EC opposes electoral bonds in SC

Opposing the Centre’s decision to introduce electoral bonds to fund political parties, the Election Commission has told the Supreme Court it will have serious repercussions for transparency of political funding, terming it a retrograde step.

In an affidavit filed in the SC, which is examining the constitutional validity of amendments brought in through various laws to pave the way for electoral bonds, and to keep such donations out of the ambit of mandatory reporting to the EC, the poll panel said the scheme to allow parties to accept funds from government companies and foreign sources is in violation of law. It said the EC had in 2017 expressed concern over it and had asked the Centre to re-examine it.

In its letter to the Centre, in 2017, the EC had termed it “a retrograde step as far as transparency of donations is concerned and this proviso need to be withdrawn”.

The respondent informed the ministry of law and justice that in a situation where contributions received through electoral bonds are not reported, on perusal of the contribution report of the political parties, it cannot be ascertained whether the political party has taken any donation in violation of provisions under Section 29B of the Representation of the People Act, which prohibits political parties from taking donations from government companies and foreign sources,” the EC’s affidavit filed in the Supreme Court has said. The commission has also annexed to the affidavit, the letter written to the Centre in 2017.

Claiming that the scheme will clean up political funding in India, the NDA government had in 2017 budget decided to bring electoral bonds despite stiff opposition from political opposition and EC’s reservations.

According to the provisions of scheme, the bonds will be issued in multiples of Rs.1,000, Rs.10,000, Rs.1 lakh, Rs.10 lakh and Rs.1 crore and will be available at specified branches of State Bank of India. Donors can donate the bonds to their party of choice, which can then be cashed via the party's verified account within 15 days. Every party that is registered under section 29A of the Representation of the People Act, 1951 and has secured at least 1 per cent of the votes polled in the most recent Lok Sabha or assembly election will be allotted a verified account by the Election Commission. Electoral bond transactions can be made only via that account.

Challenging the scheme, a bunch of petitions, including one from CPM, were filed in the apex court. The petitioners alleged that bonds would encourage political corruption. They alleged that the system of corporate donations has been made correspondingly secretive by removing the requirement to disclose the names of political parties to whom contributions have been made by amendment to the Company Act, 2013.

“In effect, at both ends of the transaction, neither the contributor nor the recipient of the funds is required to disclose the identity of the other. The inevitable consequences of these amendments is the destruction of the principle underlying Article 19(1)(a) and the concept of democratic institutions,” the petition said.

Referring to the amendment in Foreign Contribution (Regulation) Act by which political parties were allowed to receive donations from foreign companies which are having majority stake in Indian companies, the Commission said, “This would allow unchecked foreign funding of political parties in India which could lead to Indian policies being influenced by foreign companies.”

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