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AEB was a tool to facilitate quid-pro quo deals between ruling politicians & businessmen, also referred to as politician- businessman nexus or crony capitalism. It helped both of them at the cost of opposition parties, thereby severely damaging Indian democracy, disturbing level playing field for the parties. Since only ruling party could take benefit of this legalised corruption in legal currency, opposition parties had to resort to traditional corruption in black money, just to survive in our messy democracy. The money for fighting elections has become lifeline for survival in our crude democracy for want of electoral reforms. Since, only the central government had full transparency, the ruling party at centre was the prime beneficiary. India must be the only democracy which had such unique AEB system introduced in 2017 that lasted till 2024.
Both EC & RBI had opposed this scheme initially but later took a U turn (perhaps after the heads changed, not surprising in the new India). ADR filed the case in 2018. Supreme court judges avoided touching this hot potato till CJI YMC showed the courage.
The defenders of AEB claim it would reduce black money in elections. Would it? I find this argument against Supreme court judgement very strange. It virtually means- Allow them to commit crime A, else they shall be indulging in crime B.
Supreme courts defined crime A- “anonymity in the electoral bonds scheme was selective, not fool-proof; financial support to political parties can lead to a quid pro quo arrangement. It violates the right to information, freedom of speech.”
Government defined crime B- It will proliferate use of black money donations.
Both A&B have to be tackled by the system & that is possible.
This argument defending AEB is weak also because demand of illegal money is relatively inelastic & not readily interchangeable with legal money. Let me explain.
Illegal part of the electoral/ election expenses is huge; assume 70% of the total (my guess). Only illegal money can be used to meet certain heads of expenses like the election expenses which exceed the legal limit (about 10 times). The bribe to the voters before the election & to buy out opposition MPs after the election. To hire foot soldiers to spread misinformation, organise violent protests (for taking the law in hands).
Parties/ candidates have been collecting this illegal money in cash, with or without AEB. They will continue to do so even after the Supreme court decision, till such time India goes for electoral reforms, which are not likely in near future. The Supreme court decision hardly changes this part of the game.
This court decision affects mainly the legal part of the donation money which is relatively small. Its proportion will not decrease with abolition of AEB because that would complicate collection & accounting for the recipients. Not all donors are ready to give cash. Candidates/ parties have to show some legal money expenses in their books to fool the system.
Thanks to digitisation of the economy & reforms like GST, the availability of black money has reduced & should keep on reducing further if the government continues with its efforts. Election funding reform is the right way to reduce the black money.
If we are really concerned with reducing black money in elections, why does the EC not increase the legal limits of election expenses?
There was always a feasibility of converting black money into white money to buy AEB! The conversion techniques are known, many were used during demonetisation. But this was perhaps not required.
After ban on AEB, cash donations from the companies may go up (thanks to secret quid pro quo deals!) but overall cash requirement for the Electoral/ Election system will hardly increase. System will just reach a new equilibrium in sourcing their need for illegal cash.
Companies making big cash donations illegally without being caught is not likely without connivance of enforcement agencies, in 21st century India. They won’t need to pay in black money it if there are no secret quid pro quo deals with politicians, the most serious danger to health of democracy & nation.
AEB act had removed limit on political funding. Supreme court suggested re-introducing this cap because “unlimited corporate funding would increase the use of black money for political funding through shell companies.”
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