DHANUSHREE. N, GOVERNMENT LAW COLLEGE CHENGALPATTU
SYNOPSIS
In a landmark decision, the Supreme Court has set the stage for a comprehensive analysis of electoral bonds and their far-reaching implications. This groundbreaking ruling has sparked debates about the transparency and accountability of political funding in India. With the introduction of electoral bonds in 2018, the government aimed to provide a legitimate channel for political donations while protecting the privacy of donors. However, critics argue that these bonds enable anonymous funding and undermine the democracy principles of accountability and transparency. In this in-depth article, we unravel the complexities surrounding electoral bonds, examining the legal, political, and ethical aspects of this controversial financial instrument. Through a comprehensive analysis, we explore the impact of electoral bonds on Indian politics, the concerns raised by various stakeholders, and the potential reforms needed to safeguard the integrity of the electoral process.
KEYWORDS: Electoral bonds; Article 19(1)(a)
BACKGROUND OF THE CASE
Section 2(1)(j)(vi) of the Foreign Contribution Regulation Act, 2010 (FCRA) was revised by the Finance Act, 2016 to let foreign corporations possessing a majority stake in Indian enterprises to make donations to political parties. In response to earlier restrictions made possible by the Foreign Exchange Management Act of 1999 and the FCRA, this modification was made. The Finance Act of 2017 made additional amendments to a number of legislations, such as the Companies Act of 2013, the Reserve Bank of India Act of 1934, the Income Tax Act of 1961, and the Representation of the People Act of 1951 (RoPA). Political parties were permitted to maintain comprehensive records of the contributions they received through electoral bonds under Section 11 of the Finance Act of 2017.
The Communist Party of India, along with two non-governmental organizations, ADR and Common Cause, filed a Supreme Court suit contesting the Finance Act amendments. They contended that the amendments were improperly introduced as money bills to evade Rajya Sabha scrutiny and permitted non-transparency in political fundraising.
In 2019, the Election Commission of India (ECI) expressed opposition to the Electoral Bond Scheme, claiming it impedes political funding transparency. They contended that if political parties were not required to disclose their contributions, information about foreign funding would remain undiscovered and would have an impact on Indian policy. In response, the Union administration claimed that the EBS was a trailblazer in electoral reform and would stop the unchecked influx of illicit money. The only bank that is permitted to issue bonds is the State Bank of India.
UNDERSTANDING THE CONCEPT OF ELECTORAL BONDS
Electoral bonds are financial instruments that can be purchased by individuals and corporations to make donations to political parties. These bonds are similar to promissory notes and can be bought from authorized banks during specific periods. The bonds can then be redeemed by political parties, who can encash them within a designated period.
One of the main features of electoral bonds is the anonymity they provide to donors. This anonymity is seen as a way to protect individuals and corporations from potential retribution or backlash for their political affiliations. However, critics argue that this anonymity creates a veil of secrecy around political funding, making it difficult to trace the source of contributions and ensure accountability.
CRITICISMS AND CONTROVERSIES SURROUNDING ELECTORAL BONDS
Electoral bonds have faced widespread criticism since their introduction. One of the main concerns is the lack of transparency and accountability. With the anonymity provided by these bonds, it becomes challenging to trace the source of funding and identify potential cases of corruption.
Another criticism revolves around the disproportionate influence of big corporations and wealthy individuals in the political process. Critics argue that electoral bonds allow wealthy donors to have a significant impact on political campaigns, potentially skewing the democratic process in favor of those with deep pockets.
INTERNATIONAL PERSPECTIVES ON ELECTORAL BONDS
The issue of electoral bonds is not unique to India. Several countries around the world have grappled with the challenges posed by political funding and the need for transparency. In some countries, like the United States, political contributions are tightly regulated, with strict disclosure requirements and limits on individual and corporate donations.
On the other hand, countries like Switzerland have adopted a more permissive approach, allowing anonymous donations to political parties. The effectiveness of these different approaches varies, and each country’s experience offers valuable insights into the potential implications of electoral bonds.
