not limited to elections, such as setting up offices or destabilizing Opposition-led governments.

Loopholes and Controversies

  • The term “electoral bonds” was deemed inappropriate as any amount of bribe could be given without the 7.5% profit limit.
  • Even loss-making firms could make donations, and shell companies could be used, paving the way for foreign firms to donate.
  • Though bonds had to be encashed within 15 days, they could be traded for 14 days, allowing for the obfuscation of the trail of funds and the identity of the donor.
  • Many donors were unaware that their identity could be revealed if the scheme was declared unconstitutional by the judiciary.
  • Only experienced donors covered their tracks using shell companies or cash, making their identities potentially untraceable.

Continuation of Black Money in Funding

  • Despite the electoral bonds scheme, contributions through the black money route remain the major source of funding for political parties.
  • In essence, the electoral bonds scheme merely provided an additional avenue for funds, rather than replacing the existing sources.

Cronyism Uncovered through Electoral Bonds

  • Electoral bonds, although a fraction of total political funding, reveal the nature of Indian politics and elections.
  • Funds were given to political parties for various reasons:
    • For Favours from Policymakers: Businesses seek manipulation of policies or preferred treatment in policy implementation, such as securing environmental clearances or contracts.
    • To Escape Prosecution: Some businesses face complex rules and potential violations, leading to prosecution by agencies like the Enforcement Directorate. The lengthy legal process becomes a form of punishment, pressuring businesses to seek financial favors to avoid harassment.
    • As Investment for the Future: Even political parties not in power receive funds under this category, hinting at investment in future political influence.

Quid Pro Quo and Policy Manipulation

  • The State Bank of India’s data indicates clear quid pro quo in some of the donations made to political parties.
  • Further analysis could expose the money trail and the link between donations and policy manipulation, potentially revealing criminal activities.

Weaknesses in Indian Democracy

  • In a well-functioning democracy with accountable political leadership, elections would not require extensive funding or secretive electoral bonds.
  • There should be no need to exceed the expenditure limits set for elections.
  • The electoral bonds scheme exposes the growing weaknesses in Indian democracy and seems to have been designed to weaken the Opposition and democratic institutions.
  • While the scheme could have been effective in an ideal democratic environment, its necessity suggests underlying weaknesses in the current political system.

Source:

Mains question

Discuss the implications of the Supreme Court’s verdict on the Electoral Bonds Scheme for democracy and the challenges posed by cronyism in Indian politics. (250 Words)