[op-ed snap] An invitation to corruption?

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Mains Paper 2: Governance | Important aspects of governance, transparency & accountability

From the UPSC perspective, the following things are important:

Prelims level: Electoral Bond Scheme

Mains level: Various flaws in the structure of EBS and the need for a transparent mode of electoral financing


Context

Electoral bonds scheme

  1. Early this year the government introduced an Electoral Bond Scheme purportedly with a view to cleansing the prevailing culture of political sponsorship
  2. But there are many grey areas in this because when there is no ceiling on party expenditure and the EC (Election Commission) cannot monitor it, how can one be sure that what is coming in is not black money as there is a secrecy of the donor

Working of the scheme

  1. In its present form, the scheme permits not only individuals and body corporates but also “every artificial juridical person,” to purchase bonds, issued by the State Bank of India, in denominations of ₹1,000, ₹10,000, ₹lakh, ₹10 lakh and ₹1 crore, during specified periods of the year
  2. Issued in the form of promissory notes, once a bond is purchased the buyer can donate it to any political party, which can then encash it on demand

Flaws in the functioning

  1. The government claims that since these bonds are purchased through banking channels the scheme will eliminate the infusion of black money into electoral funding
  2. But this argument palpably false, as a simple reading of the scheme’s terms shows us that the programme also virtually endorses corruption in political funding
  3. The scheme allows for complete anonymity of the donor
  4. Neither the purchaser of the bond nor the political party receiving the donation is mandated to disclose the donor’s identity
  5. Therefore, not only will the shareholders of a corporation be unaware of the company’s contributions, but the voters too will have no idea of how, and through whom, a political party has been funded
  6. The programme removes an existing condition that had prohibited companies from donating anything more than 7.5% of their average net-profit over the previous three years
  7. This now means that even loss-making entities can make unlimited contributions
  8. Additionally, the requirement that a corporation ought to have been in existence for at least three years before it could make donations — a system that was meant to stop shell concerns from being created with a view purely to syphoning money into politics — has also been removed

Petition in SC highlighting problems of the scheme

  1. As petitions filed in the Supreme Court point out, the scheme suffers from at least two foundational defects
  2. One, that it was incorporated on the back of a series of amendments made to legislation, including the Representation of the People Act, the Income Tax Act and the Companies Act, which were introduced in the form of a money bill
  3. And two, that the scheme flouts a number of fundamental rights

Not a money bill

  1. Article 110 of the Constitution allows the Speaker to classify a proposed legislation as a money bill, only when the draft law deals with all or any of the subjects enlisted in the provision
  2. These subjects comprise a set of seven features, including items such as the imposition of a tax, the regulation of the borrowing of money by the government, the custody of the Consolidated Fund of India, the appropriation of money out of the consolidated fund, and any matter incidental to the subjects explicitly mentioned in Article 110
  3. It’s impossible to see how the provisions pertaining to the electoral bond scheme could possibly fall within any of these categories
  4. The Finance Act, through which these amendments were introduced, therefore did not deal with only those matters contained in Article 110

Violation of Fundamental Rights

  1. The scheme is equally destructive in its subversion of the fundamental rights to equality and freedom of expression
  2. There’s no doubt that the Constitution does not contain an explicitly enforceable right to vote
  3. But implicit in its guarantees of equality and free speech is a right to knowledge and information
  4. Our courts have nearly consistently seen “freedom of voting” as distinct from the right to vote, as a facet of the right to freedom of expression and as an essential condition of political equality
  5. In the absence of complete knowledge about the identities of those funding the various different parties, it’s difficult to conceive how a citizen can meaningfully participate in political and public life

Impact on democracy

  1. The institutionalising of equality through the principle of one person one vote, and through the creation of the universal adult franchise, was critical to building India’s republican structure
  2. When the power of that vote is diluted through opacity in political funding, democracy as a whole loses its intrinsic value

Way forward

  1. Prima facie it appears the scheme cannot really deliver whatever it was intended to
  2. The Electoral Bond Scheme inhibits the citizen’s capacity to meaningfully participate in political and public life
Electoral Reforms In India
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