Recently, the Supreme Court referred petitions challenging the 2018 Electoral Bonds Scheme to a five-judge Constitution Bench. This scheme has sparked debate with some advocating for it as a big step towards electoral reform, while others challenge its potential impact on transparency in political funding. In this context, the Supreme Court has agreed to primarily focus on the legality of anonymous donations to political parties and possible infringement of citizens’ right to information about political party funding.
Understanding Electoral Bonds
The Electoral Bonds System was introduced in 2017 via a Finance Bill and was implemented in 2018 by the State Bank of India (SBI). The primary aim of these bonds is to aid individuals and entities in making donations to registered political parties while maintaining donor anonymity. They are issued in various denominations ranging from Rs 1,000 to Rs 1 crore and can be purchased by Indian citizens or entities established within India. These bonds are valid for 15 days from the date of issue.
Eligibility and Encashment of Electoral Bonds
Eligible receivers of these bonds include those political parties registered under Section 29A of the Representation of the People Act, 1951 that secured at least 1% of the vote in the last general election. The bonds can be purchased digitally or through cheques and can only be encashed through an authorized bank account of the political party. Parties must disclose their bank account details with the Election Commission of India (ECI) ensuring accountability and transparency in party funding.
Benefits of Electoral Bonds
There are several potential benefits associated with Electoral Bonds including enhanced transparency in political party funding, accountability in disclosing donation utilization, discouragement of cash transactions, and preservation of donor anonymity.
Controversies Surrounding the Electoral Bond Scheme
Despite the potential benefits, a number of concerns have been raised in relation to the Electoral Bonds Scheme. Critics argue that it contradicts its own primary aim of bringing transparency to election funding as the anonymity of electoral bonds is only maintained for the public and opposition parties, not the government. This may enable the government to possibly extort money or victimize those not funding the ruling party.
Effect on Democracy
The scheme has also been criticized for potentially damaging democracy through the introduction of amendments to the Finance Act 2017 which exempted political parties from disclosing donations received through electoral bonds. This means that voters will not know who has funded which party.
Favoritism Towards Wealthy Corporations
Further concern lies in the possibility of the scheme favoring wealthy corporations as it opens the door to unlimited corporate donations and anonymous financing by both Indian and foreign companies. With donations under this scheme carrying a 100% tax exemption, this could potentially impact Indian democracy.
Threat to the Right to Know
The issue of the right to know in the context of elections is critical in India. Critics claim that the scheme infringes on this right by limiting transparency in party funding.
Challenge to Free & Fair Elections
Electoral bonds do not provide citizens with donor details but allow the government access to this information. This unequal distribution of information could potentially disrupt free and fair elections.
Opening Doors to Crony Capitalism
Lastly, the scheme is thought to potentially pave the way for crony capitalism by removing all previous limits on political donations and allowing well-resourced corporations to control election funding.
The Way Forward
To address these issues, there’s a need for an effective regulation of political financing along with bold reforms to break the vicious cycle of corruption and erosion of quality of democratic polity. A key step includes plugging the loopholes in current laws to make the entire governance machinery more accountable and transparent. Voter awareness campaigns can also play a significant role in bringing about this much-needed change.