WILL ELECTORAL BONDS SHINE LIGHT ON INDIA’S PARTY FUNDING?

▶ Yes, says finance minister. But critics argue they will do nothing to reform a system vulnerable to corruption

India has introduced a bonds system to improve the transparency of party funding and political donations.

Instead of making cash donations to political parties, donors will buy electoral bonds from India’s biggest stateowned banks, leaving a record of who is donating how much money to whom.

India’s finance minister, Arun Jaitley, insists this will make political funding more transparent. He announced the bond scheme on January 2.

But critics say electoral bonds will make no difference, and that neither the public nor the election commission will be able to discover the source of most of the money in party coffers.

Political financing in India is opaque. In its last report, published in 2014, the US non-profit organisation Global Integrity ranked India 42nd out of 54 countries surveyed on transparency. India scored 31 out of 100, placing it one step above Bolivia but six below Pakistan.

Donors to political parties can buy bonds in denominations from 1,000 rupees (Dh57.70) to 10 million rupees from branches of State Bank of India.

When the parties receive these bonds they can cash them with the same bank, theoretically leaving a recorded paper trail of donors and the amount they donated.

Since February last year, individual cash donations to political parties have been limited to 2,000 rupees, down from 20,000.

On Sunday, Mr Jaitley said parties accepted large amounts of money from donors who had not declared the funds to tax authorities.

“The electoral bond scheme envisages total clean money and substantial transparency coming into the system,” he said.

But the scheme does allow for anonymous donations. The bonds do not bear the names of donors and parties do not have to disclose these names in their filings to India’s election commission.

Corporations that have donated do not have to specify the parties they have favoured in their annual reports.

This anonymity has been a persistent problem in Indian political financing, said Anil Verma, the head of the New Delhi non-profit Association for Democratic Reforms, which campaigns for transparency in politics.

By law, parties have been required to report the sources of donations exceeding 2,000 rupees. In practice, Global Integrity’s 2014 report found, parties often failed to report.

Reports filed with the election commission are sparse and incomplete and the commission does not audit party finances.

Successive governments have also given political parties exemptions from India’s right to information law, which members of the public could use to discover the details of party financing.

“So with these bonds, you and I don’t know who is donating money and the election commission also doesn’t know,” Mr Verma said. “Who does know? The State Bank of India and therefore the government.”

For the government to have such knowledge opened up possibilities for harassing opposition parties and their donors, he said.

“Who will twist whose tail here? I think that’s quite obvious,” Mr Verma said.

The bonds scheme also fails to address the tendency of parties to find rich candidates who might spend their own money on their campaigns.

In its analyses, the association has repeatedly said spending in self-funded campaigns often exceeds the limit set by the election commission.

“It looks like every political party knows these bonds will do very little to change funding patterns,” Mr Verma said. “This is why, apart from maybe some weak statements from Congress in the opposition, no party has said anything at all.”

The electoral bond scheme envisages total clean money and substantial transparency coming into the system ARUN JAITLEY Finance minister