India is the world’s largest democracy, elections and political parties are fundamental features of Parliamentary democracy. The year-round operation of political parties incurs substantial expenses, often amounting to hundreds of crores. However, there has been a lack of transparency in the funding process.
In an effort to reform the political funding system in the country and transition towards a cashless economy, the Electoral Bonds Scheme was notified on January 2, 2018, the scheme introduced instruments through which anyone in the country could donate money to political parties anonymously. This is not the first time the scheme has ended up before the top court since its inception when it was announced in the Union Budget session in 2017.
While the scheme aimed to curb widespread under-the-table cash transactions, it has faced resistance from various key players in the Indian electoral system, including the Election Commission.
What are electoral bonds?
Electoral bonds (EBs) are bearer instrument, like promissory note that can be bought by any Indian citizen or company incorporated in India. The citizen or corporate can then donate the same to any eligible political party of his/her choice.
The bonds are similar to bank notes that are payable to the bearer on demand and are free of interest. An individual or party is allowed to purchase these bonds digitally or through a cheque.
The bonds are usually sold in denominations ranging from Rs1,000 to Rs1 crore, these bonds can be bought from authorized SBI branches through accounts complying with KYC norms. The donor’s name is not mentioned on the bond. There is no limit on the number of bonds an individual or company can purchase.
Following this, the political parties can choose to encash the EBs, which have a life of only 15 days during which it can be used for making donations to political parties and funding their electoral expenses. These bonds are redeemable in the designated account of a registered political party. The political parties have to disclose the amount to the Election Commission.
However, they aren’t available for purchase throughout the year and can only be purchased between 10-day windows falling in the months of January, April, July, and October.
Eligibility: Only political parties registered under Section 29A of the Representation of the People Act, 1951, and which secured not less than 1% of votes polled in the last general election to the House of the People or the Legislative Assembly of the State, are eligible to receive electoral bonds.
What is the Issue?
The Government made a way to introduce electoral bonds by amending four separate legislations, the Foreign Contribution Regulation Act, 2010; the RPA, 1951; the Income Tax Act, 1961; and the Companies Act, 2013 through the Finance Act(s) of 2016 and 2017.
In 2017, the initial set of petitions was submitted by two NGOs, Common Cause and the Association for Democratic Reforms (ADR), seeking to invalidate amendments introduced through the Finance Acts of 2016 and 2017. These acts were passed as money bills and were criticized for “permitting unrestricted political contributions, including from foreign entities,” effectively legitimizing widespread electoral malpractice.
The petitioners further contended that the bonds guaranteed non-transparency in political funding and sought a stay on the scheme, citing the argument that EBs were introduced “illegally,” bypassing the Rajya Sabha’s approval.
Timeline of earlier rulings of the Supreme Court in the Case:
April 2019- A three-judge SC bench, in an interim order, directed political parties receiving donations through electoral bonds to submit the details of the bonds to the ECI.
March 2021- A three-judge SC Bench headed by then CJI SA Bobde, dismissed a petition seeking to stay the sale of fresh electoral bonds ahead of Assembly elections in West Bengal, Tamil Nadu, Kerala, Assam, and Puducherry. CJI SA Bobde disputed the petitioner’s contention regarding the “complete anonymity” of bond purchasers.
Additionally, the SC said that bonds had been issued in the past, between 2018 and 2020, “without any impediment,” and it had already ordered “certain safeguards” by way of its April 2019 interim order.
NOTE- The word “safeguards” the court was referring to here were “requiring all the political parties who have received donations through Electoral Bonds to submit to the Election Commission of India in sealed cover” along with particulars of the donors for each bond, including the amount of each bond and credit details received against each bond, like bank account details and the date of crediting the amount.
April 2022- CJI NV Ramana assured the petitioners that the SC would take up the matter for hearing when advocate Prashant Bhushan mentioned the matter while seeking an urgent hearing, contending that a Kolkata-based news company paid Rs 40 crore to avoid a raid. “It’s distorting democracy,” Bhushan asserted.
What is the Central Government’s stand?
The primary objective of implementing the electoral bonds scheme by the Centre was to “cleanse the system of political funding in the country” and foster “transparency in electoral funding in India”.
Baijayant Jay Panda, a national vice-president of the BJP, has opined that electoral bonds represent “solid progress” towards cleaner political funding.
In a statement presented before the Supreme Court in the electoral bonds case, yesterday, India’s Attorney General, R Venkataramani, contended that citizens do not possess the right to access information under Article 19(1)(a) of the Constitution concerning the funding of a political party.
“There cannot be a general right to know anything and everything for undefined ends… Right to know for the general health of democracy will be too over-broad,” the Centre said in the affidavit.
The Attorney General countered the petitioners’ argument, who are challenging the electoral bonds scheme, asserting that citizens do not have the right to be informed about the origin of a political party’s funding.
A five-judge Constitution Bench is set to hear final arguments to the batch of petitions challenging the constitutional validity of the Centre’s electoral bond scheme on October 31.
What is the matter listed in the Supreme Court today?
On 16 October, while hearing the validity of the electoral bond scheme, a bench of Chief Justice of India (CJI) DY Chandrachud and Justices JB Pardiwala and Manoj Misra said it would hear the matter on October 31, matter on 31 and continue on November 1, if required.
In the present case, the top court will be dealing with four petitions, filed by ADR, CPI(M), Congress leader Jaya Thakur, and a PIL by one Spandan Biswal. The petitioners have asked the court to declare all political parties as public offices to bring them under the ambit of the Right to Information Act and compel political parties to disclose their income and expenditures.
So today, the court will now focus on the legality of the scheme and the violation of citizens’ right to information about the funding of parties.
