Context

Recently, the Supreme Court took the first step towards resolving the controversy over political funding that erupted after the government introduced the electoral bonds scheme last year.

Court’s direction

• The Court refused to accede to the request of the NGOs, Common Cause and Association for Democratic Reforms, and the CPM for an immediate stay of the new mechanism to fund elections.

• But the key message from the three-judge bench’s decision underlines the complexity of the issue: “Rival contentions by the parties and respondents raise weighty issues which have tremendous bearing on the sanctity of the electoral process.”

• The court has decided to examine the issue in detail.

Electoral Bonds

• Electoral bonds are bearer instruments like promissory notes and can be purchased by an Indian citizen or a body incorporated in the country.

• The identity of the donor will be known only to the bank, and it will be kept anonymous.

• Given that political funding used to be a way to whitewash black money, the switch to a mechanism that operates through the banking system is undoubtedly a step forward in ensuring clean political funding.

Concerns by Election Commission

• However, questions over the issue of donor anonymity were raised even before the scheme was notified.

• In May 2017, the Election Commission (EC) had argued that the proviso that exempts political parties from disclosing the names of donors militates against “greater transparency” in political funding.

• The Commission’s concerns were also linked to the amendment to the Companies Act in 2017, which lifted the cap on the amount corporates could contribute to political parties.

• This opens up the possibility of shell companies being set up for the sole purpose of making donations to political parties,” the EC had noted in a letter to the law ministry two years ago.

• . But the fact also is that with most of the bonds being issued and encashed at public-sector banks, the party holding office at the Centre can always access these particulars.

Government’s stand

• The government contends that the anonymity provision is necessary to prevent donors from being victimised, in case they turn out to have supported the losing party.

• If you back the wrong horse, then tomorrow an industrialist who is bidding for a dam will get victimised if the opposite party came to power,” Attorney General K K Venugopal pointed out during the hearing of the case.

Way Forward

• The SC’s order  is alive to these concerns.

• It has directed all political parties to furnish details of the funding received through electoral bonds, including the identity of the donors, to the EC by May 30.

• But this, as the Court pointed out, is only an interim measure.

• This verdict is also a message to the political class to debate more thoroughly the long-pending issue of political funding in order to resolve the anonymity vs transparency impasse.