Electoral Bonds: Seeking Secretive Funds, Modi Govt Overruled RBI

Nitin Sethi

The first part of #PaisaPolitics, an exclusive HuffPost India investigation into how the Modi government brought untraceable funds into Indian politics. Read part two here and three here

NEW DELHI — Days before unveiling electoral bonds, a secretive way to channel money to political parties, the Narendra Modi government pretended to ask the Reserve Bank of India (RBI) for its opinion, only to summarily dismiss the central bank’s reservations, previously unpublished documents obtained by HuffPost India reveal. 

The undue haste shown by the government was striking given how serious the RBI’s objections were, the following account — based on these documents— shows.

Thus far, electoral bonds worth at least Rs 6,000 crore have been sold since March 2018. Of the first tranche, worth Rs 222 crore, the BJP has garnered 95% of the money according to data compiled by the Association for Democratic Reforms. 

On a Saturday four days before Budget Day in 2017, a senior tax official spotted a wrinkle in the presentation the finance minister was scheduled to make before Parliament.

In his speech on February 1, 2017, Arun Jaitley, India’s finance minister at the time, planned to unveil “electoral bonds”: a controversial, legally-sanctioned instrument that would allow corporations and other legal entities to anonymously funnel unlimited amounts of money to political parties. 

If written into law, these anonymised electoral bonds would legalise the influence of big business and open the opportunity for offshore money to pour into Indian politics.

But there was a hitch — the RBI had to be brought on board first.

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Legalising these anonymous donations would need amendments to the Reserve Bank of India Act, the tax official wrote in a note dated January 28, 2017, to his superiors in the finance ministry.  He drafted the proposed amendment and sent it up the...

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