Context:
In light of the current political circumstances and concerns regarding donations, the conclusion of the Supreme Court hearings on the challenge to electoral bonds prompts a critical examination of the potential impact this challenge’s resolution may have on democracy and the rule of law in India.
Relevance:
GS II: Polity and Governance
Dimensions of the Article:
- Political Funding
- Importance of Disclosure in Political Funding
- Reforms Needed in Political Funding
Political Funding
- Political funding encompasses financial contributions provided to political parties or candidates, supporting their activities, campaigns, and overall functioning.
Statutory Provisions in India:
- Representation of the People Act, 1951 (RPA Act):
- Outlines rules regarding elections, including provisions on election expenses, contributions, and account maintenance.
- Income Tax Act, 1961:
- Governs tax treatment of political parties and donors, with compliance requirements and potential tax benefits for contributors.
- Companies Act, 2013:
- Regulates corporate donations to political parties, specifying contribution limits and mandating disclosure in financial statements.
Methods of Raising Political Funding:
- Section 29B of RPA:
- Allows political parties to receive individual donations with taxpayers eligible for a 100% deduction.
- State Funding:
- Direct Funding: Prohibited; government funds provided directly to political parties.
- Indirect Funding: Permitted in a regulated manner, including media access, public places for rallies, and subsidized transport.
- Corporate Funding:
- Governed by section 182 of the Companies Act, 2013.
Electoral Bonds Scheme:
- Introduced in 2017, implemented in 2018, allowing anonymous donations to registered political parties.
Electoral Trusts Scheme, 2013:
- Notified by the Central Board of Direct Taxes (CBDT).
- Electoral Trusts distribute contributions from companies and individuals to political parties.
Importance of Disclosure in Political Funding
Amendments to Representation of the People Act 1951:
- The introduction of electoral bonds in India has brought complete anonymity for political donors.
Contrast with International Practices:
- Internationally, full disclosure of political donations is a prevailing requirement.
- In the United States, regulations mandate transparency in political funding dating back to 1910.
- The European Union, in 2014, enacted regulations on funding European political parties, emphasizing limits, disclosure mandates, and immediate reporting for large contributions.
Global Convergence on Fundamental Requirements:
- Worldwide, legal regulations converge on two fundamental requirements:
- Comprehensive disclosure of donors above specific minimal amounts.
- Imposition of limits or caps on donations.
- These measures aim to ensure transparency, prevent corruption, and maintain public confidence in the political system and democracy.
Foundation of Representative Democracy:
- Political parties serve as the foundation of representative democracy.
- Public disclosure of political funding is imperative for upholding citizens’ trust in parties and politicians.
Role in Safeguarding Democracy:
- Transparent financial accounts play a crucial role in safeguarding the rule of law and combating corruption within electoral and political processes.
- This transparency ensures accountability, reinforcing democratic principles based on openness and fairness.
Preventing Undue Influence:
- Without disclosure, money can become a tool for unduly influencing the political process.
- Disclosure helps prevent the co-optation of politics by business interests and widespread vote buying.
Ensuring Equitable Playing Field:
- Disclosure is essential for maintaining an equitable playing field, preventing one party from having indomitable access to excess campaign finance.
- It ensures that all parties have equal opportunities, reinforcing democratic ideals.
Reforms Needed in Political Funding
- Importance of Electoral Justice:
- Electoral justice is crucial for upholding democracy, ensuring that all aspects of the electoral process align with the law and protect the enjoyment of electoral rights.
- Challenges with Electoral Bonds:
- Electoral bonds, allowing for undisclosed donor details, pose a threat to democratic transparency and the integrity of free and fair elections.
- Comprehensive Approach for Reform:
- Reforms need to go beyond legality and focus on preserving the democratic essence of transparency in the electoral process.
Key Components of Reform:
- Donor Identification:
- Identify donors above a specified nominal limit.
- Immediate Reporting:
- Mandate immediate reporting of significant donations to the election commission.
- Publicizing Political Party Accounts:
- Ensure transparency by publicizing political party accounts.
- Independent Auditing:
- Implement independent auditing of party accounts to ensure financial integrity.
- Establishing Limits:
- Set limits on funding and expenditure to prevent disproportionate influence.
State Funding of Elections:
- State funding involves the government providing financial support to political parties and candidates, derived from public resources.
- Aims to reduce reliance on private donations, minimizing potential influence from vested interests in political campaigns.
Holistic Approach:
- Reforms should not only address legal aspects but also focus on preserving democratic values, ensuring fair elections, and minimizing the impact of money on the political process.
-Source: The Hindu
