The document discusses the controversial electoral bond scheme in India for political donations. It provides background on political financing challenges, outlines the conceptualization and implementation of electoral bonds, and examines controversies around opacity and allegations of unfairness. It also summarizes the Supreme Court's ruling that struck down the scheme for violating transparency and the right to information.
The document discusses the controversial electoral bond scheme in India for political donations. It provides background on political financing challenges, outlines the conceptualization and implementation of electoral bonds, and examines controversies around opacity and allegations of unfairness. It also summarizes the Supreme Court's ruling that struck down the scheme for violating transparency and the right to information.
The document discusses the controversial electoral bond scheme in India for political donations. It provides background on political financing challenges, outlines the conceptualization and implementation of electoral bonds, and examines controversies around opacity and allegations of unfairness. It also summarizes the Supreme Court's ruling that struck down the scheme for violating transparency and the right to information.
The document discusses the controversial electoral bond scheme in India for political donations. It provides background on political financing challenges, outlines the conceptualization and implementation of electoral bonds, and examines controversies around opacity and allegations of unfairness. It also summarizes the Supreme Court's ruling that struck down the scheme for violating transparency and the right to information.
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ELECTORAL BOND: SCAM OR VIRTUE?
ABSTRACT
The article titled "Electoral Bond: Scam or Virtue?" delves into the intricate tapestry of India's electoral bond scheme, a subject mired in controversy and debate. The abstract provides a succinct overview of the background of the electoral bond system, its intended purpose as a financial instrument for political donations, and the ensuing controversies that have arisen since its inception. It scrutinizes the case laws that have shaped the legal discourse around electoral bonds, highlighting key judgments and ongoing investigations that question the transparency and accountability of the scheme. Through a critical analysis of the arguments for and against the system, the article examines whether electoral bonds are a scam that undermines the democratic process or a virtue that enhances it by protecting donor anonymity and reducing cash-based funding. The abstract sets the stage for a comprehensive exploration of the ethical, legal, and political dimensions of electoral bonds, inviting readers to ponder the complexities of campaign finance in the world's largest democracy. Keywords: Electoral bonds, Controversy, Transparency, Democracy and Accountability
INTRODUCTION
The electoral bonds which were brought out by the present Government of India is as an indispensable reform in the political funding sector. Its value distinction is due to its capability to transform the way of the inspecting and tracing of donations and of political parties. The political funding scenario in India has been a long-time poorly visible one. This was so because there is an absence of disclosure and transparency leading to a system, which was opaque. Most of the sources of political funding shortly became a secret of who pays to political parties. The political finance bill is considered a legitimate channel for corporates and individuals to give political parties a share of their wealth. It protects these benefactors from giving out their names which would otherwise, put them at the risk of being victimized by the selected candidate. Through the analysis and also the jurisprudence which bears on the scheme, the factor sprouts of its impact on the Indian polity.
BACKGROUND
Political Financing in India: The historical perspective and the challenges it brings would be undertaken first as the primary concentration of the political marketing philosophy. The political finance record of India has been overshadowed by the inadequacy of transparency and the deficiency of regulations. For long, political parties have resorted to private donations that are often untraceable, even though there have been consistent scary reports on how "black money" has influence over election results.1
Legislation and Policy: Contribution Laws of Politics
The Indian legal system governing election contributions has developed over time with the main Acts of legislation such as the Representation of the People Act, 1951, and the Companies Act, 1956, which regulate companies contributions in Indian election campaigns. The electoral bond scheme was the key factor in the regime of significant transparency addressing calls for adequate disclosure of donations through creation of transaction records within the banking system with the donor identity not being revealed. Nevertheless, judicial decisions that have been issued recently have brought to the forefront another reformation option. The decision of the Supreme Court to dispose of amendments to Section 182 of Companies Act 2013 in the month of February 2024, once again made the criteria of higher limit of contributions from a company mandatory and the amount of donation along with the receiver details to be reported as a requirement. 2 However, the fact that the judge made this ruling suggests that there is still strong belief among the working class of the country (these are the people who form the electorate and 1
https://www.orfonline.org/wp-content/uploads/2017/11/ORF_Occasional_Paper_127_Elections_Funding.p df 2 https://taxguru.in/finance/law-governing-political-contributions-in-india.html the judge is one of them) that corporate money influences politics and there is the need for transparent and accountable political financing.
