Electoral bonds: What are they? What does the newly-released data reveal? Would it make an impact?

It takes an Oscar-worthy director to come up with the juicy drama that somehow seems to pervade India’s pre-general election seasons. Amid all the chaos, a political hot topic has just witnessed a major development: the electoral bonds row.
What are electoral bonds?
For those unversed in the whole episode, the government introduced the Electoral Bond Scheme via the Finance Act of 2016-2017, allowing anyone to anonymously make an indefinite number of non-capped donations to their preferred political parties. Before this scheme, all donations above Rs 20,000 had to be explicitly made public, and donations of more than a certain percentage of the company’s revenue were disallowed.

Such restrictions were meant to ensure that no political party had an unfair monetary advantage over the others and that the policies would not be influenced by the rich. Therefore, many experts were concerned that this new lack of transparency in the donation process opened up a gaping avenue for big corporations to donate for favourable outcomes from the ruling regime in terms of acquiring licences, government contracts, leases, and even accelerating favourable policy changes.

The government insists that the measure ensures transparency as the purchaser would be allowed to buy bonds only on due fulfilment of all the extant KYC norms and by making payment from a bank account. However, the opposition parties kept raising objections, with the Congress leader Rahul Gandhi terming the electoral bond scheme as a legalisation of the process of accepting bribes and commissions.
How did the Supreme Court step in?
Recently, in a move that many celebrated as a major win for transparent and fair electoral practices, a Constitution Bench panel of five Supreme Court judges scrapped the Centre’s electoral bonds scheme on February 15, deeming that the whole ordeal was “unconstitutional” to begin with. Subsequently, the State Bank of India (SBI) was ordered to disclose all details of the donors that had purchased electoral bonds, the amount purchased, and the recipients of these “support” donations.

Nearly a month after the directive, SBI finally submitted the electoral data to the Election Commission on March 13, after the apex court denied its application for more time. The bank attributed the delay in compiling the information to the non-digital nature of the way electoral data was collected and stored, making it harder to collate and produce.
What does the data reveal?
The data published by the Election Commission based on SBI’s affidavit revealed information on over 22,217 electoral bonds purchased between April 1, 2019 and February 1, 2024. This also means there exists a year’s worth of data missing from the first year of the electoral bonds scheme, amounting to hundreds of crores of Rupees.

Further, the very content of the data remains lacklustre, many experts maintain. The problem is that individual electoral bonds do not have their serial numbers attached. This makes it impossible to accurately ascertain who these bonds were directed to, meaning we still do not know which corporations donated how much to which parties.

Condemning the SBI for not divulging the unique serial numbers as per its previous full-disclosure directive, the Supreme Court has now issued a notice for a prompt response by March 18.
Which political party benefited the most?
While many political parties benefited from this scheme, the Bharatiya Janata Party (BJP) encashed about 1,300 crores worth of electoral bonds during the 2023 financial year, according to media reports. This amounted to about half of the total electoral bond donations, and more than seven times the amount Congress received during the same period.

Out of a total of 12,155 crores worth of electoral bonds purchased between 2019 and 2024, BJP redeemed Rs 6061 crores, followed by Mamata Banerjee’s Trinamool Congress at Rs 1610 crores. A total of 213 donors purchased bonds worth over Rs 10 crores, with the top 20 donors accounting for nearly half of the total electoral bonds.
Are scams hiding behind the electoral bonds?
The ruling party receiving such a disproportionate share of the electoral bonds has raised many eyebrows. Rajya Sabha Minister Kapil Sibal expressed discontent with the SBI report, calling it a “scam” and explaining that it needs thorough investigation by the Enforcement Directorate (ED) and the Central Bureau of Investigation (CBI). Jharkhand Congress President Rajesh Thakur emphasised that a comprehensive study is essential to ascertain the true extent to which companies might have their money to get favour from the central government. Many Congress leaders, such as Manickam Tagore and Jairam Ramesh, also held that it was suspicious that only companies that donated funds to the BJP were given projects and contracts.

The other problem is the fact that several of the big purchasers have been consistently under the radar of central agencies, facing frequent raids. This includes the top donor, Lottery company Future Gaming and Hotel Services, led by “Lottery King” Santago Martin, who donated a whopping Rs 1,368 crores. Many others also concern that large corporations may have donated money through shell corporations, in order to hide their involvement in any political favouritism. Congress MP Manish Tewari asked for a Supreme Court order to “lift” this corporate veil of shell companies to reveal the true purchasers of the bonds.

Further, as per a Mint analysis, several donor companies who contributed massive amounts were found to be ‘inactive’, and thus the true details of the donors were not transparent at all. According to their report, this included entities such as Rungta Sons, SN Mohanty, Sasmal Infrastructure Private Limited, Avees Trading Finance, and others, whose collective contributions amount to hundreds of crores of Rupees.

The official electoral bond data can be accessed via the Election Commission of India website.