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Electoral Bond Scheme in India and State Bank of India

09 Mar 2024 Electoral Bond Scheme in India and State Bank of India

Posted at 18:12h in Daily current-affairs by
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Source – The Hindu and PIB.

General Studies – Indian Politics and Governance System, Electoral Bond Scheme, Political Parties, Representation of the People Act, 1951, Impact of Electoral Bonds on the electoral process, Electoral transparency and accountability, Government policies and interventions, Issues arising from formulation and implementation of policies.

Why in the News ?

 

  • Recently on February 15, 2024, the Supreme Court of India The electoral bond scheme run by the State Bank of India was canceled considering it unconstitutional.
  • There are several reasons for this decision given by a division bench of judges of the Supreme Court of India, which is of utmost importance not only for the political parties of India but also for the common Indian citizens in the context of electoral transparency.

State Bank of India’s response :

  • In the recent judgment given by the Supreme Court of India in the context of Electoral Bond Scheme State Bank of India (SBI) has to make available to the Supreme Court of India, by March 6, 2024, the details of purchase of electoral bonds, including both date of purchase and denomination, along with details of Indian political parties acquiring the bonds. Had to get it done. The reason behind asking SBI to do this was to ensure transparency in the funding of political parties in India’s electoral system.
  • There is time in its response to the Supreme Court of India, SBI, through one of its officials, has sought time till the end of June 2024 to release the data, which is much later than the anticipated date of 2024 general elections to the Lok Sabha in India.
  • State Bank of India in its response said that facing difficulties in purchasing electoral bonds, it is seeking to release the data through its official website in the next three months.
  • State Bank of India has also said it will take steps to improve the process of filing details of Indian political parties purchasing electoral bonds.

Data privacy and processing :

  • The Supreme Court of India has directed the State Bank of India to publish only the information relating to the purchase and issue of electoral bonds, which cannot accurately determine the relationship between the donor and the recipient person or parties as political parties Is.

Details of donations made through electoral bonds in India :

  • Current data on donations made through electoral bonds in India in the context of expenditure incurred in the recent general elections in India shows that the Bharatiya Janata Party had received 57% of the total funds through electoral bonds, while the Congress During the elections, only about 10% was received through electoral bonds.

Supreme Court’s view : 

  • On February 15, 2024, the Supreme Court of India had unanimously ruled that – “ This violates the constitutional right to freedom of expression guaranteed to Indian citizens by the Indian Constitution as well as the right to information under Article 19(1)(A) of the Constitution.”

Introduction to Electoral Bond Scheme :

Electoral bond scheme in India is a way of funding various political parties in the form of money received or donations for elections. In the case related to the validity of the electoral bond scheme, a Five – Judge Constitution bench of the Supreme Court has given a historic verdict on 15 February 2024, canceling it.

  • The Electoral Bond Scheme was introduced in the Parliament through the Finance Bill in the year 2017 in India,
  • On September 14, 2017, an NGO called ‘Association for Democratic Reforms’ (ADR) filed a challenge in the Supreme Court against this scheme as the lead petitioner.
  • On October 03, 2017, the Supreme Court issued notice to the Central Government and the Election Commission of India on the PIL filed by that NGO.
  • On January 2, 2018, the Central Government notified the Electoral Bond Scheme in India.
  • On November 7, 2022, the electoral bond scheme was amended to increase the number of sale days in a year from 70 to 85, where any assembly election can be scheduled.
  • On October 6, 2023, Chief Justice of the Supreme Court of India D.Y. The Supreme Court bench headed by Chandrachud referred the petitions against the scheme to a five-judge constitution bench.
  • On October 31, 2023, Chief Justice of the Supreme Court of India D.Y. A five-judge Constitution bench headed by Chandrachud began hearing petitions against the plan.
  • On November 2, 2023, the Supreme Court reserved its decision on this scheme.
  • In a case related to the validity of the electoral bond scheme in India, a Five – Judge Constitution bench of the Supreme Court on 15 February 2024 had given a historic judgment striking it down.

History of Electoral Bond Scheme :

  • This scheme, notified in 2008 in India, facilitated the anonymous donation of funds to political parties for election expenses, but initially it was applicable only in India. What was meant to be a time-bound plan has now become extremely irrelevant in the present times.
  • The present judgment of The Supreme Court of India attempts to establish the present position now facing the respondents.

Background of Electoral Bond Scheme :

  • The electoral bond system in India was introduced in the Parliament through a Finance Bill in the year 2017 and was also implemented in the year 2018.
  • Electoral bonds in India serve as a vehicle for individuals and institutions to make donations to registered political parties under the scheme without keeping the names of the donors secret or making public.
  • Electoral bonds in India are interest free and payable on demand by the holder.

