By Amritananda Chakravorty
On April 2, 2019, the Supreme Court is set to hear a bunch of petitions challenging the validity of electoral bonds scheme, 2018, which was notified by the Central Government on January 2, 2018. Vide the amendments in the Finance Act, 2017, the Government made many changes in the Reserve Bank of India Act 1934, Representation of Peoples Act 1951, Income Tax Act 1961 and Companies Act, 2013, in order to bring out the scheme. According to the scheme, an electoral bond is like a bearer promissory note, which can be purchased by any buyer from any authorised branch of the State Bank of India, without mentioning the name of the buyer or the payee, and will be known only to the bank.
The buyer can be either an individual citizen, or a body incorporated in India. After purchasing the bond, which would be in the denomination of Rs 1000/-, 10,000/-, 1,00,000/-, 10,00,000/- or 1,00,00,000/-, the buyer can then endorse it to a payee political party as a donation, and will be valid for 15 days, within which it has to be encashed. Most importantly, the scheme exempts the political parties to disclose the donations received by way of electoral bonds to the Election Commission of India, as part of its annual declaration. It also removes the cap of 7.5% imposed by the Companies Act on the donation by companies to political groups, or donation received from foreign sources.
The petitions have been filed by the Communist Party of India (Marxist), and Association for Democratic Reforms (‘ADR’), who have challenged the scheme as “an obscure funding system which is unchecked by any authority”. As per ADR, 95% of the electoral bonds sold so far have been in favour of the BJP, and that too in 10 lakhs or 1 crore denomination, thereby indicating that it’s the corporate bodies, and not common citizens, who are making donations in complete secrecy. Accordingly, they have asked for an immediate stay of the scheme before the elections, besides challenging its valdity, since there’s a complete fear that the ruling party would have a clear advantage over the other parties in terms of monetary resources.
Denying these allegations, the Central Government contended that “the scheme envisages building a transparent system of acquiring bonds with validated KYC and an audit trail. Besides, a limited window and a very short maturity period shall make any misuse improbable. Donors who buy these bonds, their balance sheet will reflect such donations made. The electoral bonds will prompt donors to take the banking route to donate, with their identity captured by the issuing authority. This will ensure transparency, accountability and a big step towards electoral reform”.
Most importantly, the Election Commission of India has opposed the Electoral Bonds Scheme stating that these changes would “have serious repurcussions/impact on the transparency aspect of political finance/funding of political parties.” Referring the scheme, the ECI contended that if the donations cannot be reported to the Commission, then it would be difficult to ascertain if the parties were receiving donations from government companies or from foreign sources, thereby casting huge doubts on the transparency of the political funding. It also noted that they had informed the Government in March, 2017 about the pitfalls of the scheme and the effect of the amendments in the Finance Act.
It is noted that the ECI has taken a completely opposite position to the Government’s stand on electoral bonds, and have in fact supported the petitioners’ contentions that the scheme is a huge backward step on the decade long efforts to clean up the system of political funding, bring in more transparency, and sift out black money from the electoral system. In the name of channeling the money through the banking system, which ostensibly makes it ‘white’, the Government is making a mockery of the laws and the electoral funding system.
To exempt political parties from disclosing the donations received through electoral bonds is basically providing a single window opportunity to corporates to just flush the parties with money, and influence policy decisions. It is well-known which parties receive thousands of crores of money in donation, and can spend 5000 crores on election funding. The electoral bonds scheme is a completely opaque system, designed to favour the ruling party by the corporates, and to convert their backmoney into white. It’s another form of demonetisation.
The Supreme Court ought to have heard this matter months back, and not just days before the general elections of 2019. It is an issue of seminal importance, where the core of our democratic system, i.e., the credibility of elections, is at stake, and one hopes that the Court rises to the occasion, and declares the scheme as unconstitutional. The elections in the world’s largest democracy cannot become a mockery, despite the efforts of the Government of the day. (IPA Service)