Electoral bonds introduced to bring accountability, transparency in conducting elections: Centre tells SC

The Centre on Wednesday filed an affidavit before the Supreme Court saying electoral bonds is a positive step in the right direction to ensure "accountability and transparency" in conducting elections, adding that these bonds were introduced to deal with the menace of corruption in elections.

With regard to a question on the impact of electoral bonds on transparency, the Finance Ministry said the bonds have been introduced as a pioneer step in bringing electoral reforms, to ensure that the spirit of transparency and accountability in political funding is maintained.

Last week, the poll panel had filed an affidavit and said that it had informed the Ministry of Law and Justice that changes in the law allowing electoral bonds would have "serious repercussions" on the transparency of funding to political parties.

From the changes in law, any donation received by a political party through an electoral bond has been taken out from the ambit of reporting, and it would be difficult to ascertain if the political parties received donations from government companies or foreign sources, the EC had said in its affidavit.

The Centre in its affidavit said the concern of the EC that electoral bonds will enable foreign companies to influence Indian policies is "without any legal or factual merit".

The Centre filed its affidavit before the top court on a PIL filed on behalf of the Association of Democratic Reforms on the issue of electoral bonds, unlimited corporate funding, and transparency in political funding.

The Centre said that the introduction of electoral bonds has brought in a marked shift from the old electoral system which suffered from many lacunas.

"Under the old system, despite the best efforts of the reforms suggested by the government or the Election Commission of India, massive amounts of political donations were being made in cash, by individuals/corporates, using illicit means of funding. This ensured that unaccounted criminal money/Black money was pumped in for financing elections. The result of such contributions in cash would inevitably be that neither the identity of the donor nor of the recipient- the political party would ever be known or disclosed. In other words, the 'system' was wholly opaque and ensured complete anonymity," stated the affidavit filed.

The government further said it was observed that political parties were floated, without any serious intention of contesting elections, merely for the purpose of being utilised as vehicles for generating/handling large amounts of tainted cash.

Under the earlier provision of the Act, there was no limit on the amount of contribution or donation was made in cash to the political parties. Since the major proportion of the amount of political funding was in the form of cash, the existing provision allowed the source of funding to remain unaccounted/unexplained. At the same time, there was a concern among the donors that, with their identity revealed, there would be competitive pressure from different political parties receiving the donation, the affidavit stated.

Explaining these circumstances to introduce the Electoral Bonds Scheme, the government said that considering the need to impart greater accountability in funding of political parties as well as to maintain the anonymity of the donor, a mechanism of political funding by way of electoral bonds was introduced.

It explained that under the present system, electoral bonds can be issued only by an authorised bank, being the State Bank of India.

All payments made for the issuance of the electoral bonds are accepted only by means of a demand draft, cheque or through the Electronic Clearing System or direct debit to the buyers' account. No black money can, therefore, be used for the purchase of these bonds, it added.

"Electoral Bonds is a positive step in the right direction to ensure accountability and transparency in conducting elections. The need to bring about such a change was felt as the measures that existed on the book were either not enough or were proving to be ineffective/insufficient in dealing with the menace of corruption in Elections," the affidavit said.