The Hindu Editorial Analysis- 17th November 2023 | Current Affairs & Hindu Analysis: Daily, Weekly & Monthly - UPSC PDF Download

Challenging the Electoral Bond Scheme

Why in News?

Political parties in India have traditionally been averse to any sort of public scrutiny of the sources and applications of their funds. The astronomical sums needed to finance their processes and operations cannot be raised from party cadres and altruistic donors. These can only come from Big Business, and as a quid pro quo.

What are Electoral Bonds?

• Introduction:
  • The electoral bonds system was introduced in 2017 through a Finance bill and implemented in 2018.
  • It facilitates donations to registered political parties while ensuring donor anonymity.
• Features:
  • Issuer: State Bank of India (SBI) issues bonds in denominations of Rs 1,000, Rs 10,000, Rs 1 lakh, Rs 10 lakh, and Rs 1 crore.
  • Nature: Bonds are payable to the bearer on demand, interest-free.
  • Eligibility: Purchased by Indian citizens or entities established in India, individually or jointly with others.
  • Validity: Bonds are valid for 15 calendar days from the date of issue.
• Authorized Issuer:
  • SBI is the sole authorized issuer.
  • Electoral Bonds are issued through designated SBI branches.
• Eligibility of Political Parties:
  • Only parties registered under Section 29A of the Representation of the People Act, 1951, securing at least 1% of votes in the last general election, can receive electoral bonds.
• Purchase and Encashment:
  • Bonds can be purchased digitally or through cheques.
  • Encashment is permitted only through the authorized bank account of the political party.
• Transparency and Accountability:
  • Disclosure: Parties must disclose their bank account with the Election Commission of India (ECI).
  • Donation Process: Donations are made through banking channels, ensuring transparency.
  • Obligation: Political parties are obligated to explain the utilization of funds received.
• Benefits:
  • Enhanced transparency in political party funding.
  • Accountability in disclosing donation utilization.
  • Discouragement of cash transactions.
  • Preservation of donor anonymity.

What are the Concerns Related to the Electoral Bond Scheme?

• Favoritism towards Rich Corporates:
  • The Electoral Bonds Scheme has opened the floodgates to unlimited corporate donations to political parties and anonymous financing by Indian as well as foreign companies which can have serious repercussions on the Indian democracy.
    • Donations made under this scheme by corporate and even foreign entities enjoyed a 100% tax exemption, benefiting wealthy corporations.
• Compromising Right to Know:
  • The Indian Supreme Court has long held that the “right to know”, especially in the context of elections, is an integral part of the right to freedom of expression (Article 19) under the Indian Constitution.
    • The Centre had made multiple amendments by way of two Finance Acts— Finance Act, 2017 and Finance Act, 2016, both passed as money bills.
      • The petitioners challenged the amendments as being “unconstitutional”, “violative of doctrines of separation of powers” and violative of an array of fundamental rights.
• Against Free & Fair Elections:
  • Electoral bonds provide no details to the citizens.
  • The said anonymity does not apply to the government of the day, which can always access the donor details by demanding the data from the State Bank of India (SBI).
  • This implies that the government in power can leverage this information and disrupt free and fair elections.
• Crony Capitalism:
  • The electoral bonds scheme removes all pre-existing limits on political donations and effectively allows well-resourced corporations to fund elections subsequently paving the way for crony capitalism.
  • Crony Capitalism: An economic system characterized by close, mutually advantageous relationships between business leaders and government officials.

Way Forward

• There is a pressing demand for robust regulation of political financing to combat the persistent issue of corruption and the decline in the quality of democratic governance.
• Necessity for Bold Reforms: Bold reforms are essential to disrupt the harmful cycle of corruption and strengthen the democratic system.

• It is crucial to identify and address the existing loopholes in current laws to enhance the overall accountability and transparency of the entire governance machinery.

Role of Voters:

• Demand for Awareness Campaigns: Voters play a pivotal role in bringing about significant changes by advocating for awareness campaigns.
• Rejecting Overspending and Bribery: If voters actively reject candidates and parties engaged in overspending or bribery, it can elevate the democratic process to a higher standard.