The Supreme Court has declared the Electoral Bonds scheme to be unconstitutional just a few months before the General Elections 2024.[1] The SC directed that details of the electoral bonds have to be given by the SBI to the ECI within three weeks, i.e., by March 6, 2024. The Court also directed the Election Commission of India to publish the information provided by SBI, on its website by March 13, 2024.
The Electoral Bonds scheme has been the single legitimate way of funding to political parties, as introduced by the Bharatiya Janata Party (BJP) government in 2017. From the year 2017 to 2023, the BJP received 54.7% of the total contributions via electoral bonds, while the principal opposition Congress and the ruling party in Bengal-All India Trinamool Congress receiving approximately 9% each.[2] More about the Electoral Bonds scheme can be read here. Now that Electoral Bonds have been declared as unconstitutional, it becomes necessary to discuss ways to make campaign finance more transparent and its details- more accessible. This article explores various steps different countries across the world have adopted to make their campaign finance more transparent.
Before going further, it is important to keep in mind that there is a nexus between big money sources and the politicians across the world. This therefore presents a rather universal problem. However, the responses to this problem have been on the spectrum, ranging from lenient to stringent.
There are usually three pillars of campaign finance, across the world.
One is the cap on contributions/spending’s and restrictions on contributors i.e., limiting the amounts of money that one can give to a candidate or a party, or banning some persons from contributing to parties or candidates. Second is the regulation of spending, which sets limits on how much money candidates or parties can spend during an election cycle. And thirdly, transparency measures, which aim to ensure that the sources of campaign funds are disclosed to the public, allowing for scrutiny and accountability.
United Kingdom
In UK, as far as individuals and companies are concerned, they have to be in UK Electoral Rolls and UK registered respectively. The company should be registered as a company in UK, incorporated in UK, and should be carrying on business in UK i.e., all three conditions should be met with. Any donation over £50 is required to be from a permissible donor. The candidates are required to keep the records of donors who give more than £50 and report them in the short campaign donations return. Short Campaign Period is the period beginning from the day of dissolution of Parliament whereas Long Campaign Period is the period that begins once the Parliament has sat for 55 months. There is a different allowance for the long campaign period.
The Political Parties, Elections & Referendums Act 2000(PPERA) governs the spending limits of parties. Under the PPERA, party (as opposed to the candidate spending limits in India) were introduced. Under this legislation, a formula was created for parties based on the number of constituencies in which a party fielded a candidate.[3] These limits only apply to the parties for 365 days prior to the polling day-the period being called the Regulated Period. While any party can spend approximately just over £1.458,440, for the region of England, and collectively an amount of £ 324, 090 for the regions of Scotland and Wales, irrespective of the number of seats they contest, parties are mandated to spend no more than £54, 010 per each constituency their candidate is contesting in for Great Britain.[4] Therefore, there are strict limits on spending of political parties Great Britain.
Within campaign spending, the items or services bought before the regulated period begins but used during it, or items or services given to the party free of charge or at a non-commercial discount of more than 10% and are used in campaign are also included. Political Parties are mandated to submit weekly donation reports to the Electoral Commission once the Parliament is dissolved. And after the election, Political Parties will have to report the spending and are mandated to keep invoices or receipts for any payments over £200. Parties have 3 months to submit returns, or they get 6 months if they have spent more than £250,000.
European Union[5]
Anonymous Donations: Most countries don’t allow anonymous donations, especially large ones. Austria, Denmark, Germany, Italy, the Netherlands, and Romania are the exceptions with varying limits on how much can be given anonymously.
Foreign Donations: The majority of countries prohibit donations from outside their borders. Belgium, Denmark, Germany (small amounts), Luxembourg, the Netherlands, and Sweden are exceptions.
State-Owned Companies: Most countries ban donations from companies owned or controlled by the government. Belgium, Denmark, Ireland, the Netherlands, and Sweden don’t have this restriction.
Additional Restrictions: Over half of the countries in the EU have additional rules such as bans on donations from companies with government contracts or even bans on donations from any non-individual entities.
