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Will the Fortune It Made in the Election Bond Scheme Hurt India’s Ruling BJP?

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Will the Fortune It Made in the Election Bond Scheme Hurt India’s Ruling BJP?

The revelations about the scheme are striking, but corruption alone has rarely brought down governments in India.

Will the Fortune It Made in the Election Bond Scheme Hurt India’s Ruling BJP?
Credit: Depositphotos

Indian Prime Minister Narendra Modi’s Bharatiya Janata Party (BJP) received $987 million, or half of the $1.98 billion (165.2 billion Indian rupee) that corporations and individuals spent in funding political parties through the anonymous donation scheme called Electoral Bonds between January 2018 and January 2024, data published last week reveal.

In earning through electoral bonds, the Congress, India’s main opposition party, ranked a distant second with $233.5 million, less than a quarter of what the BJP got. The rest of the funding went to regional parties.

In a February judgment, India’s Supreme Court had held the scheme “unconstitutional,” struck it down, and ordered the publication of all data, including details that connect the donors with the recipient parties. The data was released in several batches spanning over a week. The funders include companies engaged in mining, infrastructure, real estate, pharmaceuticals, and non-banking finance corporations.

It is evident from the data that the BJP had earned a significant chunk of its donations from companies facing probes by investigation agencies controlled by the federal government, prompting Congress leader Rahul Gandhi to allege that Modi was running “the world’s largest extortion racket.”

Congress General Secretary Jairam Ramesh highlighted how 41 corporate groups that faced a total of 56 raids by federally-controlled agencies had donated $310 million to the BJP, of which $221.6 million was given after the raids took place, Congress claimed. This amounts to 22.45 percent of the BJP’s total receipts through the scheme.

Ramesh alleged that the bond data reveals two kinds of quid pro quo between corporations and BJP-run governments, describing them as “pre-paid” and “post-paid” bribery. The first involves a lot of companies that spent $65.9 million on electoral bonds to the BJP and bagged projects from the Union or BJP-run state governments worth $15.8 billion within three months of making donations.

The other set of companies paid $69.3 million in donations within three months of bagging projects worth $7.4 billion.

Several opposition parties that are part of the opposition Indian National Developmental Inclusive Alliance (INDIA) bloc accused the Modi government of using agencies like the Enforcement Directorate, the Central Bureau of Investigation, and the Income Tax Department for extortion.

“The electoral bond scheme is the BJP’s white-collar corruption,” said M.K. Stalin, chief minister of the south Indian state of Tamil Nadu. Stalin heads the Dravida Munnetra Kazhagam (DMK), one of the Congress’ allies.

The BJP rubbished the charges, with Union Home Minister Amit Shah asking if the money that the opposition parties received was also part of extortion and quid pro quo.

Corruption charges from the alleged 2G spectrum scam to coal block allocation were among the key issues that led to the downfall of the Congress-led United Progressive Alliance government in 2014 and the rise of Narendra Modi, who entered the national political scene with a pitch that mixed Hindu nationalism with anti-corruption promises.

During Modi’s 10-year rule, the opposition has brought multiple corruption charges against the government including those relating to the Rafale fighter jet purchase to the health insurance and expressway construction. But nothing has been substantiated yet.

On the other hand, federally-controlled agencies have interrogated or arrested a list of opposition leaders on charges of corruption. Last week, Delhi Chief Minister and Aam Aadmi Party (AAP) helmsman Arvind Kejriwal landed in jail.

The Congress has long been alleging that the electoral bond scheme was a big scam. Now that the funding data has been released weeks before the country is set to vote in elections, the party wants to make the most out of it.

Most of the Congress’ crucial allies, the Maharashtra-based Nationalist Congress Party-Sharadchandra Pawar and Shiv Sena-Uddhav Balasaheb Thackeray; the Bihar state-based Rashtriya Janata Dal; the Uttar Pradesh-based Samajwadi Party; and the AAP, which rules Delhi and Punjab states, have received small amounts through this scheme, totaling $35.1 million. The only important Congress ally to have gotten a significant amount of funding through the scheme is the DMK, which got $76.4 million.

While most INDIA bloc parties are now looking to corner the BJP on charges of “extortion” and “quid pro quo,” several senior politicians feel the issue may not have any major electoral impact. Corruption charges alone undoing a government is rare in India.

In the landmark 1989 election, when India voted out Prime Minister Rajiv Gandhi, the allegation of a scam in the Bofors arms deal was the factor that galvanized the opposition but discontent against Gandhi’s leadership had been growing over a range of other issues.

The issues included inflation, disturbances in Assam and Punjab, the government’s involvement in the Sri Lankan civil war, and controversial decisions to back Muslim clerics on the question of divorced women’s rights and to reopen the gates to the Babri Masjid in Ayodhya. Congress veteran Mani Shankar Aiyar considered Gandhi’s decision on the Babri Masjid as “the single most important cause for Rajiv Gandhi’s defeat.”

Even in 2013-14, when the Congress government struggled to contain the leftwing insurgency and Kashmir militancy, Modi appeared on the scene promising “strong leadership” to supplement his anti-corruption and pro-economic growth pitches.

“There will be some region-specific impacts,” a veteran Congress parliamentarian told The Diplomat on condition of anonymity while speaking on the coming election.

“In India, over the past three decades or so, corruption charges hurt a party only when there is other discontentment against it. Regions with such discontent would see an impact,” said the parliamentarian, mentioning Maharashtra and Telangana as states where the Congress expects to gain.

In Maharashtra, there is public resentment against the way the BJP engineered splits in the Shiv Sena and the Nationalist Congress Party, the Congress parliamentarian said. The Congress has alleged that the BJP used electoral bond money to split rival parties.

Similarly, discontent against the Bharat Rashtra Samithi’s 10-year rule in Telangana led to the fall of the government and the Congress’ entry to power only three months ago. Here, the Congress hopes the disclosure of the BRS’ massive fortunes through electoral bonds would weaken them further.

Nevertheless, political observers also do not expect the issue to have much impact in Bihar and Uttar Pradesh, where identity politics along the lines of caste and religion have remained the dominant electoral factor for the past few decades.

A parliamentarian of the Trinamool Congress (TMC), which rules West Bengal, agreed with the Congress leader’s views.

“Our party’s internal analysis revealed that we suffered in the 2019 general elections because corruption charges against us at the grassroots level got amplified by the discontent over a section of our party’s highhandedness during the 2018 rural elections,” the TMC parliamentarian said. “Corruption charges alone wouldn’t have bled us that much.”

West Bengal is unlikely to see the two main parties – the ruling TMC and opposition BJP – trading charges on this issue.

Even though TMC chairperson and the state’s chief minister, Mamata Banerjee, is a fierce critic of Modi, her party has earned a massive fortune through the scheme, securing $204 million. It is the biggest gainer among regional parties.

The Communist Party of India-Marxist, the ruling party in the south Indian state of Kerala, did not receive any payment through electoral bonds and was one of the petitioners in the Supreme Court challenging the scheme. In West Bengal, their one-time bastion, they hope to use the issue to recover votes that they lost to the TMC and the BJP in recent years.