EDITORIAL ANALYSIS: Challenging the Electoral Bond Scheme

Source: The Hindu

For Prelims: Electoral Bond Scheme, Public interest litigation, Foreign Contribution (Regulation) Act, Representation of the People Act, Reserve Bank of India (RBI) Act, Article 19(1)(a), Article 19(2)

For Mains: General Studies II: Transparency in Electoral Funding

Highlights of the Article

Public Interest Litigation

Election Commission of India

Electoral Bond Scheme

Context

Political parties in India have traditionally been averse to any sort of public scrutiny of
the sources and applications of their funds. The astronomical sums needed to finance their processes and operations cannot be raised from party cadres and altruistic donors. These can only come from Big Business and as a quid pro quo. Civil society has been campaigning for long to empower the voter by improving her access to background information on the candidates in the electoral fray, and to bring about greater transparency in the obscure domain of political funding. In this, the instrument of public interest litigation (PIL) has been deployed to good effect. The campaign is premised on the citizen’s democratic right to information, which is integral to the fundamental right to speech and expression under the Constitution.

UPSC EXAM NOTES ANALYSIS:

1. Public interest litigation

The concept of Public interest litigation (PIL) originated in India in the 1970s, when a series of landmark cases were decided by the Supreme Court of India.
PIL is a legal action filed in a court of law for the enforcement of public interest. It is a way for citizens to seek justice for issues that affect the public at large, such as environmental pollution, human rights violations, and corruption.
PILs are typically filed by individuals or organizations with a strong interest in the outcome of the case, and they are often used to challenge government policies or actions.
These cases established the right of any citizen to file a PIL, and they laid the foundation for a robust system of judicial activism in India.
Since then, PILs have played a significant role in promoting social justice and upholding the rule of law in India.
They have been used to address a wide range of issues, including Environmental protection, Human rights violations, Consumer rights, Public health and Good governance.

2. The Election Commission of India

The Election Commission of India (ECI) is a constitutional body responsible for conducting and regulating elections in India. It was established under Article 324 of the Constitution of India and is considered one of the most powerful institutions in the country.
The ECI is responsible for conducting elections to the Lok Sabha (the lower house of Parliament), the Rajya Sabha (the upper house of Parliament), the state legislative assemblies, and the offices of the President and Vice-President of India. It also oversees elections to local bodies, such as municipalities and panchayats.
The ECI is headed by the Chief Election Commissioner (CEC), who is assisted by two Election Commissioners. The CEC and the Election Commissioners are appointed by the President of India on the recommendation of a collegium of the Prime Minister, the Chief Justice of India, the Speaker of the Lok Sabha, and the Leader of the Opposition in the Lok Sabha.

The ECI has a wide range of powers and functions, including:

The ECI is responsible for dividing the country into constituencies for elections.
The ECI is responsible for preparing and revising the electoral rolls, which are lists of eligible voters.
The ECI is responsible for notifying the schedules and dates of elections.
The ECI is responsible for granting recognition to political parties.
The ECI is responsible for monitoring election campaigns to ensure that they are conducted fairly and peacefully.
The ECI is responsible for announcing the results of elections.

The ECI has played a crucial role in ensuring the smooth functioning of democracy in India. It has been successful in conducting free, fair, and peaceful elections in a country with a diverse population and a complex electoral system.

3. The Electoral Bond Scheme

The Electoral Bond Scheme (EBS) is a method for political parties to raise funds. It was introduced by the Government of India in 2018 through the Finance Act, of 2017. The EBS was introduced as a measure to clean up political funding in India. The government argued that the scheme would make political funding more transparent and accountable. However, the scheme has been controversial since its introduction.

Objectives: The scheme aims to encourage political donations through formal banking channels, reducing the use of unaccounted cash. By providing an alternative to cash donations, the Electoral Bond Scheme intends to promote clean and legitimate funding for political parties.

Donations: Under the EBS, donors can purchase electoral bonds from designated branches of the State Bank of India (SBI). The bonds are bearer instruments, which means that they can be transferred to any other person or entity. The bonds are available in denominations of ₹1,000, ₹10,000, ₹1 lakh, ₹10 lakh, and ₹1 crore. Donors can use electoral bonds to make donations to political parties that are registered under Section 29A of the Representation of the People Act, 1951. The bonds can be redeemed at the designated branches of SBI within 30 days of purchase.

Over time, electoral bonds have become the favoured mode of political donation. Bonds
worth ₹13,791 crore have been sold in 27 tranches until July 2023.
The ADR’s research has shown that electoral bonds accounted for 55.9% of the donations totalling ₹9,188 crore received by 31 political parties. Unsurprisingly, the BJP got the lion’s share of 74.5% of electoral bonds redeemed until 2020-2021.
The INC was a distant second, at 11%, followed by the Biju Janata Dal, the YSR Congress Party and the Trinamool Congress. It would be naive to believe that political parties depend on these inflows to meet their insatiable requirement of funds.
The expenditure on the last general election to the Lok Sabha has been estimated at between ₹55,000 to ₹60,000 crore. Most dealings of political parties continue to be in cash, but the receipts from electoral bonds enable them to meet their transactions with the formal economy, such as the costs of infrastructure expansion, equipment and publicity in the print, electronic and digital media.
This gives them an enormous advantage over their rivals in influencing voter behaviour and electoral outcomes.

Challenges: Critics argue that the scheme compromises transparency in political funding, as the public and the Election Commission cannot trace the source of the donations. The anonymity provided by electoral bonds raises concerns about the possibility of money laundering and channelling illegal funds into political parties. Smaller or regional parties may face challenges in attracting large donations compared to national parties, potentially creating an uneven playing field.

Problems: The lack of a robust mechanism for scrutinizing the source of funds can lead to potential misuse of the scheme. The scheme has faced legal challenges, with concerns raised about its compatibility with the principles of transparency and fairness in elections. Critics argue that the scheme may impact the democratic process by allowing powerful entities to influence politics without public accountability.

4. Arguments in favour of the EBS

The EBS makes political funding more transparent. Political parties are required to disclose the amount of electoral bonds they receive.
The EBS protects the identity of donors. This anonymity can encourage donors to come forward and contribute to political parties.
The EBS is a voluntary scheme. Donors are not forced to use electoral bonds.

5. Arguments against the EBS

The EBS makes political funding more opaque. The anonymity of donors can be used to shield them from scrutiny and to influence political decisions.
The EBS is a backdoor entry for corporate donations to political parties. Corporate donations are banned in India, but companies can use electoral bonds to indirectly donate to political parties.
The EBS is a violation of the right to information. Voters have a right to know who is funding political parties.

6. The Way Forward

The EBS is currently under challenge in the Supreme Court of India. A bench of five judges is hearing the case. The petitioners argue that the EBS is unconstitutional. They argue that the scheme violates the right to information and the right to know. The Supreme Court's decision on the EBS is likely to have a significant impact on political funding in India. If the scheme is struck down, it will be a major victory for transparency. However, if the scheme is upheld, it will be a setback for those who are fighting for transparency in political funding.

Mains Practice Questions

1. Critically analyze the Electoral Bond Scheme (EBS) introduced by the Government of India in 2018. Discuss its objectives, challenges, and potential impact on political funding in India (250 Words)

2. Examine the impact of corporate funding on Indian politics. Discuss the arguments for and against corporate donations to political parties and their influence on policy decisions. (250 Words)

3. Discuss the impact of PIL on empowering voters by providing access to information about candidates and political parties. (250 Words)

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EDITORIAL ANALYSIS: Challenging the Electoral Bond Scheme

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