Mon May 27, 2024
May 27, 2024

Electoral Bonds in India: A Form of Legalized Corruption

By Adhiraj Bose – Mazdoor Inqilab India

Following an order from the Supreme Court, the State Bank of India, our largest public sector bank, was forced to release data on the electoral bonds redeemed by political parties. A total of Rs 16,492 crores (approximately $2 billion) were redeemed in phases between the March 1, 2018 and January 11, 2024. Half of this massive amount was redeemed by one party, the BJP. [i]

The electoral bonds scheme was first announced in 2018 and implemented shortly before the 2019 elections. It was another means by the BJP to amass political funding, in what has practically amounted to the legalization of corruption. The list of donors has been revealing, with most of these donations linked with companies that have been the subject of investigation by the Enforcement Directorate for tax irregularities. What has come to light is a massive extortion scheme by the BJP to garner political funding. At the heart of this, is one of India’s most important banks.

The Electoral Bonds Scheme

The scheme was first floated in 2017 by the then Finance Minister Arun Jaitley. The rationale of the scheme was to streamline, and make vague political contributions more clear. What it achieved was the opposite, in fact it became a tool for the ruling party to amass more funding than any of its rivals.

The electoral bond was a type of promissory note which can be bought by any Indian citizen or any Indian organization. The bonds can be procured only by cheque or digital payments, these payments are anonymous and bear neither the anonymity of the donor nor the political party to which it is issued. These bonds can only be issued to parties which have secured at least 1% of the vote in the preceding national elections.

From the very beginning the scheme was controversial. The law was brought in force under the Finance Bill of 2018 presented to the parliament as a money bill. This ensured it would not be debated in the upper house of the Rajya Sabha. The BJP was able to use it’s majority in parliament to push through the law right before the 2019 elections, the results were visible in the elections when the party was able to use it’s considerable financial resources to secure another resounding victory.

The scheme was eventually challenged by the Communist Party before the Supreme Court on the grounds of legality. On February 15, the Supreme Court struck down the electoral bonds as unconstitutional and compelled the State Bank of India, the largest issuer of the electoral bonds, to release data of donors. The list was handed over to the Election Commission of India (ECI) which has now uploaded the data on the list. Even this list is incomplete and does not account for about Rs 4000 crores (about half a billion dollars) worth of funding.

The Beneficiaries of the Scheme  

The revelations from the State Bank of India have shed light on the long-suspected nexus between the government and corporations. While the electoral bonds weren’t the only source or even the largest source of political funding for parties, it has been one of the key sources of funding, and a tool for the BJP to monopolize political funding.

The largest recipient of the electoral bonds by far have been the BJP, which received up to 58% of electoral bonds amounting 6566 crore rupees (a little less than a billion dollars). The next highest recipient of bonds was the second largest party, the Congress party, with merely 1,123 crore rupees, just about one sixth of the total of the BJP’s bond issue, and less than 10% of the total.[ii] Tailing in third place is the All India Trinamool Congress (TMC) which is the ruling party of West Bengal, at 1092 crore rupees, almost as much as the Congress Party.

The largest of the donors was a company owned by India’s infamous ‘lottery king,’ Santiago Martin, a billionaire who built his fortune by becoming the largest distributor of lottery tickets in the Southern state of Tamil Nadu. At one point his company was selling 12 million tickets a day in 2001. He had been arrested previously in land grabbing cases, and the company Fortune Gaming, had been accused in cases of lottery fraud.[iii]

A shady businessman, who built his business empire by gambling on people’s lives and is now securing his profits by investing in political corruption is most fitting for a scheme as shady as the electoral bonds. While he is the largest donor, his case is not unique. A closer look revealed that most donors to electoral bonds are companies with dubious financial situations, or suspicious origins, or were the targets of investigation by the Enforcement Directorate or the Central Bureau of Investigation.

