The story so far: The Supreme Court on Friday adjourned to April 10 the hearing of a number of petitions challenging the legality of the Electoral Bond Scheme. The Election Commission of India, in an affidavit filed in the court, said the electoral bonds had made political funding opaque and would have “serious repercussions on transparency of political funding” owing to its anonymous nature.
What is the Electoral Bond Scheme?
The scheme was launched last year by Union Finance Minister Arun Jaitley in an attempt to “cleanse the system of political funding in the country.” A donor may buy an electoral bond at specified banks and branches using electronic modes of payment and after having completed the KYC (know your customer) requirements. The political party will have to deposit the encashed money in a bank account it has informed the Election Commission about.
Where are they available?
The electoral bonds are available at specified branches of the State Bank of India (SBI) for 10 days each in the months designated by the government from time to time. The bonds may be bought for any value, in multiples of ₹1,000, ₹10,000, ₹1 lakh, ₹10 lakh or ₹1 crore.
What was the system earlier?
The rules for declaring sources of funding for political parties are outlined in Section 29C of the Representation of the People Act, 1951. Prior to 2017, the Act said all registered parties had to declare all donations made to them of over ₹20,000. The problem, according to political analysts and watchdog bodies, was that large donations were anonymous.
What is the controversy?
The bone of contention over the electoral bond scheme is that while the government has consistently said the scheme will increase transparency in electoral funding, it has ignored the reservations of several political parties and even the Election Commission.
The argument put forth by the Election Commission is that it allows political parties not to disclose the source of these bonds. The parties do not have to disclose where their money comes from, as long as the mode of funding is through electoral bonds. This provision, to exempt parties from declaring the sources of the electoral bonds they receive, was done through an amendment to the Representation of the People Act by the Finance Act, 2017.
The Election Commission also criticised several other changes made by the government. For example, it said the amendments introduced by the government in the Income Tax Act also facilitated anonymous donations by saying that parties did not have to disclose the names, address or PAN of donors of less than ₹20,000. The bulk of the donations to parties have been coming in sums smaller than that amount, the Election Commission said. Another amendment that has been criticised is the one to the Foreign Contribution Regulation Act (FCRA), which the Election Commission said will allow political parties to receive funding from foreign companies with a majority stake in Indian companies.
Are people using these bonds?
Data revealed through the Right to Information replies by the State Bank of India show that large sums have been bought through electoral bonds. The State Bank of India issued a whopping ₹1,716 crore in electoral bonds in just two months of 2019, the data show.
The RTI replies say electoral bonds worth ₹495.6 crore were sold in Mumbai in 2019, which is the largest share (28.9%) of the total amount sold.
Observers are alarmed that the bulk of anonymous electoral bonds sold seem to be going to the Bharatiya Janata Party. A separate RTI reply by the SBI has shown that the bank had sold ₹222 crore worth of electoral bonds in March 2018, the only month in financial year 2017-18 when these bonds were sold.
Given that, at the time, the bonds could only be sold by the SBI, and the fact that a review of the BJP’s audit report for 2017-18 showed that it had received ₹210 crore worth of donations that year from electoral bonds, the party received 94.6% of all the electoral bonds sold in 2017-18.
Published - April 06, 2019 07:10 pm IST
