Author :Ramneek kaur, a student at Bharati Vidyapeeth Deemed University, New Delhi
Abstract
This article studies about electoral bonds which are similar to promissory notes or bearer bond and can be purchased by an Indian citizen or corporation, who is a KYC complaint as per the instructions laid down by Reserve Bank of India. The electoral bonds were introduced by the central government in 2017 but it was implemented in 2018 as Electoral Bond Scheme. These bonds are issued by 29 specified branches of State Bank of India, which can be bought by the donor through cheque, DD or by digital means and encashed by the political party to whom it is made. Furthermore this article will elaborate the evolution, timeline and 2024 scenario of the electoral bonds.
Keywords
Electoral bonds, Non-transparency, Fraud
Introduction
Electoral bonds are considered as a mode of funding to the political parties, where the identity of the donor is protected by being anonymous avoiding the risk of intimidation for their political preferences. As stated above that the electoral bonds works like bearer bonds, so no information of the owner is recorded and the political party for whom the donor has purchased the electoral bond is assumed to be its owner. The political party files return on the electoral bonds remitted to them by the donors. Electoral bonds made by citizens and corporations get tax deduction under section 80GG and section 8GGB of Income Tax Act, 1961. Furthermore political parties can receive donations as per the section 13A under Income Tax Act, 1961.
To the point
The electoral bonds can be issued to a political party who is registered under section 29A of the Representation of People Act, 1951 with 1% votes in the last election. The electoral bonds can be purchased within 10 days in the month of January, April, July and October as mentioned by the government, moreover an additional period of 30 days can be added in the year of general election of Lok Sabha by the respective government. The electoral bonds can be purchased for a value of Rs.1000 , Rs.10,000 , Rs.1,00,000 , Rs.10,00,000 and Rs.1,00,00,000. The issued electoral bonds should be redeemed within 15 days into the designated or authorized account of the political party otherwise it is send to the Prime Minister’s National Relief Fund.
Evolution of Electoral bond
The government restricted the cash donations made to the political parties by Indian citizens to Rs.2000 only. To increase the donation beyond Rs.2000 through banking system, the scheme was introduced in The Finance Bill, 2017 under the union budget 2017-2018 by the then finance minister Arun Jaitley. At that time Arun Jaitley also proposed amendment in the Reserve Bank of India Act as to which issuance of electoral bonds can be made through banks which will ultimately lead to ease in political funding.
Arun Jaitley put forward that this step will emphasize on increment of transparency and accountability in the process of political funding and it will also rescind illegal fund making for future. Arun Jaitley also contended that anonymity of bonds is also a great step because it will protect the identity of the Indian citizens and their interest of favoring any political party.
Timeline of electoral bonds
- 14 May 2016 – Finance Act was introduced, beside this Foreign Contribution Regulation Act, 2010 was amended with the definition of “foreign source” as to which foreign companies occupying heavy share in Indian companies are able to fund the political parties.
- 1 February 2017- Arun Jaitely, the then finance minister introduces the Electoral Bond Scheme with proposing the idea of political funding which is vital for free and fair election by cheque or digital means, keeping the identity of the donor anonymous as to which they can be protected from adverse consequences.
- 31 March 2017- The Reserve Bank of India, 1934 was amended to allow union to specify any scheduled bank who can issue electoral bonds. Income Tax Act, 1961 was also amended to exempt the political parties to keep detailed record of received bonds. Representation of People Act, 1951and The Companies Act, 2013 were also amended thereby exempting the political parties to submit contribution report and removal of capping from the amount of donations by corporations with disclosure of contribution record.
- 4 September 2017- Association for democratic reforms filed a writ petition challenging the scheme’s constitutionality and contended that Finance Act should also strike down as it is passed without scrutiny in regard to money bill. Furthermore argued that this scheme opened door for unlimited funding which will lead to huge scale corruption and non-transparency in the system.
- 2 January 2018- Union government notified the Electoral Bond Scheme laying authorization of bank to issue, qualification of the donor, eligibility of political party who can receive donations and prescribed time as to which issuance and redeem of electoral bonds can take place.
- 19 January 2018- Communist Party of India challenged the scheme and Finance Act on the ground that the amendments made will cause decrement in the working of democratic institutions in favor of people.
- 5 March 2019- Petitioners common cause and ADR seek stay on issuance of electoral bond.
- 23 March 2019- ECI filed a counter affidavit against the scheme stating that amendments will lead to serious repercussions and non-transparency in political funding.
- 12 April 2019- Supreme Court directed all the political parties to submit contribution details to ECI in a sealed way.
- 9 March 2021- After a year when case was still left unheard by the Supreme Court, petitioners contended for stay on the scheme as upcoming state elections was lined up.
- 26 March 2021- Supreme Court denied the stay and justified the Scheme as appropriate.
- 7 November 2022- Union amended the scheme under which the bonds can be sold for another 15 days. Petitioners filed an additional affidavit against the amendment in the scheme.
- 31 January 2023- Three issues were bifurcated so that there will ease in dealing. Issue 1- Union Electoral Bond Scheme, Issue 2- To bring political parties under RTI, 2005 and Issue 3- Amendments made under FCRA Act, 2010 which allows foreign companies to fund political parties.
- 16 October 2023- The case was transferred to a bench comprising five judge.
- 31 October 2023- First hearing was held on this day, in which the petitioners argued upon the influx of black money, corruption and non-transparency.
