SC’S ELECTORAL BONDS JUDGMENT: A VITAL VERDICT

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THE CONTEXT: Recently, the Supreme Court struck down the Electoral Bond (EB) scheme of political funding, declaring it to be “unconstitutional” because it completely anonymized contributions made to political parties. It is being welcomed especially because it is anchored in the citizen’s right to know.

ELECTORAL BONDS:

• These are bearer banking instruments that do not carry the name of the buyer or payee, go for sale in 10-day windows in the beginning of every quarter in January, April, July and October besides an additional 30-day period specified by the central government during the Lok Sabha election years.
• It was introduced in 2018 and are available for purchase at any SBI branch in multiples of ₹1,000, ₹10,000, ₹1 lakh, ₹10 lakh and ₹1 crore and can be bought through a KYC-compliant account.
• There is no limit on the number of electoral bonds that a person or company can purchase. Donations made under this scheme by corporate and even foreign entities through Indian subsidiaries enjoy 100% tax exemption while identities of the donors are kept confidential both by the bank as well as the recipient political parties. The public sector bank is obligated under the scheme to disclose the details only pursuant to a court order or a requisition by law enforcement agencies.

THE SUPREME JUDGEMENT ON ELECTORAL BONDS

• The five bench SC judgment headed by Chief Justice D Y Chandrachud is based on petitions filed by Association for Democratic Reforms (ADR), non-profit Common Cause, Congress leader Jaya Thakur, and the CPI (M), among others.
• The petitioners had argued that either the scheme must go on account of violating people’s right to know and affecting free and fair elections, or the court must direct for full disclosure of the purchasers and donors of EBs.

POINTS MADE IN THE JUDGEMENT:

• The judgement ruled that amendments made in the Representation of the People Act, Income Tax Act, and Companies Act through the 2017 Finance Act violated the constitutional right of the electors.
• Violates Article 14: Permitting unlimited corporate contributions to political parties was violative of Article 14 (right to equality) as it highlighted that it authorized unconstrained influence of companies in the electoral process.
• Violates free and fair election: This is violative of the principle of free and fair elections and political equality captured in the value of one person-one vote.
• Violate Article 19(1)(a): The electoral bond scheme is violative of Article 19(1)(a) as it infringes upon the right to information of the voter by anonymizing contributions through electoral bonds.
• Nexus between money and politics: Contradicting the government statement that donor anonymity was necessary to shield contributors from potential retribution, the judgement noted that that financial contributions to a political party would lead to a close nexus between money and politics.
• Fails proportionality test: The judgment underscored that voters’ right to know supersedes anonymity in political party funding, and that the EB scheme fails to meet the balancing prong of the proportionality test.
• Violates the right to information: The scheme hides the source of funding of political parties from the public, which is a fundamental right under Article 19(1)(a). The scheme also enables black money, foreign funding, and corporate influence in politics, which harm the public interest and the sovereignty of the nation.
• Violates the principle of equality: The scheme discriminates between different political parties based on their vote share, giving an unfair advantage to the ruling party and the major opposition parties, while excluding the smaller and regional parties. The scheme also creates a disparity between the donors and the voters, as the former can sway the policies and decisions of the political parties, while the latter are kept in the dark.
• Violates the constitutional scheme of electoral reforms: The scheme goes against the constitutional aim of curbing corruption and criminalization of politics. The scheme is also contrary to the recommendations of various committees and commissions that have called for more transparency and disclosure in political funding.

SIGNIFICANCE OF JUDGEMENT:

• Transparency and accountability of political funding: The judgment will ensure that the public will have access to the information about the source and amount of funding received by the political parties through electoral bonds. This will enable the public to scrutinize and hold the political parties accountable for their performance and conduct.
• Reduce the influence of money: The judgment will curb the influence of money and corporate power in politics, as the donors will no longer be able to hide their identity and agenda behind the veil of anonymity.
• Level playing field for all political parties: The judgment will level the playing field for all political parties, as they will no longer be discriminated against based on their vote share or popularity. This will enable the smaller and regional parties to compete with the ruling party and the major opposition parties on an equal footing and offer a genuine choice to the voters.
• Democratic setup: “The voters’ right to know and access to information is too important in a democratic set-up so as to curtail and deny ‘essential’ information on the pretext of privacy and the desire to check the flow of unaccounted for money to the political parties. While secret ballots are integral to fostering free and fair elections, transparency not secrecy in funding of political parties is a prerequisite for free and fair elections. The confidentiality of the voting booth does not extend to anonymity in contributions to political parties.
• Undo corruption: The bench held that the information about funding of political parties is essential for the effective exercise of the choice of voting to identify corruption and governance information. It ordered full disclosure of donors and recipients of EBs issued since April 2019 on the website of the Election Commission of India (ECI) by March 13, 2024. It directed the State Bank of India the only designated EB-issuing bank to stop the issuance of EBs, adding the bank will submit details of EBs purchased since April 12, 2019, till date to the poll body by March 6.

THE WAY FORWARD:

• State funding: The Indrajit Gupta Committee on State Funding of Elections has supported partial state funding of recognised political parties. State funding has proved its effectiveness in a number of countries like Germany, Japan, Canada, Sweden etc.
• Stringent legislations: There is a need for effective regulation of political financing along with bold reforms to break the vicious cycle of corruption and erosion of quality of democratic polity. It is crucial to plug the loopholes in the current laws to make the entire governance machinery more accountable and transparent.
• Strengthening Election commission: There is a need to strengthen the role of Election Commission by enabling suitable laws and creating healthy political environment. The EC should increase its own capacity in terms of empowering staff and developing infrastructural and logistical strength.
• Political party auditing: Venkatachaliah Committee Report (2002) recommended strict regulatory frameworks for auditing and disclosure of party income and expenditure along with state funding.

THE CONCLUSION:

The Supreme Court’s judgment on scrapping of electoral bonds is a historic and landmark verdict that upholds the constitutional rights and values of the citizens and the democracy. This decision will enhance the transparency and accountability of political funding and reduce the influence of money and corporate power in politics and will create level playing field for all political parties.

UPSC PREVIOUS YEAR QUESTION

Q. Whether electoral bonds are effective in ensuring fair, just and open elections? Discuss the various concerns regarding electoral bonds. (2022)

MAINS PRACTICE QUESTION

Q. Court striking down the electoral bond scheme is a landmark moment as it affirms principles of transparency and probity, and the people’s right to know. Comment.

Source: https://indianexpress.com/article/opinion/editorials/express-view-on-scs-electoral-bonds-judgment-a-vital-verdict-9164121/