TRANSPARENCY VS. ANONYMITY: THE DEBATE SURROUNDING ELECTORAL BONDS
The debate surrounding electoral bonds centers around the tension between transparency and anonymity in political funding. Proponents argue that anonymity is crucial to protect individuals and corporations from potential backlash or retribution for their political affiliations. They claim that without this protection, the fear of retaliation may discourage people from contributing to political campaigns.
On the other hand, critics argue that transparency is essential for a healthy democracy. They contend that knowing the identity of donors is crucial to hold political parties accountable for their actions and ensure that the democratic process remains free from corruption and undue influence.
IMPACT OF ELECTORAL BONDS ON POLITICAL FUNDING
The impact of electoral bonds on political funding is a topic of intense debate. Supporters argue that these bonds provide a legal and transparent channel for individuals and corporations to contribute to political parties. They claim that without electoral bonds, political funding would be driven underground, increasing the risk of illicit and unaccounted-for money in the political system.
However, critics argue that electoral bonds facilitate the flow of large sums of money into political campaigns with minimal accountability. They contend that this lack of transparency undermines the democratic process and erodes public trust in the political system.
THE SUPREME COURT’S LANDMARK DECISION ON ELECTORAL BONDS
The Supreme Court’s recent decision on electoral bonds has brought this controversial issue to the forefront of public attention. In its ruling, the court upheld the validity of electoral bonds but imposed certain conditions to ensure transparency and accountability. This decision has significant implications for the future of political funding in India.
Electoral bonds were introduced in 2018 as a means to streamline political contributions and bring more transparency to the process. However, critics argue that the anonymity provided by electoral bonds undermines the very essence of transparency. They claim that without knowing the identity of the donors, it becomes difficult to hold political parties accountable for their actions and policies.
The plan violated the fundamental right to knowledge under Article 19(1)(a) of the Constitution, the court ruled, by allowing anonymous political donations. It made clear that this kind of right extends beyond exercising one’s freedom of speech and expression and is essential to advancing participatory democracy by keeping the government responsible. It is therefore a goal in itself rather than merely a means to an aim. The Representation of the People Act of 1951 and the Income Tax Act of 1961 amendments that permitted such anonymous political contributions were also quashed by the court.
The Court unanimity invalidated the Union’s 2018 Electoral Bonds (EB) Scheme on February 15, 2024. The Bench determined that the Scheme infringed upon voters’ constitutionally guaranteed access to information as stated in Article 19(1)(a). The Court further ordered an immediate halt to the sale of electoral bonds. SBI was instructed to provide the ECI with information about all of the electoral bonds it has bought after April 12, 2019. This will contain information about the buyer as well as the political parties to whom the bonds were distributed. Additionally, the Court mandated that the ECI post the material given by SBI on its official website no later than one week after receiving it.
FUTURE IMPLICATIONS AND POTENTIAL REFORMS IN ELECTORAL FUNDING
The Supreme Court’s decision on electoral bonds has significant implications for the future of political funding in India. It has sparked a renewed debate on the need for transparency and accountability in political contributions. Various stakeholders, including civil society organizations and political parties, have called for reforms to address the shortcomings of the current system.
Potential reforms include stricter disclosure requirements, limits on individual and corporate donations, and increased transparency in the process of political funding. These reforms aim to strike a balance between protecting the privacy of donors and ensuring the integrity of the political process.
CONCLUSION: THE NEED FOR A BALANCED APPROACH TO POLITICAL FUNDING
The Supreme Court’s landmark decision on electoral bonds has brought the issue of political funding to the forefront of public discourse. It has highlighted the importance of transparency and accountability in the democratic process. While electoral bonds offer a legal channel for political contributions, their lack of transparency and potential for abuse raise concerns about the integrity of the political system.
Moving forward, it is crucial to strike a balance between transparency and anonymity in political funding. Reforms that enhance disclosure requirements, limit the influence of big donors, and promote transparency can help ensure a more equitable and accountable political landscape. By addressing the shortcomings of the current system, India can strengthen the foundations of its democracy and restore public trust in the political process.
As the journey towards electoral funding reform continues, it is important for citizens, civil society organizations, and policymakers to engage in constructive dialogue and work towards a system that upholds the principles of transparency, accountability, and fairness in the political realm.
