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Business News/ News / India/  From the ashes of electoral bonds, a new scheme is rising
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From the ashes of electoral bonds, a new scheme is rising

The finance ministry is holding internal consultations on the issue for the new scheme, which is expected to be finalized after the national elections in April-June period

After the Supreme Court ordered the State Bank of India to reveal the list of donors, widespread protests were held. The SC said it was ruling in the interest of voter transparency. (Hindustan Times)Premium
After the Supreme Court ordered the State Bank of India to reveal the list of donors, widespread protests were held. The SC said it was ruling in the interest of voter transparency. (Hindustan Times)

New Delhi: A new scheme for funding of political parties is in the works, after the erstwhile electoral bonds scheme was struck down by the Supreme Court as being unconstitutional.

According to two people aware of discussions in the government, the Centre has already started work on a new scheme that will address the concerns the apex court expressed while striking down the electoral bonds scheme.

The finance ministry is holding internal consultations on the new scheme, which is expected to be finalized after the national elections in April-June, one of the persons cited above said on condition of anonymity.

The scheme will address the issues of transparency and extent of political financing by corporations, which were questioned by the apex court. Legislative changes that may be needed for the new scheme are not on the table yet, as discussions are at an early stage, said the person.

Emailed queries sent on Friday to the spokespersons of the ministries of finance, corporate affairs and the Prime Minister’s Office (PMO) remained unanswered till press time.

On 15 February, the Supreme Court had struck down the electoral bonds scheme introduced in January 2018. The court said that some provisions of the scheme that were signed into law through the Finance Act of 2017 were unconstitutional on account of non-disclosure of information relating to political funding.

The court held this violated the right to information of citizens. The apex court also held that the provision for unlimited funding of political parties by corporate entities was arbitrary and violative of Article 14 of the Constitution. The article guarantees that the state shall not deny to any person equality before the law or equal protection of the laws within the country.

The court had examined the argument that unlimited contributions could put corporations in a position of getting into quid pro quo arrangements with political parties that may further the companies’ interests.

Experts pointed out that political funding is a complex issue, but political parties could come together to frame a regime that is transparent and involves legitimate sources of funds. At the same time, the regime must not compromise the privacy of donors to the extent that it leads to mudslinging among political parties.

“The possibility of evolving a political funding regime that addresses the transparency requirements without causing embarrassment to parties and donors, through a consensus among parties, cannot be ruled out provided there is effort in that direction," said A.K. Verma, director of the Centre for Study of Society and Politics, an independent think tank. “This can happen only after the national elections. The apex court should have given guidance on an alternative mechanism."

Verma added that political parties require funds to contest elections and corporations do give funding, but “if you relate every donation to one policy or the other, leading to allegations of someone or the other getting favoured, it would not help".

With elections not being funded by the state, private donations to political parties including from corporations have existed in India for long.

On 31 March, Prime Minister Narendra Modi said in an interview to Thanthi TV that no scheme can be perfect and that shortcomings could be addressed.

In its ruling, the apex court had red-flagged specific provisions in the Representation of the People Act, the Income Tax Act, and the Companies Act that enabled the electoral bond scheme. These provisions in effect allowed unlimited and anonymous political funding by corporations through electoral bonds.

 

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Published: 02 Apr 2024, 10:08 PM IST
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