After years of questionable deferral, the Supreme Court has finally taken up the electoral bonds case. A Constitution Bench headed by Chief Justice DY Chandrachud, on November 2, reserved its judgment on petitions challenging the validity of the electoral bonds scheme. The proceedings focused on arguments pertaining to the voters’ right to information vis-a-vis the right to confidentiality of donors.
The issue at hand dates back to February 2017 when Finance Minister Arun Jaitley highlighted two critical points during his budget speech. He emphasised that free and fair elections were impossible without transparency in political funding, and he lamented the lack of progress in achieving this transparency over seven decades. This set the stage for what one might have hoped would be a resolution to this issue, but instead, the result was quite the opposite.
What emerged from this situation were electoral bonds, which, rather than promoting transparency, contributed to its demise. Before their introduction, any transaction exceeding ₹20,000 related to elections was required to be reported to the Election Commission without which no IT rebate could be extended. However, electoral bonds permitted donations of ₹20 crore or even ₹200 crore to be made anonymously. The rationale provided was that donors desired secrecy.
But why would donors seek anonymity? It is reasonable to question whether this was truly about protecting donors’ identities. Could it be that they wanted to conceal potential quid pro quo? For decades, corporations have made donations to Indian political parties, and often, the same donors have funded rival parties. Yet, has any ruling party ever targeted a donor who contributed to its political opponents? Did the current ruling party engage in such actions? If not, the argument that donors seek secrecy seems spurious. Perhaps it’s the government that wants secrecy.
Crucially, in the past, both the Reserve Bank of India and the Election Commission of India (ECI) voiced strong objections to the electoral bonds scheme in accordance with their mandates. The ECI, in a letter to the Ministry of Law and Justice, warned that electoral bonds, coupled with preceding legislative changes, could lead to the proliferation of shell companies to channel black money into the political system via these bearer bonds. However, by April 2021, the ECI counsel had seemingly reversed its position, stating support for electoral bonds, echoing the government’s stance. This U-turn is unfathomable.
The introduction of electoral bonds was not an isolated action. The Finance Act of 2017 introduced amendments to several laws, including the Reserve Bank of India Act, Companies Act, Income Tax Act 1961, Representation of the People Act, and Foreign Contribution Regulations Act, all to pave the way for electoral bonds. Three significant changes occurred that did not receive adequate attention. First, the limit of 7.5 per cent of profits that a company could donate was not just raised but eliminated, allowing a company to donate 100 per cent of its profits to a political party. Even loss-making companies could now make political donations, potentially legitimising crony capitalism.
Moreover, Section 29B of the Representation of the People Act, 1951, prohibits political parties from accepting contributions from foreign sources, and Section 3 of the 2010 Foreign Contributions (Regulation) Act restricts foreign contributions to candidates, legislative members, political parties and party office holders. When, in 2014, the Delhi High Court found that Congress and the BJP had accepted foreign funds in violation of the FCRA 1976, the BJP government passed a retroactive amendment via a 2016 finance bill, replacing the 1976 Act with the modified 2010 statute. This move effectively shields any foreign financing of Indian elections from scrutiny. This is a matter of great national concern.
Even if the government is hellbent on retaining electoral bonds in the name of eliminating cash transactions, a simple solution would be to disclose the identities of donors and recipients. This simple change could be swiftly implemented by the government, suo motu, or on the order of the SC which the Lordships may consider.
It was disturbing to hear the argument of the SG that citizens have no right to know the donors/recipients’ identities. This statement would behove a banana republic, not the world’s largest democracy aspiring to be vishwaguru.
It is important to remember that the citizens’ right to know was settled by the apex court in 2003 when it mandated candidates to declare their financial dealings and criminal cases while filing nominations.
In the 2003 ruling in People’s Union for Civil Liberties v Union of India and the 2002 judgment in Union of India v Association for Democratic Reforms, the Supreme Court mandated the ECI to obtain and disclose to the public background information relating to candidates running for office, including information on their assets, criminal records, and educational background. The Court ruled that the right to know about public officials is derived from the constitutional right to freedom of expression. The Attorney General has told the Supreme Court, in his written submissions, that the “citizens’ right to know is subject to reasonable restrictions”. He should not forget the keyword “reasonable”. Is keeping potential quid pro quo between the donors and the government a secret from the public a “reasonable” restriction?
In this worrying context, the highest Court must hold onto its legacy as being the last refuge in a troubled democracy. One option worth considering is to eliminate private funding and introduce public funding for political parties. This might not exceed ₹10,000 crore every five years, based on cumulative party collections as declared. It’s a small investment for the preservation of democracy. Another option to do away with the “need” for secrecy would be to establish a National Election Fund to which all donors could contribute. The funds could be allocated to parties based on their electoral performance. This would eliminate the so-called concern about donors’ reprisals.
Let’s recall the 2017 Budget speech in which the Finance Minister stressed that “without transparency of political funding, free and fair elections are not possible”. Free and fair elections and the integrity of our electoral process have been repeatedly declared by the apex court as a part of the basic structure of the constitution. Let’s hope the court reinforces the landmark judgments of its illustrious predecessors.
Quraishi is former Chief Election Commissioner of India and the author of India’s Experiment with Democracy — the Life of a Nation through its Elections
On electoral bonds, SC must reinforce its landmark verdicts that upheld peoples’ right to information
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04.11.2023
After years of questionable deferral, the Supreme Court has finally taken up the electoral bonds case. A Constitution Bench headed by Chief Justice DY Chandrachud, on November 2, reserved its judgment on petitions challenging the validity of the electoral bonds scheme. The proceedings focused on arguments pertaining to the voters’ right to information vis-a-vis the right to confidentiality of donors.
The issue at hand dates back to February 2017 when Finance Minister Arun Jaitley highlighted two critical points during his budget speech. He emphasised that free and fair elections were impossible without transparency in political funding, and he lamented the lack of progress in achieving this transparency over seven decades. This set the stage for what one might have hoped would be a resolution to this issue, but instead, the result was quite the opposite.
What emerged from this situation were electoral bonds, which, rather than promoting transparency, contributed to its demise. Before their introduction, any transaction exceeding ₹20,000 related to elections was required to be reported to the Election Commission without which no IT rebate could be extended. However, electoral bonds permitted donations of ₹20 crore or even ₹200 crore to be made anonymously. The rationale provided was that donors desired secrecy.
But why would donors seek anonymity? It is reasonable to question whether this was truly about protecting donors’ identities. Could it be that they wanted to conceal potential quid pro quo? For decades, corporations have made donations to Indian political parties, and often, the same donors have funded rival parties. Yet, has any ruling party ever targeted a........
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