Context:
Donations of substantial value made anonymously can erode the foundations of electoral democracy and governance by fostering a culture of quid pro quo between donors and recipients. The Supreme Court of India, in invalidating the Electoral Bond Scheme (EBS), where individuals could purchase electoral bonds for political parties, has acknowledged this issue, and declared the entire scheme unconstitutional, particularly highlighting its infringement on voters’ right to information.
Relevance:
GS2-
- Transparency and Accountability
- Government Policies and Interventions
- Elections
- Issues Arising Out of Design and Implementation of Policies
Mains Question:
Discussing the details of the Electoral Bond Scheme, explain the Supreme Court’s rationale behind declaring the scheme unconstitutional. (15 Marks, 250 Words).
About the Electoral Bonds Scheme:
- The electoral bonds system was introduced in 2017 through a Finance bill and came into effect in 2018.
- They provide a means for individuals and entities to contribute to registered political parties while maintaining the anonymity of the donor.
Features:
- The State Bank of India (SBI) issues the bonds in denominations of Rs 1,000, Rs 10,000, Rs 1 lakh, Rs 10 lakh, and Rs 1 crore.
- They are payable to the bearer on demand and are interest-free.
- They can be purchased by Indian citizens or entities established in India, either individually or jointly with others.
- They remain valid for 15 calendar days from the date of issue.
Authorized Issuer:
SBI is the designated issuer, and electoral bonds are issued through specified SBI branches.
Eligibility of Political Parties:
Only political parties registered under Section 29A of the Representation of the People Act, 1951, and those securing not less than 1% of the votes polled in the last general election to the House of the People or the Legislative Assembly are eligible to receive electoral bonds.
Purchase and Encashment:
- Electoral Bonds can be acquired digitally or through cheques.
- Encashment is permitted only through an authorized bank account of the political party.
Transparency and Accountability:
- Parties are required to disclose their bank account details with the Election Commission of India (ECI).
- Donations are conducted through banking channels, ensuring transparency.
- Political parties are obligated to provide an account of how the funds received are utilized.
More on the Supreme Court’s Verdict:
- The court deemed the amendment to the Companies Act, removing the 7.5% cap on a company’s profit that could be donated to political parties without disclosing recipient details in profit and loss accounts, as manifestly arbitrary.
- Since 2019, the court has mandated the disclosure of donation details. This judgment aligns with the court’s ongoing efforts to safeguard voter rights and maintain the integrity of elections, building on past interventions such as introducing the ‘None of the Above‘ option on the ballot, eliminating protection for legislators against immediate disqualification upon criminal conviction, and enforcing the mandatory disclosure of candidates’ assets and criminal history in election affidavits, along with expediting trials for criminal offenses involving MPs and MLAs.
- The Court’s rationale is entirely acceptable. It determined that the main justification for the Electoral Bond Scheme (EBS) – the restriction of ‘black money’ in political or electoral funding by permitting donations through banking channels – did not meet the proportionality test, as it was not the least restrictive means to limit voters’ right to information.
- The court established a logical connection between unidentified corporate donations and the potential influence of donors on policy decisions.
- This judgment is a natural extension of a principle established years ago, asserting that voters’ freedom of expression under Article 19(1)(a) is incomplete without access to information about a candidate’s background.
- The principle is now broadened to unveil corporate donors who may have supported ruling parties in exchange for favors.
Conclusion:
While the decision may diminish the influence of donors on governance through financial power, a pertinent question arises about whether the scheme’s validity could have been determined earlier or the regular issuance of bonds could have been halted. The actual impact of the substantial funds given to parties under this scheme, and whether they influenced favorable policy measures or supported additional campaign resources, will remain unknown. This case was a fitting scenario for the temporary suspension of the scheme.