THE ELECTORAL BOND SCHEME: CONCEPTUALIZATION,
IMPLEMENTATION, AND THE GUTS OF IT
Conceptualization: The Electoral Bond Scheme is a kind of system which was thought of as a new approach to cleanse the political funding system in India. Proposed in the Finance bill of 2017, the scheme had a twofold goal: these were to restrict the entry of tax free money into politics and to provide a full-fledged system for individuals, corporations to donate to political parties. Transparency and tracing political contributions were targeted by the concept that all these contributions should go through the banking channels which lacked cash donations, which were usually without transparency as their principal source.3
Implementation: The scheme was born in the year 2018 when it was included in the Finance Bill. It allowed the election bonds to be issued, which is a coupon-like instrument, similar to a promissory note. It was SBI only which was given the sole authority as the only authorized bank to both issue and encash these bonds. The organization executed the project in a way that protected donors' anonymity. This was done by guaranteeing that the bank knew who the donor was but that the donor's identity was kept secret.4
Mechanics: The nutshell of Electoral Bond was simple. Individuals and institutions may buy bonds during specified working hours only from SBI branches for a number of windows throughout the year. The bonds were released in different bearer forms; they could be bought through the net or by making a payment at the bank through cheques or demand
3 https://www.corporateprofessionals.com/articles/faqs-supreme-courts-ruling-on-india-inc-s-political- contributions/ 4 https://cleartax.in/s/electoral-bond-scheme draft. The bonds purchase would be donated to the registered political party and the remark of 15 days would be stipulated for the systems redemption through the bank account which has been set apart. The identity of the borrower accounted for an absence of name or information concerning the purchaser.5 Electoral Bond Scheme aims for transparent political financing with anonymity controversy debated.
CONTROVERSIES ?
Opacity Concerns: Anonymity and Transparency Shows to Be the Issues
Though intended to provide a greater margin of independence, away from the political interference in the management of elections and funding of the political parties, the scheme was immediately associated with the controversies, because its rules allowed donors to remain anonymous. There were those who doubted whether the lack of transparency in political financing would not only be detrimental to the democratic process itself but also render it impossible for the population to establish the real source of political funding.6 This argueable opacity was the concern of the people, as it could be related to the undue influence by the corporate entities from the shadows without public awareness. In the scheme, intriguingly there was no system running, which asked to the political parties to reveal to the Election Commission the donors’ identities. Therefore, it certainly made the issue more complicated.7
Allegations of a Scam: The whole charade was falsely called a scam, with the incident known as the event where uncontrollable funds were believed to have been spirited to political parties, more so the most powerful political party.8 Critics of this system pointed to Bharatiya Janata Party (BJP) dominance in fundraising through electoral bonds as
5 https://cleartax.in/s/electoral-bond-scheme 6 https://thelegallock.com/electoral-bond-scheme-controversies-scrapping/ 7 https://www.indiatoday.in/india/story/electoral-bonds-explained-political-funding-sbi-black-money- supreme-court-2455864-2023-10-31 8 https://m.economictimes.com/news/elections/lok-sabha/telangana/electoral-bonds-worlds-biggest-scam- rahul-gandhi/articleshow/109092880.cms proof of lack fairness, therefore giving rise to protectionism argument. The occurrence of the case that the Supreme Court decided to scrap the promotion, which featured voices that this was an unfavourable situation, also demonstrated similar concerns.9 The court declared that the scheme restricted the access to the information by voters regarding the funds accepted by the political parties. With respect to legal papers, the next sections would critically assess the conflicting points between the promoting goals of transparency by the Electoral Bond Scheme with the obscure situation arising out of its implementation. The analysis would also be about the legal obstacles and the Supreme Court's resolution, which at the end decided that the plan was unfit considering the concerns.
