Supreme Court to take up the long-pending challenge against the government’s Electoral Bonds Scheme
- The Chief Justice of India was informed that a case regarding the electoral bond scheme has been pending for a year without a hearing
- He replied that the Court wanted to earlier take up a long-pending challenge against this scheme, but the COVID-19 pandemic played spoilsport and the case left unheard
- It is a financial instrument used to make contributions to political parties.
- The bonds are issued in denominations of Rs. 1,000, Rs. 10,000, Rs. 1 lakh, Rs. 10 lakh, and Rs. 1 crore, with no upper limit.
- The State Bank of India is authorised to issue and redeem these bonds, which have a fifteen-day validity period from the day of issuance.
- These bonds can be redeemed in a registered political party's designated account.
- The bonds are available for purchase by any person (who is a citizen of India or who is incorporated or established in India) for 10 days in each of the months of January, April, July, and October, as stipulated by the Central Government.
- A person, as an individual, can purchase bonds either alone or in collaboration with other people.
- The name of the donor is not included on the bond.
- The electoral bonds scheme and amendments in the Finance Act of 2017 allows for “unlimited donations from individuals and foreign companies to political parties without any record of the sources of funding”.
Issues related to the use of Electoral Bonds
- Anonymity: Neither the donor (who might be an individual or a corporation) nor the political party is required to disclose the source of the contribution.
- Asymmetry: Because the bonds are acquired through the State Bank of India (SBI), the government always knows who the contributor is.
- This knowledge asymmetry threatens to skew the process in favour of whichever political party is in power at the moment.
- Blackmoney's Chanel: The removal of a 7.5 percent restriction on corporate donations, the necessity to disclose political contributions in profit and loss statements, and the requirement that a business be three years old all undermine the scheme's aim.
Government’s arguments in Favour of Scheme
- Electoral Bonds Requirements: Only parties registered under the Representation of the People Act 1951 may collect donations via electoral bonds, and they should not have received less than 1% of the votes cast in the previous elections.
- To Address the Threat of Black Money in Politics: The Bonds involve only white money because the sums are paid solely by check or demand draft
- KYC regulations are also observed.
- Support from India's Election Commission: ECI was not opposed to the bonds, but was concerned about their anonymity.
- It also urged the court not to halt the bonds, claiming that the programme is a step up from the previous system of unaccountable cash funding.
The Supreme Court can play an important role in reforming the Electoral Bond system by providing guidelines to the government to be more accountable and transparent in this regard. Voters can also assist in bringing about significant changes by requesting public awareness campaigns. Democracy would advance a step if voters rejected politicians and parties that overspend or bribe them.