Bonds make it opaque and focus has to be on spending
Finance minister Arun Jaitley may well be right when he says the fear of victimisation has kept India Inc from donating to political parties by cheque—he has also removed the cap on donations now. If company A, according to this logic, gives funds to party B then, when it comes to power, party C will try and take revenge for funding rivals. Once RBI election bonds are available, companies can simply buy the bonds and give them to political parties—since the party will not disclose who gave it the bonds to, there will be no chance of repercussions. Things may not be so simple, though, since the company will have to disclose the value of bonds it bought—even if it doesn’t reveal whom the money was given to—and political parties who don’t get the money will have reason to feel upset. More important, though, is the quid pro quo. Companies give money to buy favours, even if the quid and the quo aren’t strictly transactional each time. Since this is a given, one way to judge a government’s actions is to know who gave it money—the political bonds, however, cloak this completely and, to that extent, are a step backwards in cleaning up India’s politics.
The government’s decision to reduce anonymous cash donations from Rs 20,000 to Rs 2,000 is of a similar nature since political parties now just have to claim they got the donations in even smaller amounts than previously—the finance minister just needs to see the disclosures of political parties in the past to know this. A recent report by CMS, a Delhi-based research and advocacy organisation, puts the poll-spend in the just-concluded UP assembly at R5,500 crore which is several times what the legal spending could possibly have been. If this money has to be supplied by India Inc in cash, black money cannot be stopped since it needs to be generated—the R2,000 window, however, leaves this wide open.
More important, while CMS’ study confirms it, everyone acknowledges election spending is way above the limit thanks to loopholes that allow the party and ‘well-wishers’ to spend unlimited sums. This is what the government needed to address, but has not. If unlimited sums are to be spent, whether political parties get funds in cash or by way of opaque bonds, there will be a quid pro quo—and, once the budget proposals go through, it will be that much more difficult to trace this.