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Will the names of electoral bond donors be known within a month from today? Officials in the Election Commission are confident that, following the specific order of the Supreme Court, that will be very much possible by March 13.
“We haven’t yet had the opportunity to read the order in detail but it’s abundantly clear to us that SBI will have to share the names of those who purchased electoral bonds. So there’s no doubt about it,” said an EC official who requested anonymity.
What remains uncertain at this moment is whether the data shared by SBI will be presented in a format that helps one immediately match the bond buyer to the political party that received the same bond.
Irrespective of whether the format is reader-friendly or not, finding out the identity of the donor and recipient will not be impossible. It may just mean a lot of work for people interested in finding out the same.
Poll bond verdict
SBI bonds worth 16k cr encashed, over 90% had face value of Rs 1 cr (Page no. 6)
(GS Paper 3, Economy)
Political parties mobilised Rs 16,518 crore in 30 phases of the electoral bond scheme since 2018. According to records, around 94 per cent of the bonds had a face value of Rs 1 crore in most of the 30 phases, indicating that corporates and high net-worth individuals could have been principal donors.
The ability of a company to influence the electrical process through political contribution is much higher when compared to that of an individual, the Supreme Court said in its verdict.
A company has a much graver influence on the political process, both in terms of the quantum of money contributed to political parties and the purpose of making such contributions.
The concern is that financial support to a political party can lead to quid pro quo arrangement, especially in policy interventions.
As per the EB scheme, which was operationalised through State Bank of India, details of the donors were kept anonymous.
Many companies funded directly as well as through unlisted associate firms and trusts. Most of them have not disclosed the funding in their balance sheets as separate entries.
Editorial
Democracy’s guardian angel (Page no. 12)
(GS Paper 2, Judiciary)
February 15, 2024 will go down in India’s history as a golden day. The Supreme Court has struck a decisive blow on behalf of democracy, which it has held as the basic structure of the Constitution.
The five-member Constitution Bench, in a unanimous verdict, upheld every challenge to every aspect in the electoral bonds case, declaring the scheme unconstitutional.
It ordered the SBI to stop issuing electoral bonds immediately and submit all information of the bonds sold, and the names of all the donors and recipients, to the Election Commission of India (ECI).
The Court said the scheme violates the right to information. It rejected almost every argument of the government’s lawyers with hard-hitting remarks like “Constitution does not turn a blind eye only because there is a possibility of misuse”.
And “Curbing black money is not the only ground for electoral bonds”. In retrospect, the launch of the scheme through the Union budget of 2017 was itself intriguing.
The late finance minister, Arun Jaitley, started with two promising statements: “Without transparency of political funding, free and fair elections are not possible”.
And: “For the last 70 years, we have failed to achieve this transparency”. Our natural expectation was that his third sentence will achieve what he seemed to have set out to do.
Ideas Page
Re-energising RTI (Page no. 13)
(GS Paper 2, Governance)
The historic decision by the Supreme Court (SC) declaring Electoral Bonds (EB) scheme as unconstitutional has given a big boost to the flagging Right to Information Act.
The SC weighed in in its favour under Article 19 (1) (a) of the Constitution as against informational privacy in the EB case. The Solicitor General (SG) arguing before the Court had stated that citizens had no right to donor or recipient identities; the finance minister had opined that political retribution was also a cause for denial of information.
Earlier, a Central Information Commissioner (CIC) put the RTI Act on its head by giving a decision that information disclosure on EBs was not in public interest. Such judgments, while reflecting poorly on their quality, also hinted at the opacity of the regime.
It is in this context that the SC judgment is truly a landmark one. The SC averred that the voters’ right is breached by the anonymity clause and that information on political parties is essential.
Poll bond, in fact, is violative of fundamental rights and infringement of RTI is not justified for curbing black money. The two goals of the RTI Act — transparency and accountability — were clearly on the judges’ minds while delivering this unanimous judgment.
Explained
Amendments in 3 key laws that SC struck down, restored status quo (Page no. 19)
(GS Paper 2, Judiciary)
Along with the Electoral Bonds Scheme (EBS), the Supreme Court struck down several amendments that the government made in key laws to facilitate corporate donations to political parties.
The amendments were made through The Finance Act, 2016, and The Finance Act, 2017, before the EBS was introduced in January 2018.
Before the two Finance Acts were passed, political parties were required to declare all contributions more than Rs 20,000 with no exceptions, and to maintain a record of all donations more than Rs 20,000 for purposes of taxation.
Also, there was a cap on the amount of money that a company could donate to a political party in a financial year: companies could contribute a maximum of 7.5% of their average net profits from the preceding three years.
The Finance Act, 2017 amended The Representation of the People Act, 1951 (RPA), The Income-tax Act, 1961, and The Companies Act, 2013.
The amendments allowed electoral bonds to cut through many of the restrictions on political party funding by completely doing away with the donation limit for companies, and removing the requirements to d
Objections that RBI, EC raised on the electoral bonds scheme (Page no. 19)
(GS Paper 3, Economy)
At the time it was being conceived, the electoral bonds scheme faced stiff challenges from two key institutions — the Reserve Bank of India (RBI) and the Election Commission of India (ECI). While both had differing concerns, prevention of money laundering was a common ground.
There were multiple rounds of discussions between the RBI and the Finance Ministry on electoral bonds. In January 2017, the RBI first objected to the proposal to enable other banks to issue electoral bearer bonds for donations to political parties before the Finance Act 2017 was enacted. The RBI had three main arguments:
Such an amendment would enable “multiple non-sovereign entities to issue bearer instruments”. The RBI had argued that this proposal — to allow any other bank to issue EBs — “militated against RBI’s sole authority for issuing bearer instruments which has the potential of becoming currency”.
RBI was of the opinion that if such EBs are issued in sizable quantities, they “can undermine the faith in banknotes issued by the Central Bank.
The RBI also noted that while the identity of the person or entity purchasing the bearer bond will be known because of the Know Your Customer requirement, the identities of the intervening persons/entities will not be known. This would impact the principles of the Prevention of Money Laundering Act 2002.