In the last month or so, ever since the State Bank of India was compelled by the Supreme Court of India to release information on donations via electoral bonds to political parties, emerging details have only confirmed the worst fears of naysayers in regulatory and policy-making institutions about the scheme before it was introduced by the Bharatiya Janata Party (BJP)-led government in 2018. A joint investigation that included The Hindu found that at least 33 companies that had aggregate losses of over ₹1 lakh crore from 2016-17 to 2022-23 had donated close to ₹582 crore, of which 75% went to the ruling BJP. Loss-making companies were donating substantial sums; profit-making firms were making donations exceeding their aggregate profits; some donor firms were not reporting data on net profits or direct taxes; some newly incorporated firms were making donations before the stipulated three-year period (after being formed) — the list of the rule-breaking and suspect sources of funding is significantly large. The nature of these donations raises several questions. Were these loss-making firms fronts to launder money? Were the firms that did not report profit/losses shell companies? Were donor firms that made significant profits — but did not pay net direct taxes in aggregate for a significantly long period — engaged in tax evasion? These supplement other questions raised earlier — was the fact that a number of firms, under investigation by agencies such as the Enforcement Directorate and the Income-Tax Department, were significant donors for the ruling party, an indication that these agencies were being used as a means to ensure quid pro quo?

Reserve Bank of India and Election Commission of India officials were emphatic in their apprehensions that the bonds scheme could be utilised in money laundering and tax evasion. Yet, the Union Finance Ministry went ahead with the scheme. In the five and a half years of its operation, thousands of crores were encashed by political parties via electoral bonds, with the BJP receiving the lion’s share. While the Court must be lauded for ending an opaque scheme with serious issues, the fact that large amounts were donated from dubious sources before every election is an indictment of the nature of campaign financing in place during this period. With the polity in India busy campaigning for the general election, it is up to the electorate to assess the effects of the electoral bonds scheme. But, more importantly, once the election is over and governance takes over, Parliament and the regulatory institutions must conduct a thorough investigation into the nature of donations and whether the donors and recipients broke laws. The judiciary must prod these institutions. A clean-up of campaign and electoral financing is a must for a healthy democracy.