Regional political parties get lion's share of electoral bond funds

Share of other sources has declined as a proportion of overall income

Electoral bonds have emerged as the preferred method of donation to political parties, especially for regional parties.

Regional parties have accounted for a larger share of electoral bonds in their funding than national ones in three of the past five years. They have also witnessed the sharpest decline in declared corporate funding, a potential indicator of their political donations coming in undeclared through electoral bonds.

The Supreme Court (SC) declared the route unconstitutional on Thursday.

In the year the bonds were introduced, they constituted less than a tenth of the total donations of regional parties and a fifth of the donations of national parties.

In 2018-19, electoral bonds made up over 60 per cent of the donations to all recognised political parties in India.

In 2019-20 (Lok Sabha election year), a larger share of national party donations still came from electoral bonds. However, this trend changed in subsequent years, even as national parties received larger donations in absolute figures.

Over 80 per cent of regional party donations came from electoral bonds in 2021-22 (FY22) when 11 state Assembly elections were held.

Major General Anil Verma (Retd), head of Association for Democratic Reforms (ADR), welcomed the SC decision to scrap electoral bonds and said that electoral bonds gained popularity for donations because of the anonymity they offered.

ADR was one of the petitioners challenging the legality of the electoral bonds scheme.

“Political parties and donors were happy with the system of anonymity (under the electoral bond scheme). They were getting tax exemptions, and there was no limit to the donations that could be made. Slowly, it became popular among all parties, although in the beginning, the Bharatiya Janata Party received a larger chunk of the donations. But what we have observed, and also submitted in court, is that the bonds favour the ruling party, be it in a state or nationally,” he said.

In 2016-17, before the bonds were introduced, about half of national party donations and a third of regional party donations were declared as coming from the corporate sector. In FY22, their share had shrunk to 22 per cent for national parties and 13 per cent for regional parties.

“After the bonds were introduced, corporates slowly started shifting to the electoral bond scheme because of the anonymity offered. We have been including electoral bonds under the category of ‘income from unknown sources’ because we don’t know who these donors are,” Verma added.