The revealed data showed that many loss making companies donated huge sums to electoral bonds scheme. Newly established companies, likely shell companies, at mere months old, have contributed massively. Forty three of these new companies bought electoral bonds worth Rs 384 crores. Some of these companies bought millions worth of electoral bonds a mere year or two following their formation. The list also revealed companies which received government contracts in return for purchasing electoral bonds.

The most worrying pattern was seen in companies which bought electoral bonds shortly after being investigated by central government agencies. Electoral bonds worth Rs 335 crores were bought by such companies, after which the cases were often withdrawn.[iv]

The Monopolization of Political Funding  

The electoral bonds are but one part of a larger lobbying system in India. Until the Supreme Court order, this stood as a system of legalized corruption, the logical conclusion of India’s institutionalized corruption, where the parties subvert any pretense of independence of the state from that of the party and the capitalist class.

Institutionalized corruption was a consequence of conceding political supremacy to the Congress party after Indian independence. As the Congress system fell apart in the 90s, the BJP emerged as the next preferred choice of the Indian capitalist class. Today, the BJP is the first preferred choice of India’s capitalists, a fact that becomes strikingly clear from the pattern of political funding.

While the electoral bonds are one part of political funding, they are but a small part of the larger “system” of political financing.

A study by a group of independent journalists and media outlets, not linked to the mainstream news media or big houses, have conducted a study into political financing. The results show that of all known political financing, the BJP secured the lion’s share of up to 60% of political financing, totaling to about 13000 crore rupees, just short of $2 billion[v]  

The distant second and third in that list are the two other main bourgeois parties the Congress, and the TMC. The Congress which was once the political hegemon in India now accounts for less than one eighth of the total of the BJP’s financing. Nevertheless, it is not a small sum, and among oppositional parties, it has received the largest contribution by far.

The picture that emerges from this, is that the BJP has effectively monopolized political funding in India, a trend that has grown especially since 2018, with the advent of the electoral bonds scheme. It is a common practice of the ruling party to give out concessions in return of ‘gifts’ to its party. The BJP has been able to take over state institutions flawlessly, and wield them to its whims.

Today, the state and party are increasingly becoming one.

The Politics of Funding

The trend reveals that the BJP is clearly the preferred choice of the Indian capitalist class, however the Indian bourgeoisie does not wish for a repeat of the Congress system to return in a new package. The oppositional bourgeois parties have been kept alive with a steady funding, even if it pales in comparison to the ruling party’s.

The Congress and the regional bourgeois parties, especially that of the TMC in West Bengal, and regional parties of Southern India like the BRS and DMK, have gotten enormous sums in political contributions. The system of lobbying and patronage continues, making a mockery of any pretense of democracy under capitalism.

The corruption of the BJP is clear, but neither can the bourgeois opposition claim their hands are clean, simply by pointing to a smaller share of the loot. Given the total imbalance of financial resources in favour of the BJP, it is quite probable that the next national elections will be another stunning defeat for the Congress led opposition. However, should the Congress manage to carve out a victory, it is quite clear that they, much like the BJP, will ultimately turn to serve their paymasters.

At the end of this circus, it is the working class, youth, and peasants of India who will be sacrificed at the alter of capitalist profits.


[i] https://www.scobserver.in/cases/association-for-democratic-reforms-electoral-bonds-case-background/#:~:text=The%20Supreme%20Court%20held%20that,right%20to%20information%20of%20voters.

[ii] https://economictimes.indiatimes.com/news/politics-and-nation/electoral-bonds-bjp-took-home-lions-share-of-rs-16000-crore-political-funding/articleshow/107722969.cms?from=mdr

[iii] https://www.bbc.com/news/world-asia-india-68604287

[iv] https://thewire.in/government/electoral-bonds-seven-investigations-contracts-loss

[v] https://scroll.in/article/1065453/not-just-electoral-bonds-the-bjp-is-biggest-beneficiary-of-all-forms-of-political-finance 

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