by Simrin Sirur
In the years since it came to power in 2014, the Bharatiya Janata Party (BJP)-led central government has positioned itself as an advocate of green growth locally and globally. But recent revelations about political funding through electoral bonds cast doubt on these credentials.
Newly released data from the Election Commission of India (ECI) shows big players in India’s infrastructure development industry – from the energy to natural resource extraction businesses – paid millions in anonymous donations to political parties, of which the BJP emerged as the biggest beneficiary.
Released on the orders of the Supreme Court, the State Bank of India (SBI) shared the information with ECI, which, for the first time, made public the data of purchasers and recipients of electoral bonds – a financial instrument that allowed political parties to receive unlimited sums of money while guaranteeing purchasers anonymity. The scheme had been in effect since 2018, till it was struck down by the apex court in February as being unconstitutional for its lack of transparency.
The shadow of India’s development industry over the electoral bonds spotlights India’s weakening environmental regulations, particularly at a time when it seeks to transition its energy systems. Mining giants Vedanta and Essel Mining, that have a history in violating environmental norms, are among the top buyers of bonds, having purchased over Rs. 600 crore worth. “The presence of energy and mining companies in the electoral bond scheme reinforces the need to ramp up institutional and legal accountability measures in India’s environmental governance and renewable energy transition,” Prakash Kashwan, Associate Professor of Environmental Studies at Brandeis University, told Mongabay India.https://public.tableau.com/views/IndiaElectoralBondsandtheenvironment/Sankey?:showVizHome=no&:embed=true
Giants in mining and energy funded political parties
The disclosure of electoral bond data comes at a time when the central government has pushed to expand renewable energy capacity as part of its “green growth” agenda. Since assuming office in 2014, the present government has consistently demonstrated ambition in setting and pursuing renewable energy targets. These include aiming for 175 GW of renewable capacity addition by 2022 and now targeting 500 GW by 2030. However, this pursuit unfolds as key environmental regulation norms are whittled down to facilitate the “ease of doing business” and infrastructure expansion. Some of the biggest bond purchasers are involved in sectors like mining, infrastructure, and energy, holding multiple government contracts in sectors considered essential for economic development.
In its order, the Supreme Court said electoral bonds could encourage quid pro quo arrangements between parties and their funders. “The ability of a company to influence the electoral process through political contributions is much higher when compared to that of an individual … contributions made by companies are purely business transactions made with the intent of securing benefits in return,” the court said.
Surajit Mazumdar, professor of economics at Jawaharlal Nehru University, who studies the relationship between India’s private sector and the state, said that quid pro quo arrangements between corporations and governments have typically been clandestine. “Whether there has been a quid pro quo arrangement between an individual company and party because of electoral bonds is a matter for further investigation. But what the electoral bond system did was to create a mechanism which combined the gains of those illicit flows with the benefits of a formal, over-the-table system,” he said.
The information revealed by the SBI shows several companies that purchased electoral bonds to fund political parties have previously faced scrutiny over environmental concerns.
For example, Megha Engineering and Infrastructure Limited (MEIL), the second biggest buyer of electoral bonds worth Rs. 966 crore, works across power, hydrocarbon exploration, irrigation, and transportation. One of its flagship projects, the Kaleshwaram lift irrigation project, purportedly the biggest such irrigation project in the world, is being investigated for lapses in engineering and corruption. In 2020, the National Green Tribunal (NGT) declared its environmental clearance had been granted in violation of the law, and the Supreme Court subsequently stayed the expansion of the project after it learned it was without requisite environmental clearances.
MEIL is now constructing Asia’s longest all-weather tunnel, the Zojila tunnel, in Jammu and Kashmir, a central government contract it secured in October 2020, after the electoral bonds kicked in.
Two of MEIL’s subsidiaries – Western UP Power Transmission Company Ltd. and SEPC Power Pvt. Ltd., involved in power generation and distribution, are also top buyers of electoral bonds, spending Rs. 260 crore on funding political parties.
