[dropcap]T[/dropcap]HE Supreme Court will hear a petition today, challenging the electoral bonds schemes introduced by the Central Government to enable individuals or body corporates to donate funds to political parties.
Any political party that is registered under Section 29 A of the Representation of People Act, 1951, and has secured not less that 1 per cent of the votes polled in the last election of the Lok Sabha or legislative assembly will be eligible to receive electoral bonds.
The Election Commission has sharply criticised the introduction of the electoral bonds scheme, calling it a retrograde step that opens up the possibility of setting up of shell companies through which to route black money to get around the KYC requirement.
The petition before the Supreme Court has been filed by the Communist Party of India (Marxist).
The Election Commission has sharply criticised the introduction of the electoral bonds scheme, calling it a retrograde step that opens up the possibility of setting up of shell companies through which to route black money to get around the KYC requirement.
The Central Government filed an affidavit in the Supreme Court on March 14, 2019 saying that the scheme would “promote transparency in funding and donation received by political parties”.
What are electoral bonds?
An electoral bond is a like a Promissory Note, similar to a bank note, that is payable to the bearer on demand and free of interest. It can be purchased by any citizen of India or a body corporate in India.
An electoral bond may be issued in multiples of Rs 1,000, Rs 10,000, Rs 1 Lakh and Rs 1 Crore and are available at specified branches of State Bank of India. A donor can purchase an electoral bond with a KYC-complaint account and can donate the bonds to their party of choice which can then be cashed in via the part’s verified account within 15 days.
Election Commission of India has criticised Electoral Bonds
The Election Commission has in a three-page letter written to the Ministry of Law and Justice, conflicted with the view of the Central Government that the introduction of the electoral bonds would make the process of the political funding and donation transparent.
A former Chief Election Commissioner, O P Rawat has said that:
“Electoral Bonds will make the whole system quite opaque and this may be quite dangerous. The electoral bond system will create vulnerabilities in campaign finances (donations), making the democratic system vulnerable to manipulations. [It can be done] in a manner that money from unknown sources with dubious credentials, is routed through KYC, individuals or corporate identities, and finds its way into the electoral arena to vitiate the electoral processes. That risk may remain. Even foreign money can trickle in”.
Union Finance minister Arun Jaitley announced the electoral bonds as a means of donation to political parties during his budget speech in 2017. The electoral bonds scheme was brought through the Finance Act 2017. Related amendments were also made in the income tax act, the RBI Act, and The Representations of the People Act, 1951.
