The scheme of electoral bond will "promote transparency in funding and donation received by political parties", said the affidavit filed by the Central Government today in Supreme Court.
The affidavit is filed countering the petition filed by Communist Party of India(Marxist), which challenges the scheme as "an obscure funding system which is unchecked by any authority"
Electoral bonds were introduced by amendments made through the Finance Act 2017 to the Reserve Bank of India Act 1934, Representation of Peoples Act 1951, Income Tax Act 1961 and Companies Act. On January 2, 2018, the Centre notified the scheme for electoral bonds, which are in the nature of bearer instruments like a Promissory Note capable of being purchased by an Indian citizen or a body incorporated in India. The bonds can be purchased from an authorized bank, and can be issued to a political party. The party can encash the bond within 15 days. The identity of the donor will be known only to the bank, which will be kept anonymous.
Countering the petition, the centre says "the scheme envisages building a transparent system of acquiring bonds with validated KYC and an audit trail. Besides, a limited window and a very short maturity period shall make any misuse improbable. Donors who buy these bonds, their balance sheet will reflect such donations made. The electoral bonds will prompt donors to take the banking route to donate, with their identity captured by the issuing authority. This will ensure transparency, accountability and a big step towards electoral reform" .
Explaining the scheme, the centre says that bonds can be purchased only from the State Bank of India, after the purchaser complying with the KYC norms. The bonds will be available for purchase only for 10 days during the months of January, April, July and October. They can be bought for any value, in multiples of Rs 1,000, Rs 10,000, Rs 1 lakh, Rs 10 lakh or Rs 1 crore. The name of the donor will not be there in the bond. The bond will be valid for 15 days from the date of issue, within which it has to be encashed by the payee-political party. The face value of the bonds shall be counted as income by way of voluntary contributions received by an eligible political party, for the purpose of exemption from Income-tax under Section 13A of the Income Tax Act, 1961.
It is further stressed that every political party will have to file returns before the Election Commission of India as to how much money has come through electoral bonds, which will provide accountability.
Quoting an article by the then Finance Minister Arun Jaitley, the affidavit says that the conventional system of political parties taking cash donations was not transparent and that electoral bonds will "cleanse up" the political funding mechanism.
Identity kept anonymous to protect privacy
The right of the buyer to purchase bonds without having to disclose his preference of political party is in furtherance of his right to privacy, states the affidavit. Keeping the identity of the buyer of the bonds anonymous is also an extension to his right to vote in secret ballot. "This is necessary because once this disclosure is made, past experience has shown, donors would not find the scheme attractive and would go back to the less-desirable option of donating by cash", the affidavit states quoting Jaitley.
"it is pertinent to state that the State in order to balance the interest of the individual vis-à-vis the State, has notified that the information furnished by the buyer shall be treated confidential by the authorized bank and shall not be disclosed to any authority for any purposes, except when demanded by a competent court or upon registration of criminal case by any law enforcement agency", reads the 21 page affidavit.
The petition alleges that the bonds have been kept "secretive" for the benefit of big corporate houses. The amendments made to Companies Act 2013 exclude the requirement of disclosure of names of political parties to whom contributions have been made. The petitioner apprehends that this will lead to "private corporate interests taking precedence over the needs and rights of the people of the State in policy considerations"
The centre's affidavit does not say much about the allegation of the petitioner that the amendments could not have been introduced through the Finance Bill as they do not have the characteristics of a money bill. According to the petitioner, the amendments were disguised as money bill to bypass the upper house.
Responding to say, the centre states that issue is pending consideration before SC in another case - Kudrat Sandhu vs. Union of India & Anr, and requests that the issue be left open subject to the outcome in that case.
Apart from CPI(M), two NGOs- Association for Democratic Reforms and Common Cause- have filed petitions challenging electoral bonds.
Last Monday, the SC bench headed by CJI Ranjan Gogoi said that it will hear the petitions, which have been pending since February 2018, on March 26.