Today's Editorial

Previous interventions regarding Election reforms:

• The judgment is one more in a long line of verdicts the court has handed down to promote voter rights and preserve the purity of elections.
• Its earlier interventions led to the featuring of the ‘None of the Above’ option on the ballot, the removal of the protection given to legislators from immediate disqualification on conviction for a criminal offence, the mandatory disclosure of the assets and criminal antecedents of candidates in their election affidavits and expedited trials for MPs and MLAs involved in criminal offences.

Beyond Editorial:

Electoral Bond:

• It is a financial tool used to make donations to political parties. These are available only at specific branches of the State Bank of India. One can purchase the bonds digitally, by demand-draft or cheque. The bonds are issued in multiples of Rs 1,000, Rs 10000, Rs 1,00,000 and Rs 1 crore.
• A donor with a KYC (Know Your Customer) compliant account can purchase the bonds and donate to a political party.  The political party can encash the bonds within fifteen days.
• These are available for ten days at the beginning of every quarter, viz, January, April, July, and October. 
• The electoral bonds do not bear the name of the donor.
• Any party registered under section 29A of the Representation of the Peoples Act, 1951, and has secured at least 1% of the votes polled in the most recent general or assembly elections is entitled to receive electoral bonds.

About the data:

• Political funding through anonymous electoral bonds shot up by over 400% during the Assembly elections in Telangana, Rajasthan, Madhya Pradesh, Chhattisgarh and Mizoram as compared to the last polls in these states in 2018, according to the State Bank of India (SBI) data.
• SBI data under the Right to Information (RTI) Act revealed that electoral bonds worth Rs 1,006.03 crore were sold and encashed in the 29th tranche of sales.
• In 2018, the total sales added up to Rs 184.20 crore, with elections held in Telangana, Rajasthan, Madhya Pradesh, Chhattisgarh, and Mizoram states from November to December.
• As much as 99% of the total amount was raised by selling Rs 1 crore denomination bonds.
• The total amount collected by parties through the Election Bond Scheme in 29 phases since 2018 has gone up to over 15,922.42 crore.

Views on electoral bonds:

• Supreme Court: The Supreme Court had earlier requested that all political parties provide the Election Commission of India (ECI) with a record of all donations made through electoral bonds.
• Additionally, it requested that the Finance Ministry shorten the 10-day timeframe to a 5-day during which electoral bonds may be purchased.
• Election Commission of India (ECI): The ECI told the Supreme Court of India that it does not approve the system of anonymous donations to political parties.
• Reserve Bank of India (RBI): The central bank had warned the government that these bonds would "undermine the faith in Indian banknotes and encourage money laundering."
  

Way forward: A fruitful party funding framework requires attention to at least four key aspects:

• Regulation of Donations:
  • Sources: Some individuals or organisations, for instance, foreign citizens or companies, may be banned from donating.
  • Limits: They aim to ensure that a party is not influenced by a few large donors — individuals, corporations, or civil society organisations.
• Expenditure limits:
  • Safeguard politics from a financial arms race.
  • It relieves parties from the pressure of competing for money before they even start to compete for votes.
• Public Funding:
  • A publicly funded election is an election funded with money collected through income tax donations or taxes as opposed to private or corporate-funded campaigns.
  • An attempt to move towards a “one voice, one vote” democracy should be made, and undue corporate and private entity dominance should be removed.
  • Jurisdictions such as the United Kingdom, Norway, India, Russia, Brazil, Nigeria, and Sweden have considered legislation creating publicly funded elections.
  • Issue: Unless private funding is banned altogether (which is an extremely difficult task), public funding will keep topping up party funds and will not solve the challenging task of regulating private money.
  • Ways of implementing public funding:
    • Predetermined criteria:
      • This is measured based on the votes they received in past elections, membership fees, and the amount of donations received from private sources.
      • For instance, in Germany, parties receive public funds based on their importance within the political system.
    • Democracy vouchers:
      • Each voucher is worth a certain amount. While the voucher is publicly funded, the decision to allocate the money is taken by individual voters.
      • This system may be more egalitarian, but it may also promote more extremist candidates.
      • This criteria is in place for local elections in Seattle, US. Under this, the government distributes a certain number of vouchers to eligible voters.
• Disclosure Requirements:
  • It is a less intrusive form of regulation, not outrightly preventing parties or donors from receiving or making donations.
  • It nudges voters against electing politicians who have used or are likely to use their public office for quid pro quo arrangements. 
    • As such, it may discourage parties/candidates from using public office to benefit their donors.
  • As a regulation, it rests on the assumption that the information supply and public scrutiny may influence politicians’ decisions and the electorate’s votes.
  • Donor anonymity serves a useful purpose of protecting donors. E.g., donors may fear retribution or extortion by the parties in power. The threat of retaliation may, in turn, deter donors from donating money to parties of their liking.