Will Electoral Bonds Reveal The Source Of Funds, SC Asks Centre (UPSC Current Affairs)

Relevance: GS2 - Salient features of the Representation of People’s Act; Constitution, Polity.

(Source: The Hindu)

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Why in the news?

• The Supreme Court resumed hearing the case on October 14 after the previous hearing on March 26, 2021.
• A group of petitions submitted by non-governmental organizations Association for Democratic Reforms, Common Cause, and Communist Party of India (Marxist) against the electoral bonds program was considered by a bench of Justices BR Gavai and BV Nagarathna.
• The Supreme Court asked the government whether the electoral bonds' system reveals the source of money pumped in to fund political parties.
• The Supreme Court announced that it would decide on December 6 whether to submit the arguments against the laws allowing this kind of funding to a larger court.

What are electoral bonds?

• Election bonds are interest-free bearer instruments that were introduced in the 2017 Union Budget and are used to make donations to political parties in an anonymous manner.
• A bearer instrument does not carry any information about the buyer or payee and the holder of the instrument (which is the political party) is presumed to be its owner.
• The bonds are only permitted to be offered by the State Bank of India (SBI), and they are sold in multiples of Rs 1,000, Rs 10,000, Rs 1 lakh, Rs 10 lakh, and Rs 1 crore.
• The bonds are available for donors to buy and then give to the party of their choice.
• The party can then cash the bonds through its verified account within 15 days.
• SBI deposits these into the Prime Minister's Relief Fund if a party hasn't encashed its bonds within 15 days.

Who is eligible to buy electoral bonds?

• A citizen of India or a body incorporated in India will be eligible to purchase the bond.
• A political party must be registered under Section 29A of the Representation of the People Act, 1951 (43 of 1951) and have received at least 1% of the votes cast in the most recent general election for the House of People or the State's Legislative Assembly in order to be eligible to receive Electoral Bonds.
• A qualifying political party may only redeem the electoral bonds through a bank account with the authorized bank.

What are the criticisms against these bonds?

• Lack of transparency: The electoral bonds scheme is criticized for doing the exact opposite of what it was intended to do, which was to increase transparency in funding elections.
• Anonymity: According to some, electoral bonds' anonymity only applies to the general people and the opposing parties.
• Such bonds are sold through a government-owned bank State Bank of India (SBI), which gives the government access to information about the financiers of its adversaries.
• The scheme has an impact on the fundamental notion of free and fair elections guaranteed by Article 324 of the Constitution.
• Denominations: Election-related bonds were introduced with the goal of facilitating easy funding of political parties by the general public, however, more than 90% of the bonds issued have been of the highest denomination (Rs 1 crore).
• Corporate Funding: Additionally, there was a limit on the sum of money that a firm may donate to a political party until the electoral bonds program was established. However, critics claim that after changing the Companies Act, the government abolished this prohibition, enabling corporate India to receive limitless funding.

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Some Important FAQs

MCQs

Question: Consider the following statements:

1. Election bonds are interest-free bearer instruments that were introduced in the 2017 Union Budget.
2. The bonds are only permitted to be offered by the Reserve Bank of India

Which of the above statements is/are correct?

(a) 1 only

(b) 2 only

(c) Both 1 and 2

(d) Neither 1 nor 2