Issues associated with the Electoral Bond Scheme
Electoral bond: what is it?
- A Finance bill from 2017 created the electoral bonds system, which went into effect in 2018.
- They provide a way for people and organisations to donate to officially recognised political parties while keeping donor anonymity.
Features:
- Bonds in the denominations of Rs 1,000, Rs 10,000, Rs 1 lakh, Rs 10 lakh, and Rs 1 crore are issued by State Bank of India (SBI).
- Interest-free and payable on demand to the bearer.
- Acquired by individuals or companies based in India.
- may be purchased separately or in combination with other people.
- Redeemable within 15 calendar days of the date of issuance.
Licenced Issuer:
- The approved issuer is State Bank of India (SBI).
- Bonds for elections are issued by specific SBI branches.
Political Party Eligibility:
- Electoral bonds can only be obtained by political parties that are registered under Section 29A of the Representation of the People Act, 1951, and that have received at least 1% of the total votes cast in the most recent general election for the Legislative Assembly or the House of the People.
Acquisition and Settlement:
- You can buy Electoral Bonds using checks or digitally.
- Encashment only via a political party-approved bank account.
Openness and Responsibility:
- Parties are required to notify the Election Commission of India (ECI) of their bank account information.
- Transparency is ensured by the use of financial channels for donations.
- Political parties are required to justify how they used the money they were given.
What is the SC’s challenge to the electoral bond?
- The main points of contention during the hearings were the voters’ right to information and the donors’ right to privacy.
Governmental position:
- According to the government, donors must remain anonymous in order to protect them from abuse.
- The “right to know” of citizens has a limit, and reasonable restrictions are permitted above it.
Concerns with election bonds:
- In a letter to the Ministry of Law and Justice, the ECI issued a warning that electoral bonds, in conjunction with previous legislative modifications, may encourage the growth of shell businesses that use these bearer bonds as a conduit for the introduction of illicit funds into the political system.
- Companies are now able to donate 100% of their income to political parties, surpassing the previous cap of 7.5% of revenues that was previously set.
- Political payments could now be made by even losing businesses, which could legitimise crony capitalism.
- Through the passage of a 2016 finance bill, the BJP administration made a retroactive change that replaced the 1976 Act with the updated 2010 statute.
- This effectively deflects attention away from any foreign funding of the Indian elections. There is a lot of national anxiety about this.
Individuals’ “right to know”:
- In 2003, the Supreme Court resolved the public’s right to know by requiring candidates to disclose their financial relationships and open criminal cases at the time of nomination filing.
- The Supreme Court directed the ECI to gather and make public background data on candidates for public office, including details about their assets, criminal histories, and educational backgrounds, in the 2003 decision in People’s Union for Civil Liberties v. Union of India and the 2002 ruling in Union of India v. Association for Democratic Reforms.
- The Court decided that the fundamental right to free speech derives the right to information on public authorities.
Path ahead:
- Eliminating private funding and replacing it with public support for political parties is one alternative to think about.
- In light of the declared cumulative party collections, this could not go above ₹10,000 crore every five years.
- Creating a National Election Fund that all donors may contribute to would be another approach to get rid of the “need” for confidentiality.
- Parties might get the money according to how well they performed in the election. This would put an end to the purported worry of donors taking revenge.
Way Forward:
- Elections cannot be free and fair if political money is not transparent. The supreme court has consistently ruled that free and fair elections and the integrity of our electoral system are essential to the fundamental framework of the constitution.
