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What’s in news?

  • Voters need not know the funding source of parties, A-G tells court

Key data

  • Voters do not need to know from where political parties get their funds, the government argued in the Supreme Court on Thursday.
  • The court cannot “kill” the electoral bonds scheme for the sake of transparency, Attorney General K.K. Venugopal said. He argued that the bond was an experiment to eradicate black money and the court should not intervene now. The government position was in contrast to the stand of the Election Commission of India.
  • Twenty-four hours ago, the ECI 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.”

Black money in polls

  • The Attorney-General said “transparency cannot be used as a mantra”. He said elections are being fuelled by black money, which is democracy’s greatest evil. “You can see the way black money is seized day after day,” he addressed a Bench led by Chief Justice of India Ranjan Gogoi.
  • Advocate Prashant Bhushan pointed to how earlier there was anonymity in political funding through cash donations, and now, electoral bonds, allow anonymity in political funding through banking channels.
  • “And cash donations can still continue…” Chief Justice Gogoi added.
  • But 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.

What are electoral bonds?

  • Electoral bonds are bearer instruments in the nature of Promissory Notes issued by banks. They are interest-free instruments that can be purchased from specified branches of the State Bank of India by any citizen of India or body incorporated in India within fixed periods. The government’s argument was that banks would be able to track the buyers of electoral bonds through their KYC details and thus ensure that clean money comes into the system, while protecting the donor’s anonymity. However, critics argue that this has made political funding more opaque since there is no way of knowing who donated and how much to a political party. There is also no cap on the quantum of electoral bonds. The BJP was the biggest beneficiary of electoral bonds in 2017-18, accounting for 94.5% of the bonds worth a little over ₹210 crore

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