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  • Writer's pictureRitik Agrawal

"Analyzing the Impact of Supreme Court's Electoral Bonds Verdict"

Ayush Das

INTRODUCTION

The recent ruling on electoral bonds by the Supreme Court of India has generated much discussion and analysis in the legal and political domains. With the introduction of Electoral Bonds in 2018, the goal was to increase openness in political financing by enabling anonymous contributions to political parties. Legal challenges have been prompted by concerns voiced by different parties over opacity and accountability.  This abstract explores the consequences and difficulties raised by the Supreme Court's decision on electoral bonds. The ruling acknowledged the government's intention to reduce the use of black money and promote openness, but it also drew attention to certain weaknesses that would jeopardize democratic processes. The judgment addresses several important problems, such as donor anonymity, the absence of disclosure rules, and the possibility of abuse by special interests. The abstract also examines the verdict's wider implications for democratic governance and political finance reform in India. It talks about striking a balance between donor privacy protection and electoral transparency, highlighting the necessity of strong legal frameworks to guarantee accountability and stop improper influence on the election process.

In India, electoral bonds represent a relatively novel idea in political financing. Electoral bonds were introduced in 2017 and allowed private citizens and business entities to anonymously give an unlimited amount of money to any political party. Electoral bonds are a type of financial instrument that the Indian government established to allow people to donate to political parties anonymously[i]. The bonds were bought by donors in fixed denominations from the State Bank of India (SBI) and given to any political party, that could cash them using a bank account, until a historic decision by the Supreme Court in mid-February to abolish the seven-year-old election funding system, just weeks before the Lok Sabha elections scheduled for April-May of this year. The bonds exempted the recipient political parties from having to give the Election Commission of India (ECI) or anybody else the donor's name.

An official statement dated November 4, 2023 states that only political parties registered under Section 29A of the Representation of the People Act, 1951 (43 of 1951)[ii] and which received at least 1% of the votes cast in the most recent general election to the House of the People or the Legislative Assembly of the State, will be eligible to receive the Electoral Bonds. 

KEY FEATURES

  1. The anonymity offered to donors by electoral bonds was one of its main characteristics. The fact that an individual or organization's name was kept private when they bought these bonds guaranteed that there were no potential biases or outside influences in the political fundraising process.

  2. In India, the Finance Act of 2017 [iii]brought up electoral bonds. The government asserted that by using banking systems to route donations, these bonds would increase openness in political fundraising. Critics, however, voiced their worries over the lack of openness around the funding source

  3. The expiration time of electoral bonds is a crucial point to remember. The bonds were good for fifteen days.

  4. Concerns about transparency - Election bonds were promoted by the government as a way to increase transparency.

  5. Under section 80GGC/80GGB of the Income Tax Act[iv], taxpayers can purchase Electoral Bonds for donations to political parties and benefit from tax deductions.

  6. The manner political parties accepted money was significantly altered by the introduction of electoral bonds. Due to the fact that these bonds offered a legitimate means of making donations, many people and organisations wishing to support political causes have come to favour them.

The Election Commission was ordered by a High Court to gather and make available background data on applicants for public office, including details on their assets, criminal histories, and educational backgrounds. This order was affirmed by the Supreme Court of India. The Supreme Court held that the fundamental right to freedom of expression derives the right to know information about public authorities.[v]

Legal Framework

Finance Act, 2017: Modifications to the Finance Act, 2017 allowed for the introduction of the electoral bond programme in India. Provisions pertaining to the issuing, acquisition, and application of electoral bonds are included in this legislation.

The Representation of the People Act of 1951, Section 29C: Provisions pertaining to political parties' receipt of electoral bonds were added to this section. It describes the requirements political parties must meet in order to be eligible to collect contributions via electoral bonds.Section 182 of the 2013 Companies Act: This section deals with businesses' ability to donate to political parties. This clause was changed by the Finance Act of 2017 to permit donations using electoral bonds.

Under the Income Tax Act of 1961, Section 13A, political parties are free from income tax on income received as a result of voluntary contributions. Donations of electoral bonds are under the purview of this clause.

The Income Tax Act of 1961's Section 13B describes the requirements that political parties must meet in order to be qualified for income tax exemptions. One of the requirements can be adhering to electoral bond restrictions.

The 2013 Companies Act, Section 182(3): According to this provision, businesses that donate to political parties are required to include information about their donations in their profit and loss statement.

SUGGESTIONS

The ruling on electoral bonds by the Supreme Court offers a chance to address the issues and worries about accountability and transparency in political fundraising. The following recommendations aim to mitigate the effects of the ruling and fortify the voting system. Examine the Electoral Bond Programme in its entirety in light of the Supreme Court's decision. Think about changing the plan to improve accountability and transparency in political fundraising. This might entail going over clauses pertaining to regulatory supervision, disclosure obligations, and donor anonymity. Tighten up on political parties' and electoral bond transactions' transparency obligations. Put policies in place to guarantee prompt and thorough disclosure of donor names, gift amounts, and fund utilisation. Increasing political financial transparency is crucial to building public confidence and accountability.

CONCLUSIONS

The latest ruling on election affairs by the Supreme Court (SC) represents a turning point in the history of democracy and government. In addition to interpreting current legislation, the Court's decision has established important precedents that will influence how elections are conducted in the country going forward. The verdict's significant legal ramifications come first and foremost. To offer electoral organisations and stakeholders with clarity and direction, the SC has resolved uncertainties and settled controversial matters related to election legislation. Maintaining the integrity of elections and making sure the democratic process is open and equitable depend on this clarity. Furthermore, it is impossible to overestimate the verdict's political significance. Politically charged electoral outcomes can have profound partisan ramifications. The ruling of the SC may have an impact on the distribution of power among political parties and the tactics they use in next elections. Furthermore, the decision can have an unanticipated impact on voter attitudes and actions, which might change the course of elections. Another important factor is how the decision is perceived by the general public. The perceived impartiality and justice of the judgements made by electoral institutions determine their legitimacy and credibility. While certain social groups would see the decision as a confirmation of democratic values, others might show doubt or opposition. Sustaining public confidence in the voting process requires controlling public expectations and resolving issues. In the long run, the decision establishes significant precedents for next elections and judicial actions.

REFERENCES

[i] Reserve Bank of India, Master Circular on Electoral Bonds (2020)

[ii] Representation of the People Act, 1951, No. 43, Sec. 29A (India).

[iii] Finance Act, 2017, c. 15 (India)

[iv] Income Tax Act, 1961, No. 43, Sec. 29A (India)

[v] Association for Democratic Reforms v. Union of India, (2019) 5 SCC 212.

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