Attorney General of India K K Venugopal told the court Thursday that “voters don’t need to know where money of political parties come from”. What is the scheme, what are main objections of the critics, and the government’s claims?
The petitioners have stated that the Electoral Bonds Scheme has “opened the floodgates to unlimited corporate donations to political parties and anonymous financing by Indian as well as foreign companies which can have serious repercussions on the Indian democracy”.
The government has been defending the scheme on the ground that it limits the use of cash in political funding, thus bringing more transparency, and provides a shield to donors by granting them anonymity.
Election Commission of India submitted to the court that electoral bonds had legalised the anonymity of political donors and the parties receiving contributions. It said the right to vote meant the right to make an informed choice. Knowing the candidate was only “half the exercise.” The voters should also know the source of funding of parties who put up these candidates. “It is more important to know the principal than the agent,” its counsel and senior advocate Rakesh Dwivedi submitted.
To this, Mr. Venugopal countered on Thursday: “Their contention is that voters have a right to know. Right to know what? Voters do not need to know where money of political parties comes from.”
The petitioners has raised the following objections on Electoral Bond Scheme:
* Ordinary citizens will not be able to know who is donating how much money to which political party, and the bonds “increase the anonymity of political donations”.
* The requirement to disclose in the profit and loss account the name of the political party to which a donation has been made, has also been removed.
* With the removal of the 7.5% cap on the net profits of the last three years of a company, corporate funding has increased manifold, as there is now no limit to how much a company, including loss-making ones, can donate. This opens up the possibility of companies being brought into existence by unscrupulous elements primarily for routing funds to political parties through anonymous and opaque instruments like electoral bonds.
* The contribution received by any eligible political party in the form of electoral bonds will be exempt from income-tax as per Section 13A of the Income Tax Act.
The Bench asked Mr. Venugopal whether the bank would be able to identify the donor and the political party concerned from the electoral bonds. If not, the entire exercise of trying to fight black money would be futile.
Justice Sanjeev Khanna, on the Bench, said merely knowing KYC [Know Your Customer] information would not block the entry of black money into political funding. KYC only covered the identity of the bond purchaser and would not be able to tell whether the money he used to buy the bond was black or white. Besides, Justice Khanna said black money could be converted to white by routing it through multiple shell companies.
The arguments were heard on a batch petitions of petitions challenging the legality of the electoral bonds scheme. The court reserved the case for orders. Chief Justice Gogoi informed in court that the order would be pronounced on April 12.
