ELECTORAL BONDS : THE PANDORA BOX BUSTED

“...The scheme has been declared unconstitutional; the issuance of fresh bonds is prohibited” said the Apex court on 15th February,2024 in it’s landmark judgement busting the Indian politics’ pandora box which has been now “unconstitutionally funding” all the major political parties in India.

The Electoral Bond scheme was first introduced in the Finance Bill,2017 in the Union Budget 2017-18 by the then Finance Minister Shri. Arun Jaitely . The move was regarded as a step towards digitalization of electoral funding amidst the digitization wave going around the country in the year 2017. Before the scheme was launched , the Companies Act permitted purchasing electoral bonds to only profitable companies with the upper ceiling of 7.5% of their profit coupled with many mandatory disclosures in the balance sheet. However after the amendment of Section 182 of the Companies Act in 2017, loss making companies were also granted permissions to purchase electoral bonds with no prescribed upper limit. Soon after it’s rollover , the Electoral bonds became the main source of funding for the political parties across the nation be it small or large, national or regional with every party using the scheme to it’s full advantage. The anonymous nature of the bill helps the parties procure election funding from different stakeholders without disclosing it to public indirectly challenging the Right to Information of the citizens. Not a single political party apart from the Communist Party of India challenged the scheme showing their reliance on the scheme. To understand the scale of things, electoral bonds worth Rs.16000 Crores have been issued since inception with about two years of pandemic in between the term.

WORKING OF THE ELECTORAL BOND SCHEME

Electoral bonds scheme was introduced in year 2017 with a vision to digitize the political funding ecosystem. Before this scheme, most political funding took place in cash, promoting the alleged involvement of black money. The criteria for parties to be eligible to receive fundings through the scheme was to be registered under section 29 A of RPA Act,1951 coupled with receiving 1% vote share in the last general election. As per the scheme the State Bank of India was authorized to release bonds in denomination of Rs.1000, Rs.10,000, Rs.100,000, Rs.10,00,000 and Rs. 1 crore with the bonds having validity of usage within 15 days of issuance.

THE FUNDING MAZE

Usually there are two category of donors of a political party, one being ordinary citizens who are aligned with the party’s ideology and other being people who have an alleged quid pro quo arrangement with the government. There have been many instances in last few years where rules and regulations have been compromised for a particular entity’s benefit and the tragic part is that these things happen across governments irrespective of parties ruling. Whether it’s ruling party or the parties from opposition , all of them have shown signs of leniency to those ‘possibly’ funding them. Donation by shell companies also poses a challenge to electoral integrity of India and can be highly harmful in long run. Another important perspective to this issue lies in the fact that the ‘unconstitutional scheme’ indirectly violates Article 39 (c) of the constitution which says “that state should make the policy in a way that it reduces the concentration of wealth”. All these facts were the major reason behind the apex court scrapping the 7 year old scheme. The selective anonymity as said by the SC is another thing to focus at because it allows the ruling government to know about the donors keeping citizens under shed. The SC also stated in it’s judgement that there were adequate loopholes which enabled political parties to trace their donors fundamentally rejecting the basis of the Electoral Bond scheme.

THE JUDGEMENT

In its landmark judgement the apex 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.

The abolition of the scheme poses a significant risk on the political funding ecosystem. However, the SBI has asked another 90 days of time to give the data to the ECI with an alleged intention of nullifying the impact of the landmark decision. 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.

By Rajat Nigam

For The Purview