Electoral Bonds- A Staggering Call for Political Transparency

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7 months ago

Introduction

In headlines that dominated nearly every major media outlet , including social media in recent times, the five-judge Constitution bench of the Supreme Court of India ruled in a landmark decision that the electoral bonds scheme violates Article 19(1)(a) of the Constitution and is unconstitutional. The modifications to the Companies Act, the Income Tax Act, and the Representation of Peoples Act that made the plan possible have also been overturned by the court. It further directed that the Election Commission of India (ECI) must scrutinize information about electoral bonds that political parties have encashed by March 31, 2024, according to a court order given to the State Bank of India (SBI). These details will be made available for public inspection on the ECI website. Nevertheless, this has ignited a fierce , ongoing debate on the very nature of the scheme, its legal validity and the violation of the Right to Information on grounds of non-transparency, recognizing which it becomes imperative to address the need of a staggering call for political transparency, while at the same time, critically analysing the judgement given by the Honourable Supreme Court.

A Deep Dive into the Electoral Bonds Controversy

Across the world, India is the biggest and most active democracy. Elections are essential to preserving the core principles of democracy, as can be seen from the above indicated viewpoint. In order to effectively purge political finance, the NDA-led government implemented electoral reforms through the Finance Bill, 2017 in mid of June, bringing the controversial scheme into effect. Under the system, any person or organization can buy electoral bonds from SBI in values of Rs 1,000, Rs 10,000, Rs 1 lakh, Rs 10 lakh, and Rs 1 crore, with no upper limit. which they can then donate to any political party that is officially registered. The bonds have a 15-day validity period from the day of issuance, and the donor’s name is kept private. To be eligible to receive the electoral bonds, political parties must set up a special account that is checked by the ECI. Only the parties that received at least 1% of the total votes cast in the most recent general election were elected to the House. Essentially, all that Electoral Bonds are are Promissory Notes that can be acquired by any Indian citizen or corporate entity that is based, formed, or incorporated in India. Any eligible political party may receive the purchased Electoral Bond from the individual or business donor. In order to guarantee that “all the donations made to a political party would be accounted for in the balance sheets without exposing the donor details to the public and electoral bonds would keep a tab on the use of black money for funding elections,” the Narendra Modi Government introduced electoral bonds. As per the scheme, Electoral Bonds can be used with great ease. Only political parties that have obtained at least 1% of the vote in the most recent Lok Sabha elections and are registered under Section 29A of the Representation of People’s Act, 1951 (Act 43 of 1951) are eligible to acquire electoral bonds. Individual donors or the corporate body may acquire these bonds online or by check. The Election Commission assigns verified accounts to eligible political parties so they can cash in their donations. All transactions involving electoral bonds may only be made with this account. There are specific State Bank of India branches that offer these electoral accounts. The cities of New Delhi, Gandhinagar, Chandigarh, Bengaluru, Bhopal, Mumbai, Lucknow, Chennai, Kolkata, and Guwahati are home to the 29 designated State Bank of India Branches. Every quarter, that is, in January, April, July, and October, there are ten days during which you can purchase the Electoral Bonds. In the year of the Lok Sabha elections, the government has set aside the first ten days of certain months. In addition, the former finance minister Arun Jaitley stated that, if the political party files its own returns, the donations would be tax deductible, the donor would receive a deduction, and the recipient, the political party, would gain an exemption from taxes. In the year of the Lok Sabha elections, the government has set aside the first ten days of certain months. In addition, Arun Jaitley, the former finance minister, stated that the contributions will be tax deductible.

What the ADR Report Reveals

The year of the general elections, 2019–20, saw the largest donations from Electoral Bonds, totalling ₹3,438.8237 crore. Donations through Electoral Bonds totalling ₹2,664.2725 crore were received during the 11 Assembly elections in 2021–2022.Electoral Bonds accounted for 55.90% of the ₹16,437.635 crore in total donations that the 31 political parties under investigation received; corporate donations made up 28.07% and other sources accounted for 16.03%. The amount donated to National Parties through Electoral Bonds increased by 743% between FY 2017–18 and FY 2021–22. By comparison, throughout the same period, corporate donations to national parties saw an increase of just 48%. Additionally, Electoral Bonds accounted for a sizable amount of the money received by regional parties too., Among national political parties, the BJP receives the most donation because it is the party in power. Electoral Bonds provided the BJP with more over 52% of its total donations, or ₹5,271.9751 crore. With ₹952.2955 crore (61.54% of its total donations), the Congress received the second-highest amount for Electoral Bonds, after the Trinamool Congress (93.27%) with ₹767.8876 crore, which bolsters the argument that Power-Biased Election Bond Donations, devoid of any form of transparency is what appears to have been the direct result of the scheme’s outlay since its very inception. According to Jagdeep Chhokar, a former professor at the Indian Institute of Management, Ahmedabad, and one of the founding members of the Association for Democratic Reforms, a nonprofit election monitor, “the limit on cash donation from one source set at Rs 2,000 for political parties will not make much difference.” “Parties will now use multiple receipts of Rs 1,999 each, just as they did in order to issue multiple receipts of Rs 19,999 in order to avoid the previous cap of Rs 20,000 on cash donations.” Companies establish an Electoral Trust with the express purpose of allocating the funds they receive to the political parties The qualifying requirements and registration process for electoral trusts are outlined in the Central government’s Electoral Trusts Scheme, 2013.An application to be approved as an Electoral Trust may be submitted by companies that are registered under section 25 of the Companies Act of 1956.