This is important since in India, the major issue about anonymity of Electoral bonds was due to the chance for Quid Pro Quo (a favour for a favour) being high.
Does a blanket Ban on Corporate funding work?
In 2015, Brazil banned corporate contributions to restrict the influence of big money on politics.[6] However, it was found that this reform did not stop individuals from donating money, although there was a limit of 10% of their last annual declared income.[7] This enabled super-rich individuals to dominate the campaign funding, which was not the intention.
For Political Parties’ funding, Brazil enables Special Fund for Financial Assistance to Political Parties- to transfer money to political parties.[8] The fund is made of federal budget allocations, fines, penalties and other donations and other financial resources allocated to them by law.
What would work for India?
During the run of the Electoral Bonds Scheme, even foreign companies could buy bonds and give those to parties for the latter to encash and no one would know. Therefore, the state of affairs in India, as far as political campaign finance is concerned, is dire. From here, any reform in terms of restricting contributions from certain people or ensuring that there is transparency in ‘who funds which party’ would be a forward step provided the government does not explore other innovative options to deteriorate the situation further.
In a conversational interview of former Election Commissioner SY Quraishi, former Supreme Court judge Justice M.B. Lokur and former BJP MP Subramanian Swamy and Senior Advocate Kapil Sibal- it was suggested that there could be a Corporate Cess or that the Election Commissions could maintain a fund-accepting donations from anyone from permissible-and later distribute it according to a formula.[9]
While these are workable suggestions, the first step would be to undo the loss the electoral bonds have done. That would be to examine the data that Election Commission will hopefully disclose owing to the Supreme Court’s directions in the judgement within the timeframe as directed by the Court. This exercise will give ways for further steps to be taken, like restriction on people who get government contracts from contributions, restrictions on contributions from those who have no profits etc. Only with these initial steps can we pave a path for better laws on Electoral campaign finance laws.
(The author is a legal researcher with the organisation)
[1] ADR vs. Union of India, 2024 INSC 113
[2] Nath, D. and Das, A. (2024). 57% vs 10%: BJP vs Congress share in electoral bond funds. [online] The Indian Express. Available at: https://indianexpress.com/article/political-pulse/bjp-congress-electoral-bonds-funds-9162973/
[3] The Constitution Unit (2023). Election spending limits: we’re going to spend, spend, spend (or are we)? [online] The Constitution Unit Blog. Available at: https://constitution-unit.com/2023/10/05/election-spending-limits-were-going-to-spend-spend-spend-or-are-we/
[4] Electoralcommission.org.uk. (2024). The spending limit. [online] Available at: https://www.electoralcommission.org.uk/party-spending-uk-parliamentary-general-election/spending-limit
[5] Financing of political structures in EU Member States, European Parliament, https://www.europarl.europa.eu/RegData/etudes/STUD/2021/694836/IPOL_STU(2021)694836_EN.pdf
[6] The Wire. (2018). In Blow to Big Money, Brazil Bans Corporate Donations to Parties, Election Campaigns. [online] Available at: https://thewire.in/external-affairs/in-blow-to-big-money-brazil-bans-corporate-donations-to-parties-election-campaigns
[7] Carolina, A., Burle, F. and Joaquim, M. (2023). In brief: political finance in Brazil. [online] Lexology. Available at: https://www.lexology.com/library/detail.aspx?g=f4af9afa-06c7-41f5-aba5-43da242fa552
[8] Tribunal Superior Eleitoral, Partisan Fund, https://international.tse.jus.br/en/partidos/partisan-fund.
[9] Dil Se with Kapil Sibal (2024). Electoral Bonds Illegal but BJP Now Has Rs 6500 Cr; SC Delay, Secrecy Give Modi Unfair Advantage. YouTube. Available at: https://www.youtube.com/watch?v=Hjr9gwxn-jI
Related:
Electoral Bonds: A Democracy’s Trojan horse
Is India’s democracy being sold through electoral bonds?
SC expresses concern over the possible misuse electoral bonds, reserves its order on the matter
Centre Allowed Electoral Bonds Sale for 15 More Days Despite Official Objection: ADR