Electoral bonds Current Affairs - 2019
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In an affidavit filed before the Supreme Court, the Election Commission of India has made the following observations:
- Electoral bonds, contrary to government claims, wreck transparency in political funding.
- Electoral bonds coupled with the removal of the cap on foreign funding invites foreign corporate powers to impact Indian politics.
- Electoral bonds would cause a “serious impact” on transparency in the funding of political parties.
The Election Commission of India further criticises amendments made to various key statutes through the two consecutive Finance Acts of 2016 and 2017.
What were the amendments made?
The Finance Act of 2017 amends various laws, including the Representation of the People Act of 1951, the Income Tax Act and the Companies Act. The Finance Act of 2016 makes changes in the Foreign Contribution (Regulation) Act of 2010.
The amendment to Representation of the People Act allows political parties to skip recording donations received by them through electoral bonds in their contribution reports to the ECI.
The amendments introduced to the Income Tax Act allow anonymous donations. Donors to political parties are not required to provide their names, address or PAN if they have contributed less than Rs. 20,000. The Election Commission notes that many political parties have been reporting a major portion of the donations received as being less than the prescribed limit of Rs. 20,000.
The Finance Act of 2016 allowed donations to be received from foreign companies having a majority stake in Indian companies.
Observations by Election Commission
The Election Commission of India called these measures as a retrograde step and the ECI has no way to ascertain whether the donations were received illegally by the political party from government companies or foreign sources.
The Election commission also expressed concerns that these amendments would pump in black money for political funding through shell companies and allow unchecked foreign funding of political parties in India which could lead to Indian politics being influenced by foreign companies.
Tags: Black Money • Companies Act • ECI • Election Commission of India • Electoral bonds • Finance Act 2016 • Finance Act 2017 • Foreign Contribution (Regulation) Act 2010. • Income Tax Act • PAN • Political Funding • Representation of the People Act 1951 • Shell Companies • Supreme Court
The GoI has notified the sale of electoral bond by SBI through its 29 authorized branches from 1.11.2018 to 10.11.2018. 29. These SBI branches are in cities like New Delhi, Gandhinagar, Chandigarh, Bengaluru, Bhopal, Mumbai, Jaipur, Lucknow, Chennai, Kolkata and Guwahati. The concept of electoral bond was initiated in Union Budget 2017.Later on Electoral bond scheme 2018 was introduced.
What is Electoral Bond?
An Electoral Bond is just like a promissory note that will be payable to bearer on demand and free of interest. It can be purchased by a citizen of India or anybody incorporated in India.
Benefits of an Electoral bond
- Transparent political funding
- Protecting donors from harassment
- No disclosure of information to third parties
- Achieving Digital India vision
- Bringing donations under tax preview
Electoral Bonds Scheme 2018
The scheme introduced that the a party registered under the Representation of People’s act, 1951 and securing not less than one percent of the votes polled in the preceding election is entitled to receive the electoral bonds. Electoral Bonds may be purchased by only citizen of India. An individual can buy Electoral Bonds, either singly or jointly with other individuals. The bonds can only be encashed by an eligible political party only through a bank account with the authorized bank. Electoral Bonds are valid for fifteen calendar days from the date of issue. If the Electoral Bond is deposited after expiry of the validity period, no payment is made to any Political Party. The Electoral Bond deposited by an eligible Political Party in its account is credited on the same day. The bonds are issued in multiples of 1000, 10000, 1lakh, 10 lakh, 1 crore. The cash donation has been capped at Rs. 2000 and beyond that donations are via electoral bonds.