Political Funding Current Affairs - 2019

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SC directs political parties to furnish receipts of electoral bonds in to EC

The Supreme Court has directed all political parties to furnish details about the receipts of electoral bonds in a sealed cover to the Election Commission.

Electoral Bond Scheme

  • The government had notified the Electoral Bond Scheme 2018 on January 2, 2018.
  • As per provisions of the Electoral Bond scheme, electoral bonds may be purchased by a person, who is a citizen of India or incorporated or established in India.
  • A person being an individual can buy electoral bonds, either singly or jointly with other individuals.
  • Political parties registered under Section 29A of the Representation of the People Act, 1951 and which secured not less than one per cent of votes polled in the last general election to the House of the People or the Legislative Assembly of the State, shall be eligible to receive electoral bonds.
  • Electoral bonds shall be encashed by an eligible political party only through a bank account with an authorized bank.

Interim Order of the Supreme Court

The Supreme Court was hearing a petition filed by an NGO which challenged the validity of the scheme and sought that either the issuance of electoral bonds be stayed or names of donors be made public to ensure transparency in the poll process.

In an interim order passed by the Supreme Court, the apex court has directed all political parties to provide details of the amount and bank account of donors by May 30 to the Election Commission.

Election Commission of India on Electoral Bonds

In an affidavit filed before the Supreme Court, the Election Commission of India has made the following observations:

  • Electoral bonds, contrary to government claims, wreck transparency in political funding.
  • Electoral bonds coupled with the removal of the cap on foreign funding invites foreign corporate powers to impact Indian politics.
  • Electoral bonds would cause a “serious impact” on transparency in the funding of political parties.

The Election Commission of India further criticises amendments made to various key statutes through the two consecutive Finance Acts of 2016 and 2017.

What were the amendments made?

The Finance Act of 2017 amends various laws, including the Representation of the People Act of 1951, the Income Tax Act and the Companies Act. The Finance Act of 2016 makes changes in the Foreign Contribution (Regulation) Act of 2010.

The amendment to Representation of the People Act allows political parties to skip recording donations received by them through electoral bonds in their contribution reports to the ECI.

The amendments introduced to the Income Tax Act allow anonymous donations. Donors to political parties are not required to provide their names, address or PAN if they have contributed less than Rs. 20,000. The Election Commission notes that many political parties have been reporting a major portion of the donations received as being less than the prescribed limit of Rs. 20,000.

The Finance Act of 2016 allowed donations to be received from foreign companies having a majority stake in Indian companies.

Observations by Election Commission

The Election Commission of India called these measures as a retrograde step and the ECI has no way to ascertain whether the donations were received illegally by the political party from government companies or foreign sources.

The Election commission also expressed concerns that these amendments would pump in black money for political funding through shell companies and allow unchecked foreign funding of political parties in India which could lead to Indian politics being influenced by foreign companies.