The Supreme Court has dismissed petitions seeking to stay the sale of fresh electoral bonds ahead of Assembly elections in West Bengal, Tamil Nadu, Kerala, Assam, and Puducherry. Although the court said there is no justification to stay the current sale, the larger constitutional challenge to the electoral bonds scheme filed in 2017 is still pending.
Salient points of Electoral Bonds
The Controversy Around Electoral Bonds
- Lack of Transparency:
- As it conceals from public scrutiny the identity of the source of funds.
- Government control:
- The government is always in a position to know who the donor is because the bonds are purchased through the SBI which threatens to push the process in favour of whichever political party is ruling at the time.
- Anonymity:
- The electoral bonds scheme, by making the bonds anonymous, and by removing the requirements on companies to disclose which parties they are donating to, deprives voters of this crucial information, and thereby violates their right to know.
- In a number of previous decisions, the Supreme Court has held that freedom of speech and expression under Article 19(1)(a) of the Constitution also includes a ‘right to know about the activities of political parties and candidates, including their funding. This is essential for voters to make an informed choice and exercise their freedom of expression when voting.
Other acts which have made electoral funding more opaque and created suspicions around electoral bonds
- NO LIMIT ON CORPORATE DONATIONS
- Previously, there was a cap on the amount of money that a company could donate: 7.5 percent of its average net profits during the previous three financial years. This cap was removed by Finance Act 2017.
- elimination of the provision that a corporation must be three years in existence, undercuts the intent of the scheme.
2. NO DISCLOSURE BY CORPORATE DONORS
- Previously, companies needed to disclose the amount of money donated and the names of the political parties to which they donated money in their profit and loss accounts However, the requirement to disclose the names of the political parties was removed by Finance Act 2017.
3. DONATIONS BY FOREIGN COMPANIES
- India has strict laws against political parties receiving funding from a “foreign source”. Under the old law in 1976 and the new law in 2010, political parties cannot even accept donations from an Indian company if it is a subsidiary of a foreign company.
- Finance Act 2016 made a retrospective amendment to the 2010 law, which meant the restriction would not apply to such Indian subsidiaries if their share capital is below a specified amount. Finance Act 2018 extended the retrospective protection all the way back to 1976.
Way Forward
- Effective regulation of political financing through more powers to the Election commission like deregistering a party,
- Ensure faster resolution of cases involving misuse of money of elections and prohibiting paid news through special courts.
- State funding of elections as recommended by Indrajit Gupta Committee (1998) to establish a fair playing field for parties with less money and remove electoral funding entirely. However, a number of concerns related to concerns of smaller parties, fake parties, freedom of voters and state capacity have to be taken into account before initiating this.
Conclusion
- Successive governments have promised electoral reforms and have set up committees to look into the matter. It is imperative that the authorities enforce these reforms and cleanse our electoral process of the vicious circle of corruption and black money that threatens the very foundation of our democracy.
- Removal of the cap on corporate donations and the companies must disclose details of their political funding
- Bring political parties under RTI
- Unless drastic and radical steps are taken to cleanse public offices by the government, political parties, and people at large, corruption will continue to corrode the vitals of the country.
- State funding of election recommended by Dinesh Goswami committee
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