Updated on 12 May, 2019
News In Electoral bond case, the Supreme Court asked all political parties to submit details of funds received through electoral bonds to the Election Commission in a sealed cover by May 30.
Electoral bond case The court is hearing petitions filed by NGO Association for Democratic Reforms and CPI (M) General Secretary Sitaram Yechury against the use of electoral bonds for political funding. The main ground of the challenge
What is electoral bond · The Finance Bill, 2017, introduced “electoral bonds”. · The provisions of the Representation of People Act, the Income Tax Act, the Companies Act and the Reserve Bank of India Act had been amended under the Finance Act, 2017 and Finance Act, 2016 to accommodate the scheme’s objective of keeping the donor’s identity and details of the political parties receiving the electoral bond anonymous. · An electoral bond is a bearer instrument like a promissory note that is payable to the bearer on demand. · Both individuals as well as corporations incorporated in India can donate to political parties using electoral bonds. · Only registered political parties that secured at least 1% of the votes polled in the last general elections are eligible to receive this instrument, which can be encashed by eligible parties only through bank accounts in authorised banks, currently only SBI. · Bonds can be purchased from the SBI Bank and can be encashed by political parties within 15 days. · Any donor can purchase an electoral bond using a KYC compliant bank account and can donate to any political party in the denomination of Rupees 1000, 10000, 1 Lakh, 1 million and 1 Crore. · The identity of the donor will be anonymous and will be known only by the bank.
Different response on electoral bonds
- Anonymity factor: Ordinary citizens will not be able to know who is donating how much money to which political party. This increase the anonymity of political donations
- Introduction through a money bill: It is alleged that electoral bond scheme is introduced through money bill to bypass the Rajya Sabha
- Tilt towards union government: It is being alleged that ruling party would reap maximum benefits from electoral bonds scheme.
- Corporate political nexus: Most bonds use above 10 lakh denominations, hinting that the scheme is primarily used by corporates and not individuals, who enjoy donor anonymity under the scheme.
- Exemption from Income tax: The contribution received by any eligible political party in the form of electoral bonds will be exempt from income-tax as per Section 13A of the Income Tax Act.
- Rerouting of black money for election funding: Removal of the 7.5% cap on the net profits of the last three years of a company opens up the possibility of companies being brought into existence by unscrupulous elements primarily for routing funds to political parties through anonymous and opaque instruments
Although the Supreme Court asked all political parties to submit details of funds received through electoral bonds till May 15, including the identity of donors, to the Election Commission in a sealed cover by May 30. The Supreme Court also directed the finance ministry to reduce window of purchasing electoral bonds from 10 days to five days in April-May. Issues with the Judgement
- Government response: Attorney General of India, representing the government, defend the scheme and observe that electoral bonds were a positive step in the right direction to ensure “accountability and transparency” in conducting elections
- Election commission: The Election Commission opposed the Electoral Bonds scheme. Election commission observe that anonymous donations would have serious repercussions and impact on the transparency of political funding
- Supreme court: On hearing the Petition SC in its interim order turned down a plea for interim stay on electoral bonds. SC observe that electoral bond scheme requires in-depth analysis and do final hearing later.
Mains Question: The political will for enforcing political reforms and political financing is conspicuously missing in India. Analyse the statement in the context of electoral bond scheme. Read More Articles: Article 31B & I.R.Coelho Case Section 375- Marital Rape- Should it be Criminalized?
- Disclosure of identity by Political parties: Given that the electoral bond is a bearer bond, a political party is unlikely to have any details beyond the number of the bond, the amount, and the bearer who handed it over. Political parties may claim ignorance about identity of actual donors.
- Opacity of the Sealed Cover: This defeats the whole purpose of transparency in political funding, which is to let voters know who is funding political parties and candidates, so that they can properly exercise their right to vote, and their freedom of expression.