Eligibility of political parties to buy electoral bonds in India :

  • Section 29A of the Representation of the People Act, 1951 Under this, only those registered political parties in India, which have secured at least 1% of the votes cast for the Lok Sabha or Assembly in the last general election, are eligible to purchase this electoral bond.
  • Electoral bonds can be purchased only through digital medium or cheque in India, 
  • In India, Encashment of electoral bonds can be done only through the authorized bank account of the political party.

Authorized issuing banks for Electoral bonds in India :

  • The authorized issuing bank for electoral bonds in India is the State Bank of India.
  • Electoral bonds are issued only through designated State Bank of India branches in India

 

Being a supporter of promoting Crony Capitalism :

  • The electoral bond scheme in India removes all previously existing limits on political donations and allows corporations with effective resources to finance elections. As a result, the path to crony capitalism is paved.
  • Crony capitalism is a capitalist economic system characterized by close, mutually beneficial collusion between businessmen and government officials. Due to which there may be a threat to India’s democratic system.

 

Conclusion / Path to solution : 

  • The Supreme Court of India has also been asked to respond to the SBI during the hearing of the contempt petition filed against it and to the State Bank of India to work more diligently and provide information regarding the Electoral Bond Scheme in the upcoming elections in India in the year 2024. It should be made available much before the Lok Sabha elections.
  • It is clear from this timely decision given by the Supreme Court of India that there is an urgent need to reform the current electoral bond scheme to conduct fair, equitable and democratic elections in India and the Supreme Court has emphasized on transparency and transparency in the electoral process. To ensure justice, it has been canceled unanimously.
  • State Bank of India has also got an opportunity to ensure transparency and fairness towards the electoral bond system and to improve it as well as to ensure proper compliance with the decision of the Supreme Court. Therefore, State Bank of India also needs to seriously consider the electoral bond system so that transparency and justice can be ensured in the electoral process in India.
  • The government should now seriously consider this issue to ensure transparency and justice in the electoral process in India.
  • There is an urgent need to implement measures to increase transparency in the electoral bond scheme in India.
  • There should be strict rules regarding disclosure to the Election Commission regarding receipt of donations by political parties in India and the Election Commission of India should be empowered to investigate any kind of donations and both electoral bonds and money spent on elections and elections. There should be a strict provision for giving clarification regarding this.
  • There is an urgent need to identify and address the existing shortcomings in electoral bonds to prevent risks such as potential misuse, violation of donation limits and crony capitalism and flow of black money in respect of funds raised from the electoral bond scheme in India.
  • Time bound implementation of the Electoral Bond Scheme through judicial scrutiny, periodic review and public participation to address the emerging concerns about democracy in the present democratic system of India, to adapt to changing political scenarios and to ensure a more inclusive decision making process in a democracy. There is an urgent need to ensure monitoring.
  • There is an urgent need for bold reforms at the political level as well as effective regulation of political financing to stop the vicious cycle of corruption prevalent in India’s democracy and bureaucracy and the decline in the quality of democratic politics.
  • To make the entire governance system more accountable and transparent in India’s democracy, it is extremely important to remove the loopholes in the existing laws regarding the Electoral Bond Scheme.
  • In Indian democracy, significant changes can be brought about in the existing electoral bond scheme by starting voter awareness campaigns.
  • In Indian democracy, if the voters become aware of the basic principles of democracy and reject those candidates and political parties who spend more money in elections or bribe the voters, then Indian democracy will move a step forward towards its basic objective. Which is a sign of a bright future for the democracy of the Indian democratic system.

 

Practice Questions for Preliminary Exam :

Q.1.Consider the following statements regarding the electoral bond system in the context of electoral transparency in India.

  1. Electoral bonds can be purchased only through digital medium or cheque.
  2. In India, encashment of electoral bonds can be done only through the authorized bank account of the political party.
  3. Encashment of electoral bonds can be done only by the Reserve Bank of India.
  4. In India, donors have to pay interest on the electoral bond scheme as it does not come under the purview of income tax returns.

Which of the above statement / statements is/ are correct?

(A) Only 1 and 3.

(B) Only 2 and 4

(C)  Only  3 and 4 

(D) Only 1 and 2.

Answer – (D)

 

Practice Questions for Main Exam :

Q.1. Discuss in the context of a fair and clean election system in India, How is the Electoral Bond Scheme contradictory to the Right to Information and a Supporter of the Capitalist System ?  

 

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