Electoral Bonds were a method of giving funds to political parties. Electoral Bonds can be purchased by a person who is citizen of India or an organization or company incorporated or established in India.
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What is an Electoral Bond?
All the political parties need funds to contest elections and manage expense related to the elections and campaigning. For these expenses the political parties get money in the form donation from the public. Anyone who is influenced by the ideology of a political party and its agenda can give donations to that political party. These funds are used by the political parties in their election and campaigning functions and internal operations of their party. It scheme was introduced to control the circulation of black money and reduce the use of black money in form of cash to give donations to political parties.
How do Political parties get donations before the Electoral Bonds Scheme?
Most political parties got donations before electoral bonds in the form of unaccounted and predominantly non-transparent cash mode.
what is the need for electoral bonds?
The purpose of introducing the bonds was to expose illegal money and increase transparency in political funding. Collecting donation amounts exceeding ₹2,000 via the banking system would mean the declaration of assets by political parties and also help to trace the funds. It was argued by the government that this reform of electoral bonds is expected to enhance transparency and accountability in the realm of political funding, while also preventing the creation of illegal funds for future generations.
when was electoral bonds introduced?
This scheme was first introduced in the Finance Bill,2017 in the Union Budget 2017-18 by the then Finance Minister Shri. Arun Jaitely. This bill was introduced as a money bill in Lok Sabha to bypass the consent of Rajya Sabha on the bill. Bonds were only issued by State Bank of India for 10 days after the interval of every 3 months. The bond has to be claimed by the political parties within 15 days of the date of issue if not claimed, the amount would be transferred to PM Care Fund.
important changes in the donation rules in electoral bonds scheme
- Earlier, the rule was that only 7.5% of the profits can be given as donation to political parties but in this scheme this bar was removed and now anyone can give any amount of donations.
- Earlier, only 10% of revenue can be given as donation to political parties but in this scheme this bar was also removed.
- Before the scheme was launched , the Companies Act permitted purchasing electoral bonds to only profitable companies but under the scheme, even the loss making companies were also allowed to give donations.
- Earlier no foreign organisations were allowed to give donations to Indian political parties but under this scheme, Shell companies (companies having foreign mother company) can also give donations which can influence Indian politics by foreign powers.
How does Electoral Bonds Functioned?
They could be bought from SBI through a KYC-compliant account with no limit on the number of electoral bonds that a person or company could purchase.
Every party registered under section 29A of the Representation of the People Act and having secured at least 1% of the votes polled in the most recent Lok Sabha or state election was allotted a verified account by the Election Commission of India (ECI) for the bonds.
There is no cap on the number of electoral bonds that a person or company can purchase.
Why in news?
Recently, On 15 February 2024, the Supreme Court of India has given a judgement related to the Electoral Bonds in which it has banned this scheme and gave an order to the election commission of india to public the electoral bonds data. Supreme Court says, this Scheme violates the right to information and freedom of speech and expression under Article 19(1)(a) of the Constitution.
Supreme Court JUDGEMENT
In its landmark judgement the Supreme court stated a few things:
1) The issuing bank (State Bank of India) should stop the issuance of such bonds. The bonds have been declared illegal and unconstitutional.
2)SBI has been asked to give details of all the donations along with the details of donors from 12th April,2019 till date.
3)All the unredeemed bonds were declared unconstitutional.
4) The SBI should give the data to the Election Commission of India by 6th March,2024 and the same should be published by the Election Commission of India on their website.
Abolition of this scheme has been welcomed from all kinds of stakeholders and reaffirms country’s trust on the judiciary for protecting citizens basic fundamental rights.
Which parties got maximum donations through electoral bonds?
| Political Parties | Amount (in crores) |
|---|---|
| Bharatiya janta party (BJP) | 5271.97 |
| Congress | 952.29 |
| Aam Aadmi Party (AAP) | 48.83 |
| Trinmool Congress (TMC) | 767.88 |
| Dravida Munnetra Kazhagam (DMK) | 431.50 |
| NCP | 51.15 |
| JDU | 24.4 |
| BJD | 622 |
Miscellaneous
The Communist Party of India (Marxist) has also opposed the scheme, and was the sole national party to refuse donations through electoral bonds
On 15 February 2024, a five-judge bench of the Supreme Court of India, headed by Chief Justice DY Chandrachud, unanimously struck down the electoral bonds scheme, as well as amendments to the Representation of People Act, Companies Act and Income Tax Act, as unconstitutional.
judges found that it was “violative of RTI (Right to Information)” and of voters’ right to information about political funding under Article 19(1)(a) of the Constitution. judges also pointed out that it “would lead to quid pro quo arrangements” between corporations and politicians
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