Updated: May 13
Author- Sakshi Komal Dubey*
Editor- Manishikha Mondal
The Finance Bill, 2017, for transparency in electoral funding introduced electoral bonds, and the same was notified in the Electoral Bonds Scheme 2018 . An electoral bond is a bearer Banking Instrument to be used for funding eligible Political Parties. A qualified Political Party is the one registered under Section 29A of the Representation of the People Act, 1951 and who has secured not less than 1% of the votes polled in the last General Election to the House of the People or the Legislative Assembly.
So, what is the controversy around it?
The purpose of introducing electoral bonds was to ensure that all the donations made to a party would be accounted for in the balance sheets without exposing the donor details to the public. In addition, according to the government, electoral bonds will keep a check on the usage of black money for the funding of elections. Previously, donors used to donate via cash . Electoral Bonds may be purchased by an Indian citizen or incorporation or establishment in India.
Section 2(31) of Income Tax Act, 1961 defines "person" as (i) an individual; (ii) a Hindu undivided family; (iii) a company; (iv) a firm; (v) an association of persons or a body of individuals, whether incorporated or not; (vi) every artificial juridical person, not falling within any of the preceding sub-clauses; and (vii) any agency, office or branch owned or controlled by such person. Thus, a person with a KYC-compliant account can purchase the bonds and donate them to any party or individual of choice.
The bonds are to be issued by the Designated Branches of SBI in the denomination of Rs. 1000, Rs. 10,000, Rs. 1,00,000, Rs.10,00,000 and Rs. 1,00,00,000. The bonds are available for purchase by any person for ten days each in every quarter, i.e., in January, April, July, and October, as specified by the Central Government. The central government also specifies an additional period of 30 days in general elections to the Lok Sabha. The Electoral Bonds are valid for fifteen calendar days from the date of issue. If the Electoral Bond is deposited after the expiry of the validity period, no payment is made to any payee Political Party.
However, the PMO compelled the SBI to open three unique windows in March, April, and May 2018 during the Karnataka assembly elections . Furthermore, the present government amended the Representation Act, 1951, the Income Tax Act, 1961, and the Companies Act, 2013 under the name of "money bill" to shun Rajya Sabha, allowing anonymous donors to donate without any cap .
Since its introduction, the electoral bonds have been dominating the medium of funding for political parties in India; it proves a threat because:
Right to Know:
The Hon'ble Supreme Court has time and again upheld the principle of "right to know" and the Right to Information as a living epitome. However, even after leaving the matter unheard for three years, the Court did not give a concrete decision, even though it is unequivocally related to Article 19, i.e., Right to Freedom of Expression. The essential requirement in a democracy is when a citizen casts his vote, he must have complete information about the candidate and the party representing him for five long years. This is because the associations and objectives of a party can be derived from donors of the party. But by keeping the citizens aloof from this fact, the scheme violates the fundamental principle on which the Constitution is immobile.
Time is proof that money is the most excellent motivator that can skew the odds in one's favor. Since no one is aware of the source of the donations, the parties can use it blatantly without any hindrances or restrictions. Therefore, an increase in the influx of money filling the party's coffers, wrongly influencing politics, has to be limited. No one ever is friend or foe in politics; it is a transaction or quid pro quo.
The rules and regulations of the electoral bond give a biased preference to the ruling party over other parties. We can understand this by a finding to procure which parties submitted their audit reports and income tax reports to the Election Commission. Through the check, it was found that Bhartiya Janata Party has been the biggest beneficiary of electoral bonds, garnering 94.5% of the bonds. Association for Democratic Reforms, which also filed an application seeking a stay on electoral bonds, reveal the same in their findings .
The bonds might even act as a haven for money laundering since the amendments of 2017 in the Companies Act removed the limit on political contributions by a company which was earlier 7.5 percent of its average net profit of the previous three years .
The government's insinuation that the purpose of bringing electoral bonds into existence was curbing the flow of black money falls short in pragmatism as to how the donor's anonymity is related to the prevention of black money. As the scheme does not restrict any foreign donations, it is plausible that even shell companies can donate to manipulate. This way, the electoral bond scheme increases institutional corruption instead of decreasing it. Moreover, in its design and functioning, it allows for unlimited anonymous corporate donations.
A six-part investigative series "#PaisaPolitics" based on the documents retrieved by RTI transparency activist Lokesh Batra and by journalist Nitin Sethi revealed that the present government ignored the objections leveled by the Reserve Bank of India and additionally deceived the Election Commission about the vital features of the scheme .