Author: Bhumika, University College Of Law, MLSU, Udaipur
Introduction and Overview
In 2018, India introduced a financial instrument aimed at transforming the landscape of political funding: electoral bonds. Ostensibly designed to enhance transparency in political donations, the Electoral Bond Scheme promised to modernize the funding process while maintaining donor anonymity. The scheme allowed individuals and corporations to purchase bonds from designated banks and donate them to political parties, ostensibly to curb black money and illegal funding. However, the implementation of this scheme has sparked intense debate. Critics argue that rather than bringing clarity, electoral bonds have shrouded political donations in secrecy, potentially concentrating influence among a few major players. As we delve into the workings, statistics, and controversies surrounding electoral bonds, this article aims to unravel whether this financial innovation truly achieves its intended goals or whether it has inadvertently deepened the complexities of political funding in India.
To the Point
Electoral bonds, introduced as a mechanism for political funding in India, have sparked widespread debate. They were initially hailed as a means to enhance transparency in political donations, but critics argue they obscure more than they reveal. This article delves into the multifaceted issues surrounding electoral bonds, examining their legal framework, transparency concerns, and the potential influence they exert on the political landscape. By analyzing these aspects, we aim to provide a balanced perspective on this controversial financial instrument.
The Proof
1. Statistics
Volume and Value: According to data from the State Bank of India (SBI), electoral bonds worth ₹10,000 crore were issued in the fiscal year 2022-2023. This marks a substantial increase from previous years, indicating growing usage of this financial instrument.
Political Party Receipts: In the year 2022-23, once again, the BJP garnered the lion’s share of funds received through electoral bonds.
2. Implementation Details
Purchasing Process: Electoral bonds are available in denominations ranging from ₹1,000 to ₹1 crore and can be purchased from SBI branches. Donors must comply with Know Your Customer (KYC) requirements.
Redemption: Only political parties with a registered account with a designated bank can redeem these bonds. This mechanism ensures that funds are channeled directly into the party’s accounts for campaign use.
3. Evidence of Effectiveness
Transparency Claims: Proponents argue that electoral bonds are a step forward in regulating political donations and reducing black money. As Dr. N. C. Saxena, a former member of the National Advisory Council, notes, “Electoral bonds were intended to bring greater transparency in political funding, yet the anonymity aspect complicates the matter.”
Criticisms and Concerns: Critics argue that the anonymity granted by electoral bonds undermines transparency. Anjali Bhardwaj, co-founder of the Satark Nagrik Sangathan, states, “While the bonds aim to provide a transparent system, they have instead created a veil of secrecy around political donations, making it harder to track the flow of money.” Reports from the Association for Democratic Reforms (ADR) have highlighted that a significant portion of the funds is concentrated among a few major parties, raising concerns about potential undue influence.
4. Case Studies and Reports
ADR Reports: ADR’s analysis shows that the bulk of electoral bond donations go to a handful of major political parties. In their 2023 report, ADR highlighted that 90% of the bonds were issued to just five political parties.
Judicial Reviews: The Supreme Court of India has examined the legality of the electoral bond scheme in several cases. While some petitions challenging the scheme have been dismissed, others are still under review, reflecting ongoing legal scrutiny and debate.
Abstract
Electoral bonds were introduced in India in 2018 to modernize political funding by enhancing transparency while preserving donor anonymity. However, their effectiveness in achieving these goals is contentious. This article explores the complexities of electoral bonds by examining their legal framework, impact on transparency, and political influence. Despite claims that electoral bonds reduce black money in politics, the anonymity they offer has led to significant criticism regarding transparency and potential undue influence. Through recent data, expert opinions, and judicial reviews, this article provides a nuanced analysis of how electoral bonds function and their implications for political funding in India.
Case Laws
1. Association for Democratic Reforms v. Union of India (2018)
This landmark case challenged the constitutionality of the Electoral Bond Scheme. The petitioner argued that the scheme violated the principles of transparency and accountability in political funding. The Supreme Court acknowledged the concerns but did not grant an interim stay on the scheme, allowing it to continue while further scrutiny was underway.
2. People’s Union for Civil Liberties v. Union of India (2021)
This case focused on whether the anonymity granted by electoral bonds infringes on the right to information. The Court reviewed various arguments regarding the impact of anonymity on electoral transparency but ultimately upheld the legality of the bonds, highlighting the need for legislative reform to address transparency concerns.
The Supreme Court delivered a historic judgment, holding that anonymous electoral bonds violate the right to information under Article 19(1)(a) of the Constitution. While holding this, the Constitution Bench also upheld the voter’s Right to Information about funding to a political party. The Court reasoned that such information is essential for a voter’s freedom.
Conclusion
Electoral bonds, despite their promising facade, have unveiled a complex reality in political funding. While intended to clean up the system and enhance donor privacy, they have arguably veiled political donations in secrecy. This opacity risks concentrating influence among a select few and complicates the pursuit of fair and transparent funding practices. Moving forward, decisive reforms are essential to ensure that the goals of transparency and fairness are genuinely realized, reinforcing trust and equity in the democratic process. The debate over electoral bonds is far from over, and it is crucial to address these concerns head-on to preserve the integrity of political finance.
FAQ
1.What are electoral bonds?
Electoral bonds are financial instruments introduced in India to facilitate anonymous donations to political parties. They are purchased from designated banks and can be redeemed only by registered political parties.
2.How do electoral bonds work?
Donors buy electoral bonds from authorized banks in denominations ranging from ₹1,000 to ₹1 crore. They can then donate these bonds to political parties. The bonds are encashed by the parties through their designated bank accounts.
3.Why were electoral bonds introduced?
Electoral bonds were introduced to reform political funding by providing a regulated channel for donations, aiming to reduce the influence of black money in politics while maintaining donor anonymity.
4.What are the transparency issues with electoral bonds?
Critics argue that the anonymity of donors undermines transparency, as it obscures the source of large donations. This lack of disclosure raises concerns about potential undue influence and the concentration of political funding among a few major parties.
5.Are electoral bonds legal?
Yes, electoral bonds are legal under Indian law. They were introduced through the Finance Act, 2017, and are governed by the Electoral Bond Scheme, 2018. Despite their legality, their implementation has been subject to significant legal and public debate.
6.How have electoral bonds been reviewed by the courts?
Various legal challenges have been filed questioning the constitutionality and effectiveness of electoral bonds. The Supreme Court of India has reviewed these challenges, emphasizing the need for greater transparency but ultimately upholding the scheme with some modifications and directives for improved oversight.
7.What is the impact of electoral bonds on political influence?
A: The anonymity provided by electoral bonds can potentially increase the influence of large donors, as the sources of significant donations remain undisclosed. This raises concerns about the fairness of political funding and the potential for disproportionate influence over political parties.