SUPREME COURT’S ROLE
The Supreme Court of India once again took center-stage as it gave its verdict on the electoral bonds matter which was of paramount importance. On 15th February 2024 the SC’s Constitutional Bench of 5 judges held electoral bonds scheme as against the Constitution. Here are the key points from the Supreme Court’s decision :
1. Struck Down the Scheme: The Court rendered the decision that the electoral bonds regime breached the guarantee of the right to information and transgressed Article 19(1) (a) of the Constitution.10
2. Transparency Concerns: The Court emphasised in its ruling that politic funding transparency can not be secured by granting full immunity from disclosure and that such information is necessary for the competent practice of the elector’s choice.
3. Stop Issuance of Bonds: The State Bank of India (SBI), which is the bank that issues electoral bonds, ordered it to stop the issuance of this bond immediately.
9 https://www.telegraphindia.com/elections/lok-sabha-election-2024/electoral-bonds-spotlight-on-racket-of- extortion-rule-bending-in-favour-of-bjp/cid/2008694 10 https://www.indiatoday.in/india/story/electoral-bond-scheme-supreme-court-strikes-down-electoral- bonds-top-five-points-2502410-2024-02-15 4. Disclosure to Election Commission: SBI was also instructed to furnish record of names of the political parties that took the bonds after 2019 to the Election Commission of India (ECI) that has a duty to post the details on its website. 11
5. Quashed Amendments: The SC cancelled changes in Income Tax Act as well as in
RPA which made contributions to these two Acts anonymous.
6. Aid to Political Party in Power: According to the Court, the electoral bond scheme may have a vested interest in the party that is already in power and would allow for a possible 'quid pro quo' setting.
This judicial decision really becomes a milestone of the Indian anti-corruption campaign, and it successfully answered the perennial issue of transparency and accountability in political funding.
CASE LAWS These are three additional case laws in the context of the electoral bond scheme in India:Certainly, here are three additional case laws in the context of the electoral bond scheme in India:
1. The case, popularly known as The Association for Democratic Reforms v. Union of India, arose amid concerns about the illegal fundraising and undue influence of big money in Indian politics. Here this Supreme Court judgment highlighted not just whether the financing scheme is a constitutional issue but it elaborated the same on the basis of fundamental rights. The Court ruled the disclosure of donors' identity as the scheme provision violating the right to access the information a key element in the right to freedom of speech and expression including the part in Article 19(1)(a) of the Constitution.12
11 https://www.indiatoday.in/india/story/electoral-bond-scheme-supreme-court-strikes-down-electoral- bonds-top-five-points-2502410-2024-02-15 12 https://www.scconline.com/blog/post/2024/02/20/analysis-and-anatomy-of-electoral-bond-judgment/ 2. Common Cause vs. Union of India (2023) This case is about the political donations and issues with public information. This revision was done into various enactments through Finance Act 2017 with the incorporation of electoral bond scheme which was challenged by petitioners that this bill was illegal as there was no verification process of Rajya Sabha which is an essential part of the Constitution of India. According to the Supreme Court, the Finance Bill makers broke the law and the amendments needed to be drawn and pass through the Legislative steps as they should have.13
3. Indian National Congress and ICAI (2022) presented the case for. Furthermore, the Delhi High Court interpreted if the political parties shall inform the details of the bonds whether they are donations coming as a source of their audited financial statements or not. The Court upheld the necessity of such disclosure to make it easier for the electoral process to work in a transparent manner and ensure the essential concept of political financing responsibility.14
These cases illustrate a judiciary on the course of controling the scheme of electoral bonds, they are also a sign of the continued dispute as to the equilibrium of donor confidentiality and public's access to information in case of political financing.
