Decoding Electoral Bonds in India
Electoral Bonds Latest Update (15th Feb 2024): On Thursday, India’s Supreme Court made a significant decision by banning electoral bonds, a source of funding for elections that has long been shrouded in mystery and has contributed to substantial revenues for political parties.
Presided over by Chief Justice of India D Y Chandrachud, a five-judge Constitution Bench directed the immediate cessation of electoral bond issuance by the issuing bank. Additionally, the State Bank of India (SBI) was instructed to furnish details of all electoral bonds purchased from April 12, 2019, until the present date to the Election Commission of India (ECI). The court mandated that SBI disclose information regarding each electoral bond encashed by political parties, including the engagement date and denomination. This information must be provided to the ECI within three weeks from the date of the judgment, by March 6, 2024.
Chief Justice Chandrachud emphasized the court’s stance, asserting that anonymous electoral bonds infringe upon the Right to Information and Article 19(1)(a). Furthermore, the court deemed a proviso introduced to Section 29C of the Representation of People Act, which exempted political entities from disclosing contributions received through electoral bonds, unconstitutional and arbitrary.
Electoral Bonds Latest Update (12th Feb 2024): The ruling BJP received nearly Rs 1,300 crore through electoral bonds in 2022-23, according to the party’s annual audit report submitted to the Election Commission. This is seven times more than what the Congress, the main Opposition party, got in the same period through the same route. On the other hand, the Congress earned Rs 171 crore from electoral bonds, down from Rs 236 crore in FY21-22.
The BJP’s total funds stood at Rs 2,120 crore in the 2022-23 fiscal, of which 61 percent came from electoral bonds. In the financial year 2021-22, the BJP’s total contributions were Rs 1,775 crore.
Electoral Bonds: The What, Why, and How
Introduced in 2017 to reform political funding in India, electoral bonds have sparked debates and controversies. Involving the Supreme Court, addressing concerns about black money, and impacting the political landscape, these bonds have become a focal point. This article aims to simplify the intricate aspects of electoral bonds, examining their definition, purpose, and controversies.
In response to the persistent challenge of transparent political funding, former Union Finance Minister Arun Jaitley proposed the Electoral Bonds Scheme in the 2017-18 Union Budget. The primary goal was to cleanse the political funding system, promoting free and fair elections. But what exactly are electoral bonds, and how do they alter the dynamics of political financing?
Electoral Bonds – A Simplified Explanation:
Electoral bonds serve as a method for individuals and organizations to contribute funds to political parties. Similar to special banknotes available from designated banks, what sets them apart is the confidentiality they provide to donors – the contributor’s identity remains undisclosed. With a limited time frame for use, political parties can redeem these bonds through their bank accounts.
There are no restrictions on the number of electoral bonds an entity can purchase, providing flexibility in contributing to the political process. However, only parties meeting specific criteria, such as securing at least 1% of the votes in the last election, can receive these donations.
Electoral Bonds: Not Investments, but Donations:
Unlike traditional investments, electoral bonds do not yield financial returns like interest or dividends. Instead, they represent a method of making financial contributions to political parties. The funds collected through these bonds are reserved for supporting political activities and campaigns.
The Rising Significance of Electoral Bonds:
Electoral bonds have emerged as a crucial source of political funding in India, leading to notable impacts:
1. Increased Funding: Political parties now receive more substantial funding through electoral bonds, influencing campaign strategies and outreach programs.
2. Shifting Donation Patterns: The introduction of electoral bonds has redirected donations toward more formalized and transparent channels, albeit with persistent concerns about donor anonymity.
3. Reduced Cash Dependence: The transition to digital transactions through electoral bonds has decreased reliance on cash for political funding, aligning with the government’s push for a cashless economy.
4. Challenges for Smaller Parties: Smaller political parties, lacking widespread support, face difficulties meeting the eligibility criteria for receiving electoral bond donations.
Growth in Electoral Bonds:
Analyzing the numbers reveals the significant impact electoral bonds have had on political funding in India:
– Total donations surpassed ₹9,188 crores between 2016-17 and 2021-22.
– National parties experienced a remarkable 743% increase in donations from FY 2017-18 to FY 2021-22.
– Over 56% of political party donations now come through electoral bonds.
The Unique “India Way”:
The implementation of electoral bonds in India is unparalleled globally. While other countries permit corporate and individual donations to political parties, India’s electoral bond system stands out due to its distinctive features like donor anonymity and the use of bearer instruments.
Controversies Surrounding Electoral Bonds:
The controversies surrounding electoral bonds are multi-faceted and revolve primarily around transparency, the potential for misuse, and unequal impacts on the political landscape. Advocates for electoral reforms propose additional transparency measures to address concerns about anonymous donors compromising overall transparency.
As of January 8, 2024, the Supreme Court of India is yet to issue a final verdict on the electoral bond scheme. The court has been examining its validity and potential impacts on transparency and democracy through hearings that began in April 2023.
The Concern for Smaller Parties:
A primary concern revolves around the potential impact of electoral bonds on smaller political parties in India. Limited resources and networks make competing with established national counterparts challenging for these parties. Reliance on anonymous donations through electoral bonds could further widen this gap, hindering their ability to participate effectively.
Beneficiaries and Transparency:
The lack of transparency in electoral bonds makes it challenging for smaller parties to hold larger parties accountable for funding sources and potential conflicts of interest. This lack of transparency could impact public perception and trust.
Conclusion:
The Electoral Bond Market in India represents a groundbreaking initiative aimed at bringing transparency to political funding. While achieving specific objectives, the system is not without challenges and controversies. Balancing donor anonymity with overall transparency is crucial for the success of this unique financial mechanism. As India’s democracy evolves, discussions surrounding the Electoral Bond system will shape the future of political funding in the world’s largest democracy.
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