Latest Finance Ministry Notification on Electoral Bonds Against Model Code of Conduct: Former Top Bureaucrat

Former top bureaucrat, EAS Sarma, has written to the Election Commission (EC) regarding the latest Finance Ministry notification on electoral bonds. Sarma pointed out that the notification violates the model code of conduct currently in action in multiple states where Assembly elections are being held. 

Furthermore, as the donations received through electoral bonds majorly favour the ruling party in the Centre, the latest notification, as per Sarma, "raises serious concerns about its probity, its prudence, the underlying intentions and its likely adverse implications for the integrity of the ensuing Assembly elections." 

In a scenario where various political parties are competing against each other in an election, Sarma has asked the EC to examine if one political party deciding the timing of the notification (the party that receives most EBs) is an injustice to other parties. 

Moreover, Sarma has also asked the EC to look into the sources of the donations through EBs and whether they would be put into states where Assembly elections will be held in the coming weeks. 

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Here is the text of the full letter:

To

Shri Rajiv Kumar

Chief Election Commissioner

Election Commission of India (ECI)

Shri A C Pandey

Election Commissioner

Election Commission of India (ECI)

Shri Arun Goel

Election Commissioner

Election Commission of India (ECI)Dear S/Shri Rajiv Kumar/ Pandey/ Goel,

I refer to the notification issued by the Union Finance Ministry a couple of days ago opening a window for receipt of anonymous donations by political parties through Electoral Bonds (EBs) between 6-11-2023 and 20-11-2023 (

Considering that the timing of the above-cited notification is decided exclusively and unilaterally by the political party in power at the Centre, without consultation with other political parties, especially when the Model Code of Conduct (MCC) for the ensuing State Assembly elections is in force and when the legality of the scheme itself is under scrutiny by the apex court and considering that the past pattern of receipt of donations through EBs displayed a strong bias in favour of the BJP, the latest notification raises serious concerns about its probity, its prudence, the underlying intentions and its likely adverse implications for the integrity of the ensuing Assembly elections. 

I earnestly believe that this is far too serious a matter for the Commission to ignore and refrain from acting against it.

It is possible that the donations received by political parties engaged in the ensuing State assembly elections, whether they are national parties or regional parties, use the EB route to receive funds from sources that infringe the requirements of Section 29C of the Representation of People Act of 1951 or to receive kickbacks by way of quid pro quos from private companies to whom they have granted undue concessions. If that were to be the case, the donations thus received would be illegal, and they may also have to be considered as attracting the penalties provided for corrupt practices under the relevant election laws and the other laws that deal with corruption. In my view, neither the donors nor the recipient political parties can be permitted to claim anonymity if such donations are prima facie illegal and tainted. Under Article 19 of the Constitution, from the public interest point of view, the citizen-voter is entitled to know the details of all such donations and whether they are tainted in any way.

In view of the above, I request the Commission to examine the latest EB notification from the following points of view:

1. Since the notification is issued when the MCC is in force and its validity overlaps the electioneering timeframe, since its timing has been decided exclusively by one political party in power, possibly to the detriment of the interests of the other political parties and since the past track record clearly showed that it was the BJP that received the lion's share of the donations (https://adrindia.org/sites/default/files/ElectoralBondsNote_March_July2021_updated.pdf), does the timing of the notification militate against the MCC and does it do injustice to the other political parties involved in State elections?
2. Do the sources of funds received through the latest EBs attract the prohibitive provisions of the election laws and the other Central laws? Should not the Commission satisfy itself with the legality of the donations?
3. Are the funds received through the EBs by those political parties which are in power in the nature of quid pro quos, a euphemism for brazen kickbacks, for concessions granted to the donors by way of industrial subsidies (irregular subsidies to private companies through concessional land, electricity, water, taxes, irregular Production Linked Incentives etc.)?
4. Are they in the nature of kickbacks for allocation of highly valuable mineral blocks in violation of Central and State laws and in violation of competitive norms?
5. Are they in the nature of quid pro quo by way of the political executive diluting the laws relating to forest conservation, regulation of development of minerals, etc. and relaxing the rules and procedures that grant undue favours to corporate entities?
6. Are they in the nature of donations given under duress by some private companies and individuals against whom Central and State investigation agencies have either launched or threatened to launch investigations?
7. What are the sources of the donations, to what extent are they put to use in those States where Assembly elections are scheduled to be held and in what manner? While the Commission is no doubt exercising vigilance on funds put to misuse by political parties at the field level, exercising vigilance at the source assumes greater importance. It is desirable that every rupee received by political parties through EBs is fully subject to close oversight from its source to its end-use

 As an institution set up under Article 324 of the Constitution, the Election Commission has not only an obligation to conduct elections in a free and fair manner but also has the necessary authority to ensure in every manner that no action by the executive comes in the way of fulfilling that obligation. The people of India and the political parties in the country repose trust in the Commission as the sole custodian of free and fair elections, and I sincerely hope that the Commission will rise to the occasion to justify that trust. Failing to do so would undoubtedly erode the credibility of elections.

May I request the Commission to make a public disclosure of this letter and the action taken on it, at the Commission's website, for others to see? May I also request the Commission to act in a timely manner to make sure that the latest EB notification does not affect the integrity of the ensuing elections?

Regards,

Yours sincerely,

E A S Sarma

Former Secretary to the Government of India

Visakhapatnam