Electoral Bond Scheme Violate The Fundamental Right

Context:

A five-judge Constitution Bench of the Supreme Court of India strikes down the Electoral Bond Scheme.

Relevance:

GS II: Polity and Governance

Dimensions of the Article:

1. Details
2. What are Electoral Bonds?
3. Why have they attracted criticism?
4. Key Highlights of the ADR Report

Details:

• The Judges of the Supreme Court issued the following ruling about the Electoral bond scheme:
• Violates Fundamental Rights:The court held that the scheme violates the fundamental right to information under Article 19(1)(a) of the Constitution.It violates the right to information and said that the information on political funding is essential.
• Violates free and fair election:An unlimited corporate funding violates the principle of free and fair election in the country.The court also held that political funding can impact fair policy making and thus lack of disclosures about corporate funding is unconstitutional.
  • The court also asked the State Bank of India (SBI)  to stop the issue of electoral bonds and furnish all details of those who have encashed the bonds so far.

What are Electoral Bonds?

• An electoral bond is like a promissory note that can be bought by any Indian citizen or company incorporated in India from select branches of State Bank of India.
• The citizen or corporate can then donate the same to any eligible political party of his/her choice.
• The bonds are similar to bank notes that are payable to the bearer on demand and are free of interest.
• An individual or party will be allowed to purchase these bonds digitally or through cheque.

Why have they attracted criticism?

• The central criticism of the electoral bonds scheme is that it does the exact opposite of what it was meant to do: bring transparency to election funding.
• For example, critics argue that the anonymity of electoral bonds is only for the broader public and opposition parties.
• The fact that such bonds are sold via a government-owned bank (SBI) leaves the door open for the government to know exactly who is funding its opponents.
• This, in turn, allows the possibility for the government of the day to either extort money, especially from the big companies, or victimise them for not funding the ruling party — either way providing an unfair advantage to the party in power.
• Further, one of the arguments for introducing electoral bonds was to allow common people to easily fund political parties of their choice but more than 90% of the bonds have been of the highest denomination (Rs 1 crore).
• Moreover, before the electoral bonds scheme was announced, there was a cap on how much a company could donate to a political party: 7.5 per cent of the average net profits of a company in the preceding three years. However, the government amended the Companies Act to remove this limit, opening the doors to unlimited funding by corporate India, critics argue.

Key Highlights of the ADR Report

The report analyzed various sources of donations received by political parties, including Electoral Bonds, corporate donations, contributions from MPs/MLAs, meetings, morchas, and collection by party units.

Electoral Bond Donations

• The highest donations from Electoral Bonds, amounting to ₹3,438.8237 crore, were received in 2019-20, the year of the general elections.
• In 2021-22, during which 11 Assembly elections took place, Electoral Bond donations worth ₹2,664.2725 crore were recorded.

Distribution of Donations

• Out of the total donations of ₹16,437.635 crore received by the 31 political parties analyzed, 55.90% came from Electoral Bonds, 28.07% from the corporate sector, and 16.03% from other sources.

National Parties

• National parties witnessed a significant surge in Electoral Bond donations, experiencing a 743% increase between FY 2017-18 and FY 2021-22.
• Corporate donations to national parties increased by 48% during the same period.

Regional Parties

• Regional parties also received a substantial proportion of their donations from Electoral Bonds.

Donations by Specific Parties

• The BJP, as the ruling party, received the highest donations among national political parties. More than 52% of the BJP’s total donations came from Electoral Bonds, totaling ₹5,271.9751 crore.
• The Congress secured the second-highest Electoral Bond donations, with ₹952.2955 crore, which accounted for 61.54% of its total donations.
• The Trinamool Congress received ₹767.8876 crore through Electoral Bonds, representing 93.27% of its total donations.

-Source: The Indian Express, The Hindu