Context:

Recently you might have heard of the term "electoral bonds" on which the Supreme Court has started hearing petitions rigorously to examine its legality and effectiveness. it is a money instrument that enables an Indian citizen or a company located in India to donate money to their preferred political party. the legality of this bond and scrutiny is being done by a bench of 5 Justices of the Supreme Court Of India.

Table of Contents:

What is Electoral bonds.

How you will buy and donate the E-Bond?

Why It came under act ?

What was the features before this e-bond?

Highlights of Electoral bonds ?

Issues reported in Supreme Court

its history & how it was introduced in 2017.

Way forward

Note

What is an Electoral bond?

You can assume it is a bank cheque but it's not the exact cheque. it is a legalized way of giving donations to political parties. the donor can be anyone from the India domicile and any company that has an office located in india. A number of people do charity and donate money and all.. Similarly, if a person wants to support any particular political party, he/she can donate money using an "Electoral bond".

How you will buy and donate the E-Bond?

It's all procedures are carried out through the designated Banks, as of now only State Bank Of India is authorised to issue the e-bond. Step 1: A person or company who has an account in SBI, purchases a bond: in return, SBI branch gives a paper stating it holds 1000rs or 1 lakh rupees etc.

Step 2: That person or company give that monetary paper to their choice of Political Party.

Step 3: That Political party goes to the SBI Branch and encash the money

Why it come under the act ?

Before this act, if anyone wanted to donate money to political parties they could simply give them cash in hand and get some receipt from the party, there was no log print of that money. who donated and to whom it went etc. the government argued that it is increasing the corruption in our electoral system and black money is being flooded, to tackle this, they brought this rule of electoral bond which has log prints from the bank transactions.

What were the features before this e-bond?

=> Anyone can donate the money to political parties

=> A company can't donate 7.5% of its profit or 10% of its revenue.

=> If someone donates more than 20k, parties have to disclose their name to the Election Commission of India.

=> There was no involvement of the Bank so transactions were not in log prints.

Highlights of Electoral bonds ?

=> Only the State Bank of India can issue the bond, which is a government bank.

=> After issuance of the bond, political parties have to redeem it in 15 days.

=> One can donate in multiple of 100x, like 1k, 1Lakh, 1crore, 1Billion there is no any upper cap on it.

=> On the issued bond paper, information about the donor is not printed to maintain anonymity.

=> One can buy the bond from SBI in the first 10 days of every quarter of the year, ( January, May, Aug, Oct ).

=> As the government argued, it's an anonymous donation. it is not required to disclose the name.

=> Any political party that got a 1% vote share of the total polled votes can receive a donation in their bank account assigned by the Election Commission of India.

=> if political party failes to encash the money within 15days, that money will go into PM Relief fund.

Now come to the issue point

As you have seen above an Indian citizen or company (which has an office in India) can donate any amount of money and political parties are not required to disclose the name of the donor as name and all are not printed on bond paper. the government also says that bond is being issued by SBI so there is no point in black money.

Issue 1: Violation of rights to information

Supreme Court in its verdict has stated that the right to information comes under fundamental rights and also people have the right to know the criminal history of the political candidate. With these two points, common people have also the right to know the funds of political parties. In the e-bond case, political parties don't disclose the name of the donor.

Issue 2: quid pro quo => advantage or favor granted in return for something

Various petitions in the Supreme Court also said that there is a high chance of a company or group of people donating money to particular parties and getting some benefits from the government. It is possible that I can make a deal with Modi to get some government lands giving him money through e-bonds. no one can stop me!! and Modi is also not liable to disclose my name.

Issue 3: Shell Companies

the e-bond rule states that any company ( office in India) whether it is an Indian or Foreign Company, can donate any amount to any political party. there is a possibility that a foreign nation can open a fake company and donate money to a party and help him win the election and after the election government will favor that nation in international affairs.

Issue 3: Transparency of SBI

Although the information of donors is hidden from the public, as SBI comes under the government, the government can access the data of SBI transactions.. who paid, and what amount was paid because banks have all the details of the transaction of the customer. and thus this will increase the corruption and political party can make their white money as black.

Issue 4: Effect on democracy, SBI

As the government can access the data from the SBI database, suppose the opposition party got a huge amount than the governmental party, the governmental party can take retaliatory action against the opposition and may try to expose or simply they will try to push down the opposition party. pushing down the opposition party is dangerous to democracy, as they are the first critic of the government. without criticism and feedback, democracy will not function.

Issue 5: Purpose of E-bond not defined

Although it is said that e-bonds are meant for political expenses but its nowhere defined in the rules so parties are open to investing that money anywhere... maybe be on their personal expenses or building some company or anything.

History of this e-bond and how was brought into effect in 2018

This electoral bond was introduced into LokSabha in 2017 by former Finance Minister Arun Jaitely stating it would bring transparency to political donations. In 2018 it was launched by a notification. the strange thing about this bill was that, it was termed a Money bill and as you may know, if a bill is termed a money bill, it doesn't need to go through the procedures of Rajya Sabha. it directly goes to the president and after the accent of the president it is termed as an Act/Rule etc.

In the case of a normal bill, the bill has to be passed through LokSabha, Rajysabha & then the president. Since 2014, the Central government has been in the majority in LokSabha but not in RajyaSabha and so the bill was not introduced into RajyaSabha because the bill was rejected by the opposition in Loksabha itself but due to the majority and being termed as Money it bypassed RajyaSabha( where it was sure to get rejected ).

after this bill got passed ECI and RBI raised the concern that legitimization of the flow of black money through governmental procedures is dangerous for democracy.

RBI Stated that anyone can donate money and it can travel from one person to another without any counter question which will hurt the sentiments of the Money Laundering act.

Before the introduction of the electoral bond bill government had to make multiple amendments in various acts

Representation of People Act 1951

, is related to political parties, elections, and citizens.. as this bill is from this domain, it had to get modified.

Companies Act 2013

as a company can also donate, rule modification was required here

Income Tax Act

The person or company that donates the money gets an exemption from tax .. so changes were required here too.

Foreign companies

can also contribute by opening an office here so it was also modified

after these 4 acts were modified, it was introduced into lok sabha.

Way Forward

The previous procedures and current electoral bonds both pose a threat to our democracy. in the previous one, there is a chance of a high inflow of cash and black money and in e-bonds, there are many loopholes designed to make this scheme opaque and favorable to ruling parties or opposition. an unfriendly nation can invest a huge amount of money in an opposition party to topple the current government.

so both rules have many loopholes for addressing them we can use our digitization movement itself where the government is encouraging digital payments and transactions which logs the prints as well.

Established banking procedures of NIFT, RTGS, and cheque issuance can be used extensively. and not only SBI we can encourage and make regulations regarding donation handling in every bank whether private or public for better transparency

Supreme court is hearing this case with 5 judge bench because it involves the constitutional rights of the people of Bharat.