The biggest company in the energy sector to have purchased bonds is Haldia Energy, a 600-megawatt thermal power plant company and a subsidiary of the RP-Sanjiv Goenka Group (RPSG). In 2015, the Comptroller Auditor General (CAG) reportedly flagged irregularities in Haldia Energy and RPSG’s participation in the country’s first coal auction, raising concerns about fair competition in the bidding process. Dhariwal Infrastructure Limited, a thermal power plant in Maharashtra owned by another RPSG subsidiary, CESC Limited, bought electoral bonds worth Rs. 115 crores (Rs. 1.15 billion), the SBI data shows.
Several renewable energy companies also purchased bonds, but Greenko and its subsidiaries contributed the most – Rs. 117 crore. Greenko is one of India’s most rapidly growing renewable energy companies, with a presence across 15 states.
According to Kashwan, the participation of renewable energy companies in the electoral bonds scheme is a cause for concern when it could have international repercussions. “Greenko has benefited from a strategic partnership between Italy and India launched in 2021. Similarly, Greenko appears prominently in the plans that Abu Dhabi Investment Authority (ADIA), the UAE’s sovereign wealth fund, has for investing in India’s renewable energy sector,” he said, adding, “The industry-politician nexus has implications for multilateral and bilateral cooperative arrangements promoting decarbonisation in India. The potential for quid pro quo undermines the goals of upholding public interest in the process of decarbonisation that, in the Indian context, must prioritise the goals of energy poverty.”
Apart from setting ambitious goals for installed capacity year on year, the BJP-led government has cleared the decks to nurture a clean tech manufacturing hub in the country. Several government missions are dedicated to ramping up the production of green hydrogen, electric vehicles, and solar PV modules while keeping them largely exempt from any environmental impact assessments.
Weak environmental regulation is a result of electoral bonds scam
The enforcement of environmental regulation hasn’t been devoid of political influence. A paper assessing the power of local state assembly members over environmental clearances for coal projects between 2004 and 2014 found that applications for clearance went up in their constituencies if they aligned politically with the ruling party in the state. “Our findings are consistent with aligned politicians using their privileged position to help powerful project developers profit from construction and operating contracts,” the researchers wrote.
A more recent study of the environment clearance process for coal projects between 2017 and 2021 also found that external stakeholders, namely the Ministry of Coal and project proponents, influenced clearance outcomes.
“The decisions of state agencies have always played an important role in the success of corporations operating in sectors like power and mining, which are not of a nature where competitive markets can operate,” said Mazumdar. “The expectation has been that, apart from their profits, these companies also play a role in achieving a larger good for the country’s development. But the state has been weak in disciplining private capital, which is also why the private sector can influence decision-making and leverage its capital.”
Vedanta Limited, which bought Rs. 400 crores worth of bonds between 2019 and 2024 and against whom there are multiple allegations of environmental negligence, reportedly lobbied to allow mining companies to increase production by up to 50% without needing to hold public hearings. This was eventually written into regulation in 2022.
By its admission, the Ministry of Environment, Forests and Climate Change has made a spate of changes to environmental norms in recent years to accommodate business interests. In 2022, it introduced a star-rated system for states, based on how quickly they can grant and dispose of applications for environmental clearance. The scheme is currently being challenged in the NGT.
Clearances for projects have also shot up by twenty times over five years since 2018. In March 2023, the Ministry revealed forest, wildlife, coastal regulation zone, and environmental clearances went up from 577 in 2018 to 12,496 in 2022, which the government attributed to efficiencies in its single-window clearance system. “Ministry of Environment, Forest and Climate Change has taken several measures through policy and technological interventions to remove redundancy and to streamline the clearance process with the environmental safeguards,” state environment minister Ashwini Kumar Choubey had told Parliament at the time.
Changes to quicken the pace of the environment clearance process have also come with changes in the clearance process itself. Through office memorandums and notifications, the Ministry extended the environment clearance validity of projects like hydropower and nuclear, while allowing coal production to ramp up without fresh public hearings. In 2021, the government made it possible for projects that started work without obtaining prior clearances to obtain it ‘ex post facto.’ More than 100 projects were granted environmental clearance under a new “violation category,” until the Supreme Court stayed the notification in January 2024.
This article was first published in Mongabay. To read the original article tap here.