India's Supreme Court cancels fundraising for Modi

India's Supreme Court on Thursday struck down a controversial fundraising mechanism that allowed individuals and companies to make anonymous political donations, a system widely seen as a benefit to Prime Minister Narendra Modi's ruling party.

Although the ruling came just months before the country's next general election, likely too early to affect its outcome, activists said it could eventually bring more responsibility for campaign finance.

The ruling on 'electoral bonds', as the fundraising tools are called, came six years after Modi's government introduced them. According to political analysts, his ruling Bharatiya Janata Party has raised huge sums of money during that period – both from electoral bonds and other means – money that it has used to defeat its rivals in elections and drown out opposition voices in general.

Under the controversial fundraising scheme, the State Bank of India, India's largest commercial bank, issued paper bonds that could be purchased in exchange for donations to a political party of the donor's choice. They range from as little as $12 to more than $120,000, with no limit on the number of bonds a donor can purchase.

Although the purchases were anonymous in the sense that they were not made public, the identity of each buyer was known to the State Bank of India, which is run by the federal government.

“This decision was taken with the laudable aim of bringing transparency in the electoral system. We respect the court order,” Ravi Shankar Prasad, a leader of the ruling party, said of the Supreme Court ruling. “After reviewing the entire judgment, we will provide an appropriate response.”

In their 232-page ruling, the justices wrote that they questioned how elected representatives could be accountable to the electorate when “companies, which entail enormous finances and enter into quid pro quo arrangements with parties, are allowed to contribute unlimited amounts. ”

In other words, the Supreme Court did not take seriously the idea that corporate donors gave money to politicians merely out of a sense of civic duty. “The rationale for corporate political contributions is as open as daylight,” the judges wrote. Yet “the integrity of the electoral process is critical to maintaining the democratic form of government.”

During hearings, Prashant Bhushan, one of the lawyers who filed the case against the government, told judges that about 99 percent of the bonds issued went to the ruling party and its allies.

In its ruling on Thursday, the five-judge bench declared the entire system unconstitutional and directed the State Bank of India to stop issuing any more bonds. It also ordered that all funding received by political parties through the bonds since April 2019 must be reported to the country's Federal Election Commission.

For decades, some Indians have called for transparency in campaign finance as their elections have become more expensive. In fact, by some estimates, Indian elections now cost more than competitive elections in the United States.

Police often confiscate large amounts of cash, liquor and other inducements from candidates and parties, which are intended to be distributed to voters before elections. Political observers say that politicians who spend the most money to win elections tend to become corrupt most quickly, as they seek the first opportunity to finance their future campaigns.

When Modi's government introduced the electoral bond system in 2017, his finance minister argued it was necessary to bring transparency to campaign finance. Opposition politicians and other critics noted that the nature of the system seemed better designed to benefit politicians already in power.

In a recent report, the Association for Democratic Reforms or ADR., a nonprofit organization dedicated to cleaning up elections in India, said that individuals and companies had purchased about $2 billion in election bonds since November last year, and that Mr. Modi's party alone bought about 90 percent of the business portion of these donations had received in the previous financial year.

Jagdeep S. Chokkar, member of the ADR and one of the petitioners in the Supreme Court, said the verdict would prevent further damage of the kind inflicted on the electoral system in recent years and should contribute to a more level political playing field in the region . future.

“The plan had the potential to provide additional benefits to any ruling party in power. And it has the potential to choke off the funding of all opposition political parties,” by giving the government the power to covertly monitor the fundraising efforts of its rivals. “That mischief has been removed,” Mr Chokkar said.