ELECTORAL BOND SCHEME
1. Context
The recent dismissal of petitions seeking to halt the sale of electoral bonds by the Supreme Court has reignited debates over the use of these instruments in Indian politics. Electoral bonds, introduced in the 2017 Union Budget, allow donors to make anonymous contributions to political parties. This article delves into the issues surrounding electoral bonds and the pending constitutional challenge against them.
2. The Pending Challenge
- The challenge against electoral bonds was initiated in 2017 by the Association for Democratic Reforms and Common Cause, non-profit organizations advocating for electoral transparency.
- The case questions the constitutionality of the electoral bonds scheme and seeks to bring political parties under the ambit of the Right to Information Act, compelling them to disclose their income and expenditure.
- Although the Supreme Court has rejected a plea to suspend the sale of electoral bonds, the larger constitutional challenge remains pending.
- The court admitted the petition and solicited responses from the government and the Election Commission of India (EC). However, the case has not yet received in-depth consideration.
3. About Electoral Bonds
The electoral bonds scheme is a mechanism for political funding introduced by the Indian government in 2017. It allows individuals, organizations, and corporations to make anonymous donations to political parties. Over 12,900 electoral bonds worth Rs 6,534.78 crore were sold in 15 phases between March 2018 and January 2021.
3.1. Key Features of Electoral Bonds
- Electoral bonds allow donors to make contributions to political parties while maintaining anonymity. The bonds do not carry any information about the donor, ensuring that the identity of the contributor remains undisclosed.
- Electoral bonds are available in multiple denominations, including Rs 1,000, Rs 10,000, Rs 1 lakh, Rs 10 lakh, and Rs 1 crore. Donors can purchase bonds in these denominations to contribute to political parties.
- The State Bank of India (SBI) is the sole authorized bank for the sale of electoral bonds. Donors can buy these bonds from designated SBI branches.
- Donors must fulfil Know Your Customer (KYC) norms while purchasing electoral bonds, which includes providing their personal information to the bank. However, this information is not disclosed to the political party receiving the donation.
- Political parties have 15 days to encash the electoral bonds in their verified bank accounts. This ensures that the bonds are promptly converted into funds.
- There is no limit on the number of electoral bonds an individual or company can purchase, allowing for substantial contributions.
- If a political party does not encash the electoral bonds within the stipulated 15-day period, the SBI deposits these bonds into the Prime Minister's Relief Fund.
- A contentious feature of the scheme is that political parties receiving donations through electoral bonds are exempt from disclosing the source of these donations in their mandatory annual contribution reports to the Election Commission of India (EC).
3.2. Rationale Behind the Electoral Bonds Scheme
The rationale for introducing the electoral bonds scheme was as follows:
- Proponents of the scheme argued that it would bring a level of transparency to political funding by making contributions through a banking channel, as all transactions would go through the banking system, leaving an audit trail.
- The scheme was intended to protect the privacy of donors, allowing individuals and entities to contribute to political parties without fear of retribution or public exposure.
- By providing a legal and transparent means for making political contributions, the scheme aimed to reduce the use of unaccounted-for cash in political funding, which was perceived as a major source of corruption in the political process.
- The scheme encouraged donors to make contributions through the formal banking system, thereby promoting digital transactions and aligning with the government's push for a cashless economy.
3.3. Challenges and Controversies
- The primary point of contention with electoral bonds is the anonymity they offer to donors.
- An amendment to the Finance Act 2017 exempts parties from disclosing donations received through these bonds.
- This means that voters are unaware of the source and extent of funding for political parties, undermining transparency.
- Transparency activists argue that the amendment infringes upon the citizen's 'Right to Know' and further reduces the accountability of the political class.
- While the citizens remain uninformed, the government can access donor details from the State Bank of India, rendering only the taxpayers unaware of the source of donations.
| Electoral bonds have gained popularity due to the anonymity they offer to donors. More than half of the total income of national and regional parties in the financial year 2018-19 came from electoral bond donations. The Bharatiya Janata Party (BJP) emerged as the largest beneficiary, receiving 60.17% of the total electoral bond donations. |
4. Election Commission's Stand
The Election Commission has expressed objections to amendments in the Representation of the People Act that exempt political parties from disclosing donations via electoral bonds. It has raised concerns about the potential violation of provisions prohibiting political parties from receiving donations from government companies and foreign sources.
5. The Way Forward
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For Prelims: Electoral Bonds, SBI, Election Commission of India, Right to Know, Finance Act 2017, Prime Minister's Relief Fund
For Mains:
1. Examine the challenges and controversies surrounding the Electoral Bonds Scheme, particularly regarding donor anonymity and transparency in political funding. How have these issues raised concerns about the integrity of the political process in India? (250 Words)
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Previous Year Questions
Prelims
1. Consider the following statements: (UPSC 2017) 1. The Election Commission of India is a five-member body.
2. Union Ministry of Home Affairs decides the election schedule for the conduct of both general elections and bye-elections.
3. Election Commission resolves the disputes relating to splits/mergers of recognised political parties.
Which of the statements given above is/are correct? A. 1 and 2 only B. 2 only C. 2 and 3 only D. 3 only Answer: D 2. With reference to the Constitution of India, prohibitions or limitations or provisions contained in ordinary laws cannot act as prohibitions or limitations on the constitutional powers under Article 142. It could mean which one of the following? (UPSC CSE 2019) Answer: B 3. Consider the following statements : (UPSC 2021) 1. In India, there is no law restricting the candidates from contesting in one Lok Sabha election from three constituencies.
2. In the 1991 Lok Sabha Election, Shri Devi Lal contested from three Lok Sabha constituencies.
3. As per the- existing rules, if a candidate contests in one Lok Sabha election from many constituencies, his/her party should bear the cost of bye-elections to the constituencies vacated by him/her in the event of him/her winning in all the constituencies.
Which of the statements given above is/are correct?
A. 1 only B. 2 only C. 1 and 3 D. 2 and 3
4. Consider the following statements about Electoral Bond Scheme 2018: (RPSC RAS Prelims 2018)
(A) The aim of this scheme is to bring about transparency in the funding process of political parties.
(B) Only the political parties recognized by the Election Commission which secured not less than one per cent of the votes polled in the last general election to the House of People or the Legislative Assembly of the State shall be eligible to receive the Electoral Bonds.
(C) Electoral Bonds shall be valid for fifteen calendar days from the date of issue.
(D) The Electoral Bond deposited by an eligible political party in its account shall be credited on the same day.
Which of the above statements are correct?
1. Only (A) and (B)
2. (A), (B), (C) and (D)
3. Only (B), (C) and (D)
4. Only (A), (C) and (D)
Answer: 2
5. With reference to the PM CARES Fund, consider the following statements: (AFCAT 27 2022)
I. The amount collected by it directly goes to the Consolidated Fund of India.
II. It can avail donations from the foreign contribution and donations to fund can also avail 100% tax exemption.
Which of the above statements is/are correct?
A. I only B. II only C. Both I and II D. Neither I nor II
Answer: B
6. The Prime Minister's National Relief Fund is operated by which one of the following bodies? (CDS 2019)
A. The Prime Minister's Office (PMO)
B. The National Disaster Management Authority
C. The Ministry of Finance
D. The National Development Council (NDC)
Answer: A
Mains 1. In the light of recent controversy regarding the use of Electronic Voting Machines (EVM), what are the challenges before the Election Commission of India to ensure the trustworthiness of elections in India? (UPSC 2018) 2. Discuss the role of the Election Commission of India in the light of the evolution of the Model Code of Conduct. ( UPSC 2022) |
Source: The Indian Express
