India’s top court scrapping anonymous poll funding is a setback for Modi

A judicial delay in India that stretched some six years and caused immense despair, fortunately, did not end in disappointment.

Instead, when the country’s Supreme Court last week scrapped – following protracted arguments and intermittent adjournments – a scheme by the Narendra Modi government that allowed individuals and corporates to anonymously fund political parties, there was a general outpouring of relief that the beleaguered Indian democracy had survived what was seen as a debilitating crisis.

That the verdict jettisoning the scheme as “unconstitutional” came ahead of national elections slated for mid-2024 provided additional comfort. It is another matter that Modi is widely expected to win a rare third term.

Brought into effect in 2018, the electoral bond scheme was widely thought to have skewed India's democratic process, already dominated heavily by Modi's far-right Bharatiya Janata Party (BJP) and its allies.

Though touted as a fund-raising instrument aimed at bringing transparency into election funding, it had the exact opposite result and made the entire process more opaque.

Indian elections are very expensive - second only to US presidential elections - and cost an estimated seven billion dollars in 2019 when the last parliamentary elections were held.

Political parties guzzle money and the electoral bond scheme allowed Indian citizens and businesses incorporated in the country to make anonymous donations to them.

Akin to promissory notes, one could buy interest-free bonds in fixed denominations from $12.50 to $125,000 from the state-owned State Bank of India during specific periods of time throughout the year and could then donate them to a political party of their choice for encashing within the next 15 days.

The contributors could buy as many bonds as they wished since the law provided for no limit.

Also, the scheme allowed individuals and firms to donate without revealing their identity.

From the very beginning, critics were aghast. Ordinary citizens had no idea who was buying the bonds and bankrolling which party. The government, though, had access to the records kept by the State Bank of India.

It was suspected that the scheme had been deliberately designed to benefit the BJP. As the party in power, it could easily find out if anyone was donating to the opposition and arm-twist them to desist from doing so.

The non-disclosure of names of donors to the public also meant that governments - both at the federal and regional levels - could enter into quid pro quos with donors without ordinary citizens getting any wind of it.

Records suggest that the ruling BJP did indeed benefit the most.

Of the US$ two billion worth of bonds sold until the Supreme Court stepped in, around 57 percent went to the ruling party. The Congress - its principal opposition - got a dismal 9 percent in comparison.

Critics naturally have been crying foul.

For that matter, even the country’s central bank, the Reserve Bank of India, and the Election Commission of India - the election organising body – had initially raised red flags. Strangely, though, they flipped and dropped their opposition a year later, deepening suspicion about the gradual capture of state institutions.

In the end, the ruling party's best-laid-out plans of lining its coffers came unstuck as the Supreme Court threw out the scheme.

Among everything else, the scheme was thought to have enabled money laundering. Any foreign entity could register a subsidiary in India and route donations through it.

Even loss-making companies were allowed to donate generously. Why and for what a loss-making firm would donate remained a subject of speculation.

That the Supreme Court struck down the scheme despite the government's spirited defence of what was generally felt to be indefensible was truly remarkable.

For one, the unequal funding allowed the BJP to defeat its rivals in polls and drown out opposition voices in public spaces. Though termed electoral bonds, the donations could be used for other things, and the BJP has used the money to build a massive infrastructure and network that others simply cannot match.

More importantly, the Supreme Court's ruling has somewhat restored people's faith in the country’s highest judicial body.

For several years, many felt that the top court, too, had succumbed to majoritarianism, and several of its recent judgments had left sections of the society dismayed.

It included the top court's decision to allow the building of a Ram temple where the Babri Mosque once stood. The court had declared the mosque demolition a “criminal act”. Yet, it allowed Hindu fanatics' plea for a temple, recently inaugurated by Modi with much opposition.

It is no wonder that a sizeable section of India is savouring the Supreme Court verdict on electoral bonds. It is reassuring to realise that the judiciary still has a spine, and ensuring a level playing field in elections is still within the realm of possibility.

But the larger battle to strengthen democracy is far from over. There is talk – though not substantiated – that the Modi government could take the ordinance route to legislate and overrule the verdict.

It is unlikely, though, since it would be poor optics in an election year.

A far bigger challenge comes in the shape of the Election Commission of India. Though meant to be an autonomous body, its structure has been changed drastically, and now there are questions about its fairness.

Out of a committee of three that decides on the selection of election commissioners, the government has given itself a clear majority by bringing in a new law. It, therefore, can stack the body with its own people.

Undoubtedly, the court verdict on electoral bonds is a significant victory. But the battle to safeguard free and fair elections in India has not reached a closure yet.