People walk past the Election Commission of India office building in New Delhi.(REUTERS)
People walk past the Election Commission of India office building in New Delhi.(REUTERS)

Electoral bonds have brought in transparency, says Centre’s affidavit

Electoral bonds were introduced in January 2018 after changes to the Finance Act 2017 and related amendments to the Income Tax Act, the Reserve Bank of India Act, and the Representation of People Act. Even foreign companies can buy electoral bonds.
New Delhi | By HT Correspondent
UPDATED ON APR 03, 2019 11:57 PM IST

The Centre on Wednesday dismissed the election commission concerns over electoral bonds and reiterated the scheme has pushed more transparency and accountability in electoral funding.

In a fresh affidavit filed in the Supreme Court, the government rejected the poll watchdog’s apprehension that electoral bonds will enable foreign companies to influence Indian policies. “This stand of the poll body is without any legal or factual merit.”

Electoral bonds were introduced in January 2018 after changes to the Finance Act 2017 and related amendments to the Income Tax Act, the Reserve Bank of India Act, and the Representation of People Act. Even foreign companies can buy electoral bonds.

The affidavit comes two days ahead of a hearing in the apex court on two petitions challenging the Bharatiya Janata Party (BJP)-led National Democratic Alliance government’s decision to issue electoral bonds for election funding in the country.

The Association for Democratic Reforms (ADR), a non-governmental organisation, and the Communist Party of India-Marxist have filed the two petitions.

The government called the introduction of electoral bonds “a pioneering step” in bringing electoral reforms.

In an affidavit filed before the Supreme Court, the EC on March 28 expressed concern over legislative changes that allowed the use of electoral bonds for anonymous funding of elections.

It warned this would have “serious repercussions” on the transparency of the electoral process. The EC added that changes to the Foreign Contribution Regulation Act, 2010, could “allow unchecked foreign funding of political parties”, raising the spectre of foreign influence on India’s politics and policies.

The poll watchdog has been opposed to the idea of electoral bonds. In 2017, the EC told the government that “the amendments to the Finance Act would have serious repercussions on the transparency aspect of political finance and funding of political parties.”

The government maintained the introduction of the electoral bond scheme has brought a marked shift from the old electoral system which suffered from many lacunas. Under the old system, despite the best efforts of the reforms the government or the EC suggested, massive amounts of political donations were being made in cash, by individuals/corporates, using illicit means of funding, it said. This ensured that unaccounted criminal money/black money was pumped in for financing elections, the government maintained.

The government contended that non-disclosure of the identity of donors is the core objective of the scheme of electoral bonds to safeguard them from political victimisation. It said the electoral bonds scheme was introduced after due consultations with concerned stakeholders, including the EC.

The BJP was the biggest beneficiary of the electoral bond scheme in 2017-18. It received bonds worth around ~210 crore of the ~215 crore issued. As per audit and income tax reports the BJP has submitted to the EC, it earned ~210 crore through electoral bonds. The Congress earned ~199 crore as income in 2017-18, of which ~5 crore was from electoral bonds. The bonds can only be credited into the accounts of registered parties. They are available for 10 days each in the months of January, April, July and October, with an additional period of 30 days specified by the Central government in the year of general elections.

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