Introduction
Starting by explaining what electoral bonds mean. Electoral bonds are instruments or securities used to make donations to political parties. Electoral Bonds may be purchased by an Indian citizen or a company incorporated or founded in India. The Electoral Bonds may only be cashed by an eligible Political Party through an Authorized Bank account.
Who can get Electoral Bonds?
In India, political parties registered under Section 29A of the Representation of the People Act, 1951, can receive electoral bonds. These bonds are intended to make donations to political parties more transparent, as they may only be cashed through designated bank accounts of registered political parties. However, the electoral bond plan has sparked controversy and debate in India due to its impact on openness and accountability in political spending. State Bank of India has been granted permission to issue and redeem Electoral Bonds through its 29 Authorized Branches. The bond is valid for fifteen calendar days from the date of issue, and no payment will be made to any payee Political Party if the Electoral Bond is placed after the validity period has expired. The Electoral Bond deposited by an eligible Political Party in its account will be credited on the same day. Electoral bonds would be issued/purchased for any amount in multiples of '1,000, '10,000, '1,00,000, '10,00,000, and '1,00,00,000 from the designated State Bank of India (SBI) branches.
Electoral bonds were introduced in The Finance Bill 2017 during Union Budget 2017-18 in the form of a money bill as an important component of the aforesaid Budget. In simpler terms, to gain certain benefits and avoid certain checks by Parliament, which goes against the rules outlined in Article 110 of the Indian Constitution. According to the Indian Constitution, Money Bills are excluded from the obligation to be "passed" in the Rajya Sabha, as the upper chamber is merely entitled to remark on bills submitted in the Lok Sabha. That is why often a lot of bills are included in the money bill to be passed by the upper house and the president without checking the constitutional validity of such bill, or without any consideration of how it will impact the majority of the population when the said Bill or Act when passed and enforced on the common man. One such example of this is the landmark case of Justice K.S. Puttaswamy and Anr. vs. Union of India (UOI) and Ors, in which it was discussed that “Whether the Aadhaar Act could be passed as a ‘Money Bill’ within the meaning of Article 110 of the Constitution”.
The main issue with the electoral bond issue was the transparency and accountability in the political funding. It was argued that the arrangement violated democratic values by allowing for opaque political financing. It was also argued that the anonymity afforded to donors through electoral bonds keeps the public from knowing who is financially supporting political parties, which could lead to corruption and influence peddling. Several factors contribute to the success of the existence of any political party and each factor is as important as others. But money is one of the factors that binds people under the crushing obligation of following commands even if they are fatuous. Money gives a sense of having an upper hand to anyone who has it. Furthermore, several legal experts and opposition parties have questioned whether the scheme infringes the right to knowledge and freedom of expression provided by the Indian Constitution. They claim that citizens have a right to know how political parties are funded so that they can make educated judgments during elections.
The electoral bonds system has been challenged at the Supreme Court of India via a Public Interest Litigation (PIL) on two grounds. To begin, it is argued that the scheme has resulted in a complete lack of transparency in Indian political funding, preventing the Election Commission and citizens from accessing critical information about political contributions and parties' significant sources of income. Second, it is argued that passing this scheme as a Money Bill, circumventing the upper house of Parliament Rajya Sabha — is unconstitutional and violates the doctrine of separation of powers as well as the citizen's fundamental right to information, both of which are essential components of the Constitution's basic structure. The Indian Constitution specifies conditions for categorizing legislation as a Money Bill, which the clauses relating to electoral bonds do not meet. The administration explains this by saying that any budget component is automatically classified as a money bill. Similar misuse of Money Bills happened in retrospective revisions to the Foreign Currency Regulation Act (FCRA) intended to protect political parties from punishment. All parties have a vested interest in keeping finances anonymous, which contributes to the prevalence of unreported funds and corruption. Unfortunately, there is no detailed documentation required by existing rules, therefore election finances and expenditures are key contributors to corruption and the spread of black money in Indian politics.
In the recent landmark judgement of the Hon’ble Supreme Court on the EBS in a 5-judge bench led by Chief Justice D.Y. Chandrachud and four other judges deemed the Electoral Bond Scheme (EBS) unlawful after reviewing past legal precedents. They initially asked whether keeping the identities of political party donors secret violated voters' right to know. The Court determined that voters had a right to know about political parties, which extends beyond their right to free expression. The government claimed that ensuring donor anonymity lowers black money's effect in elections, but the Court disagreed, holding that only specific grounds can limit freedom of expression, none of which include public interest. Furthermore, the Court concluded that the EBS was not the best approach to combat black money. Furthermore, it questioned the scheme's lack of transparency, which allowed wealthy donors to stay anonymous. The Court ruled that voters require knowledge regarding political finance to make educated judgments, and the EBS infringes this right. The Court also held that firms should not be allowed to make unlimited political contributions since it undermines fair elections. The Court ordered the State Bank of India to stop selling Electoral Bonds and provide transaction records to the Election Commission by the end of 31st March 2024.
Mainly the EBS was used illicitly to get the funding by the political parties in contesting of elections Between March 2018 and April 2022, an estimated 18,299 electoral bonds worth ₹9,857 crore were successfully exchanged. On November 7, 2022, the Electoral Bond plan was revised to raise the number of sale days from 70 to 85 in a year when an assembly election may be held. The decision on the Electoral Bond (Amendment) Scheme, 2022 was made just before the assembly elections in Gujarat and Himachal Pradesh, while the Model Code of Conduct was implemented in both the states. These methods question the democratic value of such schemes, the main objective of having “Free and Fair Elections” is often placed in the spotlight of corruption that is constant everywhere in today’s time. But in a country as diverse as India and also the largest Democratic country in the world making sure that things like these are kept in check now and then is very important. The elected representatives shall be the ones with a morally ethically clean background, because only then can the common person or the voter decide who is going to do something for them and who is not.
Conclusion
The Electoral Bond Scheme (EBS) in India has been a subject of intense debate and scrutiny due to its implications for transparency and accountability in political funding. While designed to make political donations more transparent, the scheme has faced criticism for fostering opacity by allowing donors to remain anonymous. This anonymity can potentially lead to corruption and undue influence on political parties. The passage of the EBS as a Money Bill circumvented thorough parliamentary scrutiny, raising constitutional concerns and questions about the separation of powers. The recent Supreme Court judgment deemed the EBS unlawful, highlighting the voters' right to know about political party funding. The Court's decision to halt the sale of electoral bonds and mandate disclosure of transaction records underscores the need for transparency in political financing. The misuse of electoral bonds, as evidenced by the substantial sums exchanged, points to a broader issue of unaccounted funds in the electoral process. The Court's intervention aims to uphold democratic values by ensuring that political contributions are transparent and regulated, thereby fostering fair elections. In a diverse and democratic country like India, maintaining the integrity of the electoral process is paramount. The elected representatives must have a clean moral and ethical background, allowing voters to make informed choices. Ensuring transparency in political funding is a crucial step towards achieving this goal, reinforcing the principles of free and fair elections, and ultimately strengthening the democratic fabric of the nation.
~Authored by Zehra Bushra Khan
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