- 1 November 2023- Second hearing was held on this day, in which arguments was made on the behalf of Union government, stating the scheme was introduced to protect the donor from adverse repercussions by keeping everything confidential.
- 2 November 2003- Union continued their arguments of justifying scheme’s confidentiality and stating it as a full proof plan ensuring transparency and accountability.
2024 scenario of the electoral bond
The five judge bench struck down the Electoral Bond Scheme stating it as unconstitutional on 15 February 2024 as it violates the Right to Information incorporated under Article 19(1) (a) of the Indian Constitution. It was held by the Supreme Court that to freely exercise right to vote in an effective manner, seeking information from the political parties on funding is super vital. The Supreme Court denied the arguments made by union that this scheme is a full proof as there were adequate gaps which can assist the parties to the information about donors.
On the plea of corporate funding, Supreme Court is of the view that unlimited funding by corporates is not ethical and lastly Supreme Court directed State Bank of India to disclose the contribution report from the date 12 April, 2019. After the directions SBI started filing applications of extension for the disclosure report before two days of the deadline set by Supreme Court stating the reason of practical difficulty to retrieve the data. Afterwards, ADR filed contempt petition against SBI and stated that they have the KYC details of the purchaser through which it is easy to access the data and put averments on SBI stating they are willfully and deliberately disobeying the Court directions.
Furthermore, Supreme Court directed the SBI chairman to disclose the data till 21 March 2024 which ECI will publish on their website as soon the disclosure happens and finally SBI complied with the directions and submit the disclosure report and affidavit by chairman of the SBI on the said date.
Pros of electoral bond:
- Redeeming of electoral bond can take place through authorized bank account of the political party.
- Issuance of electoral bond is made by digital means or through cheque thereby ensuring accountability.
- Prescribing eligibility of political party will lead ease to the donor while funding.
Cons of electoral bonds:
- Influx of black money.
- Result in huge corruption as unlimited funding can be done.
- Non-transparency due anonymity.
How electoral bond is a fraud?
Electoral bond is represented as a full proof plan by the union government but it is was a total scam with the common people as the gaps in the scheme clearly shows that it is so easy to know the credentials of the donors the anonymity is just for the sake of common people, despite various contrary arguments by ECI, communist party of India and other critics of the scheme the scheme continued and various amendments has taken place.
This Electoral Bond Scheme was exactly fit in the maxim of “quid pro quo” which means something for something; the donors are funding the respective political party for some favor done to them by the party whom they are funding. The favor here can be a business opportunity given by the political party as some corporations funded beyond what they even earn. Electoral bond was a complete extortion racket which took money from common people labeled as donation as to which fraud cannot be determined, but later on the whole fraud was discovered by Supreme Court and it was held unconstitutional.
According to ECI data totals bonds were 12,769.40 crore from which highest donation Was received by Bhartia JantaParty, second highest by Trinamool Congress encashed, Third highest byIndian National Congress enashed and so on. It was a contract between union government and corporations in which corporations were supposed to fund the political party and if they wish not to do that must face raid by ED or CBI. Let us understand how this extortion racket worked, A company named Megha Engineering & Infrastructure Ltd purchased electoral bonds of Rs.140 crore in April 2023 and in May 2023 the company got a Thane-Borivali Twin Tunnel project worth Rs.14,400 crore. Furthermore the same company was raided in October 2019 and afterwards this company bought electoral bonds in crores between the time span of 2019 to 2023 which gave business opportunities the company with so many huge projects by the Telengana and central government, this is one example but many such examples were captured under this extortion racket.
Conclusion
By the following explanation we can conclude how electoral bond scheme was a tremendous fraud which deceived the common people and political parties received donations by the means of indirect extortion. Despite various contrary arguments this fraud scheme survived till 7 years and finally it was held unconstitutional by the Supreme Court on 15 February 2024. It was one of biggest scam proposed and implemented by the union government.
FAQs
- What do you mean by electoral bond?
Electoral bonds which are similar to promissory notes or bearer bond and can be purchased by an Indian citizen or corporation, who is a KYC complaint as per the instructions laid down by the Reserve Bank of India.
- Who proposed the electoral bond scheme?
The scheme was introduced in The Finance Bill, 2017 under the union budget 2017-2018 by the then finance minister Arun Jaitley. At that time Arun Jaitley also proposed amendment in the Reserve Bank of India Act as to which issuance of electoral bonds can be made through banks which will ultimately lead to ease in political funding.
- Can the donor redeem the electoral bond?
No, the issued electoral bonds can be redeemed within 15 days into the designated or authorized account of the political party by the party itself otherwise it is send to the Prime Minister’s National Relief Fund.
- What is the position of electoral bond in 2024?
The five judge bench struck down the Electoral Bond Scheme stating it as unconstitutional as it violates the Right to Information incorporated under Article 19(1) (a) of the Indian Constitution. It was held by the Supreme Court that to freely exercise right to vote in an effective manner, seeking information from the political parties on funding is super vital.
- What are the pros and cons of electoral bond?
Pros of electoral bond:
- Redeeming of electoral bond can take place through authorized bank account of the political party.
- Issuance of electoral bond is made by digital means or through cheque thereby ensuring accountability.
- Prescribing eligibility of political party will lead ease to the donor while funding.
Cons of electoral bonds:
- Influx of black money.
- Result in huge corruption as unlimited funding can be done.
- Non-transparency due anonymity.
References