INVESTIGATIONS AND FINDINGS
Governmental Probes: Queries by Offices Serving as Government Accounting
Superseding Many of the Common Questions. The supreme judgement of the apex court on the controversial electoral bonds debate made transparent that the need for proper investigations by the government into the
13 https://blog.ipleaders.in/legality-electoral-bonds/ 14 https://www.thehindu.com/news/national/electoral-bonds-scheme-unconstitutional-sbi-should-reveal-the- details-of-donors-rules-sc/article67848211.ece growing suspicions was in order. SBI, as the issuing bank, was made to convey information about political parties receiving SB especially from 2019 onward to the ECI, and it was then directed to publish those details15. These actions were viewed as signs that accountability and transparency in funding for elections was being strengthened.
Media Exposés: Investigative's Journalism Role
An investigative journalism that has been crucial in the detection of the problems emanating from the electoral bond scheme. Media sources chose this event as their hot topic exposing the misuse of the scheme, emphasizing those incriminated companies and those under the supervision of the enforcement agency list among the donors.16 The activities of the commission have increased awareness among the public and added to the dicussion among people on the need for campaign fund transparency.
Expert Opinions: Jurists and the financial experts have quantified and evaluated the impact of the Supreme Court's ruling on the subject areas of political money and democracy in India. The experts opined that while the view that this was a positive milestone, the effect of the scheme might not undo already its harmful effects as the scheme enabled anonymous funding had already flowed into the political system.17 Transparency and disclosure by candidates and donors was at the very center of their efforts. All these came to build trust for the voters in the sources of funding.
In the context of a legal article, these sections thus will discuss the various probes and results related to electoral bond scheme, brings to light the different roles of governmental bodies, media and professionals in making the issues known to general public, there by influencing the legal debate on political funding in India.
Political Ramifications: Effects of Social Media on Political Groupings and Elections
The decision of the Supreme Court on the political contribution through electoral bonds casts a wide shadow, especially, on the Bharatiya Janata Party (BJP) that procured a considerable amount of donations through the e-conversion of the scheme.18 A ruling in this case can turn the nation's financial landscape of political parties upside down, thus modify their campaign structure and make them less competitive. The disclosure of past deals commonly made by judges in the Court may spur a recalculation of political blocs and of voter support, especially before they go to the polling stations to vote in the general election that follows.
Public Perception: Analyze The Impact The Scam Had On Public Credibility. Strengthening the public belief and trust created by the electoral bond scheme controversy is the main challenge in the electoral process. The opacity and the incubation of corruption which are amongst several sayings of the bonds probably for the anonymity might sound the alarm among voters. The Supreme Court’s judgment is looked upon as a measure to reinforce the trust in the democratic process and to guarantee that the voters get the information on the sources of political funding.19
CONCLUSION The electoral bond dispute has changed the way political funding is organized in India so far. The verdict is in; the right of voters to know who funds political parties, as recognised by the Court too in its verdict is made fundamental. The saga has presented to view the vital role of transparency in a democracy and hazard of which anonymity as regards political parties. The fact that the vast majority of donations flowing in through electoral bonds, all coming from business establishments, mostly, in turn has emphasized 18 https://www.iasexpress.net/electoral-bonds-scheme-features-merits-demerits-upsc/ 19 https://www.epw.in/journal/2024/13/editorials/free-and-fair-elections-after-electoral-bonds.html the impact of 'big money' in politics and the urgency to put in place a robust system to avoid the capture of political parties by wealthy interests.
The Supreme Court’s choice to put an end to the electoral bond scheme stands a chance for the beginning of the new era of electoral finance in India. The ruling basically means that the political parties may change how they acquire funds and maybe they would use more transparent processes. The direction being taken by India towards 2024 election will be the building of a system that guarantees the authenticity of the electoral process and strengthens the authority of the political institutions in the eyes of the voters. This may include legislative reforms, stricter implementation of current laws, and all relevant actors deliberating ways to incorporate transparency and not the anonymity in political contributions.
Debating the loopholes in the issuance of electoral bonds has proved to point back to details that should be given top attention if electoral financing is to be maintained. It is an appeal to all the above-mentioned stakeholders to move in the same direction that will be beneficial to the greater good of public who put so much faith in the foundations of their democracy. So overall the legal article ending with the lessons were taken away from electoral bond.