The Electoral Bonds Judgement- A Critical Analysis

The Election Commission’s recent request for political parties to disclose details of their electoral bond donations underscores larger issues than just the ongoing legal examination of these bonds’ validity. This action is part of an ongoing case before the Supreme Court on the validity of electoral bonds. In February 2024 , the Association for Democratic Reforms and Common Cause, two notable NGOs fighting for the cause of democratic notions of civil liberties, equal opportunities and accountability in the democratic process filed a case against the Union, question the legality of the scheme in bringing about political transparency in terms of funding. The Association for Democratic Reforms (ADR), the petitioners in the case before the Supreme Court, contended that electoral bonds’ anonymity violates the idea of democratic responsibility. They further contended that since monetary contributions are still allowed in conjunction with the Electoral Bond Scheme, the introduction of electoral bonds is illogical. The Electoral Bond Scheme and statutory amendments that require the non-disclosure of information about electoral funding are unconstitutional for the following reasons:

a. They go against the intent of the Companies Act and RP Act, which is to increase transparency in electoral funding.

b. They limit voters access to knowledge on public affairs and governance, in violation of Article 19(1)(a).

c. By encouraging corruption through unreported political contributions, they transgress Article 21.

Additionally, the petitioners claimed that by severing elections from representative democracy, the Electoral Bond Scheme may give funders preferential treatment over voters in the sense that voters lack access to political donation information, creating information asymmetry.

In contrast to the above, the defendants represented by eminent advocate Harish Salve, relied primarily on two fangs of the argument in order to deliberately prove that the exercise is not a futile one. To begin with, they contended that Examination of corporate contributions to political parties is a matter of democratic significance best left to the legislature, claiming that the legislature had sovereign authority to decide over the future of the scheme. They tried to conv By allowing people to donate money to political parties via authorized banking channels, the Electoral Bond Scheme helps to cut down on uncontrolled cash transfers. Moreover, amendments aim to curb cash donations to political parties and secure donor anonymity.

Despite the fact that the Electoral Bond Scheme guarantees that the money that political parties gather are clean money or accounted for, as elucidated in the defence argument put forward by the government in terms of ensuring confidentiality, the donor, whether a person or an organization, is not required to reveal their identify. Furthermore, political parties are not required to disclose the whereabouts of the donations. A 5 Judge Bench, comprising of held that It breaches the public’s fundamental right to know where political parties get their funding, as guaranteed by Article 19(1)(a). The plan does this by concealing such information. Additionally, the plan promotes corporate influence in politics, foreign finance, and dark money—all of which are detrimental to national sovereignty and the general welfare. The plan unfairly favors the ruling party and the main opposition parties while excluding smaller and regional parties, discriminating between political parties based on vote shares. This is a violation of the equality principle. Additionally, because the donors have the power to influence the political parties’ policies and actions while the voters are kept in the dark, the system creates a divide between the two groups of people.It further enunciated that The proposal runs counter to the objectives of increasing political illegality and decreasing political corruption. Furthermore, the plan defies the recommendations of multiple commissions and committees that have advocated for greater transparency and openness in political finance. The idea is also at conflict with the Representation of Peoples Act, 1951, which requires political parties to disclose their contributions and expenditures.

The electoral process’s integrity and the preservation of democratic values are greatly enhanced by the constitutional requirements pertaining to electoral financing and transparency. The foundation of political transparency is laid by Article 19(1)(a), which gives citizens access to information about public affairs, including political funding. This clause acts as a deterrent to political corruption and opacity while highlighting the significance of informed voters. In addition, Article 324 gives the Election Commission the authority to monitor election administration and impose transparency standards, which strengthens the legitimacy and equity of the electoral process.

It is also pertinent to note that the framework for the management of public finances is outlined in Article 266 of the Constitution of India. It indirectly highlights the significance of accountability and openness in the management of all public resources, including those connected to political funding, even if its primary focus is on government finances. Together, these constitutional clauses establish the foundation for guaranteeing accountability, transparency, and equity in election procedures, including the control of political financing. They emphasize the fundamental tenets of democracy and the necessity of defending them via efficient institutional supervision and governance frameworks.

Conclusion

Thus, the Supreme Court’s observation in the above case calls for a relook towards the basis of political funding received by numerous political parties across the spectre , which if unregulated, could result in the rolling forward of such kind of unaccountable measures on part of the executive all in all. In conclusion, though the judgment will ensure that the public will have access to the information about the source and amount of funding received by the political parties through electoral bonds. This will enable the public to scrutinize and hold the political parties accountable for their performance and level the playing field for all political parties, as they will no longer be discriminated against based on their vote share or popularity it will enable the smaller and regional parties to compete with the ruling party and the major opposition parties on an equal footing and offer a genuine choice to the voters, we as responsible citizens must be aware of the Right to Know about our political representatives, particularly at a time when democratic responsibility is at stake.

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