DOES ELECTORAL BOND BONDS WITH DEMOCRACY?
India attained freedom on 15 August 1947 and our Constitution came in existence on 26th January 1950.The Constitution envisaged Parliamentary Democracy where elections were to be held both directly and indirectly for Lok Sabha and Rajya Sabha respectively. Direct elections means that after every 5 years elections will be held both at the center and the states. Holding of elections require funding for all the political parties who give tickets to their candidate to be elected as M.Ps and MLA’s. All the political parties have huge budget for elections availing them to make massive expenditure which runs into crore of Rupees.
Since its inception lots of unaccounted money has been pumped in by individual, groups and corporate before and during the process of elections. The whole concept of funding the election was based on quid-pro-quo (return on investment) i.e. the election funds were in lieu of return on investment (ROI) in form of kickbacks or commissions or contracts. It leads to serious economic offences promoting corruption at a massive scale.
PROVISION CHECKING AND RESTRICTING DONATIONS
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U/s 29C of Representation of People Act 1951: All political parties are required to declare donations exceeding Rs.20,000/- from any person or a company, failing which it disentitles the party from tax relief under Income Tax Act 1961.
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Section 2(E) of Foreign Contribution Act 1976: It is a punishable offence which may extend to 5 years or fine or both if the political party accepts contribution from any foreign sources which is completely prohibited.
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Rule 19 of the Conduct of Election Rule 1961: Governs the maximum expenditure by a political party.
ELECTORAL BOND SCHEME (EBS)
Electoral Bond Scheme (EBS) was launched in 2017 to clean the system of corruption during political funding and move towards cashless economy. Electoral bond is a bearer instrument in a manner of promissory note and an interest free banking note whereby a citizen or a corporate is eligible to purchase the bonds through cheque or digital payments.
These bonds were only to be bought from notified branches of the State Bank of India (SBI) for 10 days each in January, April, July, and October. Electoral bonds could be purchased in any specified denominations and the payee can bestow it upon registered political party as donation of Rs.1000/-, Rs.10,000/-, Rs.1,00,000/-, Rs.10,00,000/- and Rs.1,00,00,000/- which can be enchased by the parties’ verified accounts within 15 days from the date of purchase.
Electoral bond will not carry the donor’s name but the payee will have to fulfill KYC norms at the Bank. No report is required to be submitted by the receiving parties of the donations received via Electoral bond. Every party registered under section 29A of Representation of People Act (R.P Act) 1951 and has secured at least 1% votes held in Lok Sabha. Political Party will be allotted a verified account by Election Commission of India (ECI). Electoral Bond transaction can be made only through this account.
FEATURES
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Anonymity – Neither the donor nor the Political Party is obliged to reveal the name of the donor.
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Freedom of Information under Article 19(1)(A) of the Constitution.
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Transparency – It is a convenient channel for the passage of black money.
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Asymmetrically opaque as the bonds are purchased through SBI; the political party knows who the donor is.
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Unlimited corporate donations due to removal of 7.5% cap and disclosure requirement.
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No accountability – shell companies can donate unlimited amounts.
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Foreign funding widened – Amendment to FCRA expanded scope for foreign firms to donate.
PETITION FILLED BY ASSOCIATION OF DEMOCRATIC REFORMS V/S UNION OF INDIA
The central issue: whether the Electoral Bond Scheme 2018 (EBS), by granting anonymity to the corporate donors to political parties, is against the spirit of free and fair elections, which is a basic feature of the Constitution.
A bench comprising Chief Justice D.Y. Chandrachud, Justice Sanjiv Khanna, Justice B.R. Gavai, Justice J.B. Pardiwala, and Justice Manoj Mishra declared EBS unconstitutional.
SUPREME COURT RULING BANS THE ELECTORAL BONDS
The Supreme Court held that Electoral Bond Scheme (EBS) lacks transparency but the relation between the donor and the recipient cannot be denied. At the same time, EBS blocks the Right to Information (RTI) to the public at large.
Hence, the Supreme Court struck down the Electoral Bond Scheme on 15 February 2024, declaring it violative of Article 19(1)(A) of the Constitution. The Court directed SBI to submit details of the Electoral bonds from 12 April 2019 onwards to the ECI, including purchaser and political party information. ECI was instructed to publish the data on its website within one week of receiving it (13 March 2024).
WHAT IS THE WAY OUT? (STEPS SUGGESTED)
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National Election Fund can be created.
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The Election Commission can decide how the donations can be shared among parties.
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Inderjeet Gupta Committee (1998) endorsed state funding of elections.
CONCLUSION
Democracy or self-government has been earned with great effort and sacrifice by our freedom fighters.
Since Right to Information is the cornerstone of democracy, its violation blocks transparency. The Supreme Court upholding the voter’s right to information strengthens democratic values ingrained in our society.
– MAMTA SINGH SHUKLA
Advocate, Supreme High Court
📞 9560044035
✉️ adv.mamtasinghshukla@gmail.com
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